Massachusetts Competitiveness Index 2024
September 2024
Massachusetts is at risk of losing its competitive edge as rising costs and a labor force that has not returned to pre-pandemic levels challenge the state's position as a leader in innovation and economic growth, according to this report com the Massachusetts Taxpayers Foundation (MTF). The first annual Competitiveness Index created in partnership with the Massachusetts Competitive Partnership and the institute, is a comprehensive study that examines the state's economic standing through 26 key metrics, designed to offer policymakers, business leaders, and the public a clear, data-driven understanding of how Massachusetts measures up against other states.
The Index reveals that while Massachusetts continues to benefit from its symbiotic relationship between its highly educated workforce and marquee economic sectors like healthcare and higher education, the state also faces significant challenges related to cost and demographic shifts. Among the most pressing issues are the high costs of energy, housing, and childcare, as well as a declining labor force, aging population, and increasing rates of outmigration.
Some of the report’s key findings include:
- Massachusetts’ talent and innovation are a strength:
- Massachusetts ranks 1st nationally in terms of the share of adult residents with a bachelor’s degree
- Massachusetts’ K-12 system ranks 1st and 2nd in reading and math respectively
- Massachusetts ranks 2nd nationally and 1st among competitor states in Research & Development funding as a share of Gross State Product, underscoring the commonwealth’s strength in innovation
- Cost of living and cost of doing business is a major competitive disadvantage:
- For businesses, energy, unemployment insurance, and taxes rank near the bottom of national rankings
- For residents, child care and housing costs as well as commute times make Massachusetts a challenging place to raise a family
- The pandemic has exacerbated pre-existing demographic challenges:
- Massachusetts has seen a 2.4% decrease in its labor force since 2018, a trend that poses a serious risk to the state’s long-term economic growth
- The state ranks 45th in the nation for domestic outmigration, with many residents relocating to lower-cost states
"Massachusetts is a great state, but to maintain our competitive edge, we need to address the fundamental issues driving up costs and driving out talent," said Jay Ash, President & CEO of the Massachusetts Competitive Partnership. "This report provides a roadmap for the policies and strategies that can help us reverse these trends and build a stronger, more resilient economy."
The 2024 Competitiveness Index also highlights five key areas for policy focus, including creating a competitiveness roadmap, stemming outmigration, growing the labor force, incorporating cost considerations into policy decisions, and fostering the relationship between the education system and the economy.
