The state is losing more workers than it’s attracting, with more than 27,000 people leaving in 2024 alone, the Massachusetts Taxpayers Foundation’s latest Competitiveness Index shows. And the state ranks last in the nation in private employer growth. Businesses cite high costs of living, employer-paid healthcare costs and energy prices that run well above the national average.
This fall, Gov. Maura Healey established an advisory council on competitiveness, a panel tasked with figuring out how to make the state a more appealing place to live and do business. Doug Howgate, head of the Massachusetts Taxpayers Foundation, joined GBH’s All Things Considered host Arun Rath to talk about what the council must tackle, what it shouldn’t overpromise and what it will truly take to move the needle on competitiveness in the commonwealth. What follows is a lightly edited transcript of their conversation.
Arun Rath: When you look at the Massachusetts Taxpayers Foundation’s latest data, what do you see as the clearest signs that Massachusetts is becoming less competitive? And what’s fueling this decline?
Doug Howgate: Well, let me take a step back.
We produced this index — we now do it annually, this is the second time we’ve done it. And I think one of the reasons why we think it’s so important to put something like this out annually is not so much to answer “Is Massachusetts competitive?” in a yes-or-no way — but to hopefully provide folks, from policymakers to the public, with an array of metrics to demonstrate areas where we’re really strong and the areas where we could use some work.
The goal of this index is not to say, “Oh, gosh. Massachusetts is no longer competitive.” It’s to say, “Hey, what are the areas that we think we need to focus on to make sure that people can live here, invest here and create jobs here?”
The report highlights a number of areas where we are quite strong, but in terms of those areas where we need to do some work, I think it really often comes down to cost. That’s costs for both families, but also for employers. That’s from child care costs, housing costs, commute time, costs in terms of the time in your day, energy costs and health care costs. [Those are] some areas where we continue to see Massachusetts ranking poorly compared to other states.
Rath: Not that it’s simple to tackle costs, but if we get costs lower, would you say that will hit both problems, in terms of attracting more workers here and having more businesses grow?
Howgate: I think so. And we have some major strengths that both drive Massachusetts, but also I think are really appreciated by folks who do live here, when you think of: the quality of our education system, the quality of our health care system more generally, and some other elements of day-to-day life here. But when we know that it’s more expensive to buy a home here, more expensive to send your child to child care here, and more expensive for a business to operate here due to things like health care costs and energy costs. Those are really going to be the things that we think can move the needle, in terms of job growth.
Rath: Well, those things are correlated, right? The quality of life and cost, I mean — we have such great health care, but we have those big health care costs. We have great schools, but we have high property taxes and higher housing. How do you tackle that?
Howgate: I think one of the other things we talk about in the index is that there obviously is a balance between the quality of services available in Massachusetts and the cost to live here. What we want to be mindful of is not [if we are] ranked first in the nation in terms of lowest tax burden, or things like that. We want to look at how we compare to some of our peer states, whether those are economic or geographic competitors.
For example, I’ll take health care costs. I think Massachusetts has consistently had very good health care quality, and we’ve actually made progress over the last 15 years on the cost equation. But one of the things our report notes is that between 2022 and 2023, which is the most recent year for which we have data, Massachusetts dropped from 36th in the nation to 48th in the nation in terms of employer health care costs. That represents about a $1,000-per-employee increase.
What we’re looking for are those differential areas where the increase in cost is out of proportion to the kind of service that’s provided. Those are the areas we think that we can make a difference. I would also say, on the housing front — which obviously I think appropriately has gotten so much attention — the state is never going to use expenditure of public resources alone to build sufficient housing; it’s really about some of the policy levers I think the state can use to make it more attractive and more feasible for housing to be developed in our communities around the commonwealth.
Rath: With the work of the advisory council, what is the first issue you think should be tackled head-on?
Howgate: From my perspective, I think one of the first things to tackle is: What are the areas where we can coalesce around challenges that Massachusetts has? And then, what are some of the public policy levers that exist that relate to those challenges? So let’s focus on the things that we think public sector action is going to make the biggest difference.
One thing that we highlight in this report that I think is maybe related to the Competitveness Council, but also related to other ongoing work, is that we don’t want to lose sight of the fact that Massachusetts has some truly unique strengths as they relate to our K-12 and higher education system, and the intersection between that system, research and the economic sectors that thrive here.
The reality is that we’ve seen some major federal policy changes that put a lot of these strengths, I think, under threat nationally, but certainly here in Massachusetts. And so, what can we do to also make sure that we’re not just addressing some of our longstanding challenges, but to make sure some of those areas where we are historically strong remain strong.
Rath: Are there any models out there in any states or regions that are taking strategies that we might want to adopt?
Howgate: Yes, and it depends on the issues. None of these things are easy, right? There’s no silver bullet for any of these, but I would say — on the front of: what do we do to try to mitigate some of the impacts of federal policy changes? — I think we actually have a legislative proposal here. Governor Healey has filed the DRIVE Initiative that uses some resources that had originally been set aside to draw down federal infrastructure dollars to help provide grants to protect postdoc jobs and protect research that’s going to lead to innovative discoveries. I think that’s a good thing for us to pursue.
And then, let’s talk about housing. I think we have seen, in places like California and in some cities around the country, pushes to really take a new look at our zoning laws and how we can reuse incentives — whether it’s positive or negative incentives — to understand that we all collectively need to buy into this idea that we need to act to make housing more accessible for people of all income strikes.
In many cases, a lot of the local zoning laws and requirements we have are barriers to that. So, what can we do to make sure we expedite some of those processes at the state level and provide some positive incentives for communities to relook at their zoning and figure out where we can appropriately fit development in?
Rath: A year from now, what would be the best sign, in your estimation, that the council is coming up with a plan that can move the needle on this?
Howgate: One thing that I’m going to be looking out for is every two years, there’s a broad economic development legislation that tends to move through the process filed by the administration, and then moves through the House, and then the Senate. For me, that is a potential vehicle to really see some of these policy ideas that move us forward in areas like housing, transportation and some of those other places.
One of the things we’ve been looking at a lot on the housing and development front is [if there is] a way to maybe use a pilot program where we can create zones around the Commonwealth, where we bring to bear some additional state-level and local-level tools to reduce development costs. And, at the same time, maybe pilot some new ways to think about zoning, new ways of thinking about how we get to some of our goals related to affordability and climate in a way that doesn’t force us to change it everywhere in the state, but see what works and what doesn’t, and then expand those programs that make a big difference.
