Gary Higgins
In its fifth annual Massachusetts Talent and Competitiveness Survey 2025, McKinsey & Co., working with the Massachusetts Business Roundtable, identified three main obstacles to doing business in the Commonwealth: high costs of doing business, high living expenses, and aging infrastructure.
Business leaders met Thursday to review the survey results and discuss strategies for addressing these challenges.
“The same warning signs keep coming up, and now they’re no longer just flashing — they’re solid red,” said Mekala Krishnan, a partner at McKinsey Global Institute. “It’s time to start tackling these issues.”
The report highlighted housing costs as a particularly urgent issue. Rising housing prices are forcing employers to raise wages to remain competitive, but even that is proving insufficient to keep workers in Massachusetts.
- 74% of employers said the housing market is hurting hiring and retention.
- 73% reported increasing pay to offset housing costs.
- 85% said that up to 20% of their employees now work remotely from out of state — up from 72% the year before.
“Housing never used to be a concern of mine, but in the last couple of years, three employees moved south,” said Michael Tamasi, CEO of AccuRounds in Avon. “It’s a new challenge, and it’s affecting our business.”
Housing isn’t the only concern. Tariffs, federal policy changes, and the threat of a recession are also making companies hesitant to grow. This year, 80% of businesses expect no change or a reduction in their Massachusetts footprint, compared with 69% in 2024.
Still, employers are leaning on workforce strategies and new technologies to stay competitive. Nearly two-thirds of businesses say they are expanding professional development and training, and more than half have upgraded employee benefits.
Artificial intelligence is another focus:
- 80% of executives believe AI will strengthen the economy and improve hiring and retention.
- 69% are actively pursuing AI adoption to improve productivity and attract talent.
“If we think about AI, workforce development, and talent pipelines, these are opportunities for a stronger partnership between business and government,” said Lucy Perez, senior partner at McKinsey’s Boston office. “Massachusetts has the chance not just to react, but to actively shape its competitiveness.”