To paraphrase a popular business maxim — most frequently attributed to management guru Peter Drucker — you can’t improve what you don’t measure.
To that end, a leading business group on Monday unveiled the Massachusetts Competitive Index, a new gauge of the state’s economic strengths and weaknesses designed to show how we compare against the rest of the country, especially the states luring away jobs and residents.
The news: The index rankings and accompanying report — produced by the Massachusetts Taxpayers Foundation in collaboration with the Massachusetts Competitive Partnership and the Donahue Institute at the University of Massachusetts Amherst — hammer home a familiar theme: Our biggest liability is the cost of just about everything.
Unlike many competitive rankings, the MTF index tracks a broad set of metrics. The results underscore the sometimes-overlooked fact that Massachusetts’ overall competitive standing is solidly in the middle of the pack.
The MTF hopes that its benchmark, to be updated annually, can inform policy discussions and track improvements and declines.
“We have no common language to talk about the competitive issue. People tend to cherry pick the data to suit their argument,” said Doug Howgate, president of the taxpayer group, a business-backed public policy organization. “We wanted to establish a consistent baseline.”
The overview: The index is composed of 26 metrics in four categories: economic health; population and labor force; business, employment, and investment; and resident life.
It ranks Massachusetts against all states and a group of “key competitor states,” defined as those outside of New England that gained the most jobs at our expense in 2022. The Fearsome Five (my moniker, not the MTF’s) are California, Florida, New York, North Carolina, and Texas.
- Massachusetts ranks in the top 10 of all states in seven of the 26 metrics. Its best scores are for educational attainment, wages and productivity, health, and ability to attract international immigrants. (International immigrants to Massachusetts are typically more highly educated and skilled compared to other states, according to the MTF’s report).
- We rank in the bottom 10 in 10 of the measures, ranging from business taxes and energy costs to affordable child care and housing.
- Against the Fearsome Five, the state ranks first in seven metrics and last in five.
Why it matters: National trends are moving against Massachusetts.
“Mobility of talent and investment, combined with an aging population, pose new and emerging threats to Massachusetts’ competitiveness,” the report said, noting that Massachusetts ranked 45th in the nation for highest net domestic outmigration and recorded the third-largest labor force decline since 2018.
To be sure: There’s nothing new about corporate leaders sounding the alarm about the high cost of doing business in Massachusetts.
But voter approval in 2022 of the “millionaires tax” — a 4 percent surcharge on annual incomes above $1 million — was a tipping point. The chorus of complaints has grown more vociferous while frustration with lawmakers’ failure to pass some key legislation has mounted.
“Until we get agreement on costs being the problem, we can’t move forward,” said Jay Ash, chief executive of the Massachusetts Competitive Partnership, whose members run some of the biggest companies in the state.
Note: The MTF decided not to calculate a single score or ranking for Massachusetts in the index, which it believed would oversimplify the wealth of its data and be used out of context.
But if you do the math, Massachusetts ends up in the middle, both nationally and when compared to the Fearsome Five.
Next steps: The MTF report didn’t propose specific policies to improve the state’s competitive posture. Instead, it made some broad recommendations, including stemming outmigration, growing the labor force, and incorporating cost considerations into policy conversations.
But Ash urged the Legislature to revive last session’s economic development bill, which would have dedicated up to $1.4 billion for the life sciences and climate-tech sectors, and take up Governor Maura Healey’s proposal for $100 million in funding to create an “Applied AI Hub” in Massachusetts, with the aim of boosting the state’s role in the artificial intelligence industry.
In a statement, Governor Maura Healey said the administration is focused on making the state more competitive.”We worked to pass the largest tax cuts in 20 years as well as the largest housing bill in state history to lower costs for everyone,” Healey said. “We’re going to continue to drive a pro-growth agenda to power this economy and create jobs now and for years to come.”
Final thought: Despite its shortcomings, the Massachusetts economy is still the envy of most states.
But it’s dangerous to assume that the state’s past achievements will continue in the years ahead. Post-pandemic, workers have become more mobile. We won’t thrive if residents flee to other states in search of a more affordable cost of living.
That’s why the MTF index is important. We need to measure what we want to improve.