May 2, 2024 - Economy

Massachusetts fights to keep talent, tech and investors

Photo illustration of the John Hancock building in Boston with brightly colored clouds and a sun.

Photo illustration: Brendan Lynch/Axios. Photo: Daniele De Gaudio/Getty Images

Massachusetts is a leader in life sciences, academia and medicine, but competing states with nicer weather and friendlier economies are breathing down its neck.

Why it matters: When Massachusetts companies in cutting-edge sectors look to grow their businesses elsewhere, it harms the local economy and the state's self-perceived reputation as home to the country's smartest workforce.

The big picture: Massachusetts has consistently high levels of net outbound migration, and its top-notch college grads aren't settling down there like they used to.

  • Bay State policymakers need to brace for competition from other states while making Massachusetts more affordable to avoid talent and brain drain.

Threat level: Massachusetts is one of the most expensive states for residents.

  • Food, utilities, transportation and health care all cost more there than practically anywhere else in the country.
  • The annual homeowner cost is nearly 25% of the median income — the sixth-highest such level in the U.S.
  • Massachusetts is even one of the most expensive states in which to give birth.

Follow the money: A tax relief package passed last year was meant to help struggling middle- and lower-income families, while also helping the richest residents through estate and capital gains tax reform.

  • The state also streamlined corporate tax filings after much clamoring from business leaders.

Zoom in: A changing academic admissions landscape and shifting public perception of higher education could also spell trouble for one of Massachusetts' top sectors.

  • Polls suggest many Americans are losing faith in the value of a four-year degree.
  • College costs are skyrocketing across the region: Boston University, Wellesley College and other top local schools are now charging over $90,000 a year for tuition alone.

Flashback: In the last few decades, Massachusetts leveraged its world-class academic institutions to build a globally renowned life sciences sector.

  • MIT, Harvard and other research centers fueled scientific discoveries and attracted talent.
  • Local governments invested in startups and set up incubation centers, while venture capitalists built the Kendall Square area around MIT into the world's biotech headquarters.

Yes, but: Other areas of the country are starting to catch up.

  • Nashville and North Texas are the country's top-growing markets for life sciences.
  • Companies like Alcon, AstraZeneca, August Bioservices and Cumberland Pharmaceuticals have located most of their U.S. workers in warmer, cheaper states, and built research centers around Southern universities like Vanderbilt.

Between the lines: Boston still has some leverage with Congress to land major federal life sciences projects.

  • The government's Advanced Research Projects Agency for Health (ARPA-H) will spend billions on cancer and Alzheimer's treatments through its Cambridge-based "investor catalyst."
  • But the Bay State is sharing ARPA-H facilities with Washington, D.C., and burgeoning Dallas.

What's next: Massachusetts is trying to repeat its success in life sciences by bolstering its growing climate tech sector.

  • State grant programs like InnovateMass aim to invest in the next big thing in clean climate tech.
  • After years of effort, wind turbines are finally operational off the Nantucket coast — but the state is still racing with North Carolina, Maryland and the rest of New England to bring large-scale offshore wind farms online.
  • State leaders are now aiming to build a hub for climate tech — a Kendall Square for clean energy — around Boston, or in a city like New Bedford.

Meanwhile, Massachusetts Gov. Maura Healey in February launched a task force to analyze how the state can become an AI leader, too.

The bottom line: State Senate president Karen Spilka recognized the crossroads the state is reaching when she spoke to business leaders at the Greater Boston Chamber of Commerce last week.

  • "We have a lot to do. We must take action now to buffer our state and our residents from future financial uncertainty, continuing high costs and the changing nature of work."
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