Numbers shed light on how Mass. economy can keep growing
Frank Conte
It's quite possible that Massachusetts long ago shed the “Taxachusetts” label by embracing sound tax policies such as Proposition 2½, fostering pro-growth innovation companies and retooling its human capital through the Education Reform Act of 1993. But these pivotal sea changes over the last 30 years don't tell the whole story about what really counts: the drive for long-term economic growth.
Taxes are not the only measure of importance, nor are strict measures of student performance based on dollar-per-pupil spending or the number of high-tech companies.
What counts is competitiveness; that is, the ability to promote economic growth and boost personal income. Since 2001, the Beacon Hill Institute (BHI) at Suffolk University has ranked all 50 states by economic competitiveness, examining the productivity of each state's workforce. Why this metric? Because that's how each state can shape in the face of broader national and global factors.
BHI's index shows that Massachusetts has been holding its ground. Between 2005 and 2013, the Bay State topped the overall index in seven of those nine years. (In 2007, it was second; in 2010, third.)
A cursory look at the sub-indices within the index shows that states that performed well in education and “openness” — how well they export products and draw foreign investment — scored well overall. It also helps for a state to be business friendly with reasonable labor costs and to have a risk-taking culture.
Policymakers often compare a state's performance with that of “leading technology states.” However, these states don't always prove to be competitive in the BHI index. The only tech states to finish in this year's Top 10 were Minnesota (5th), Colorado (7th), Texas (9th) and Virginia (10th). California, even with Silicon Valley, ranks 29th.
In 2013, Massachusetts did extremely well in technology and human resources — where it led the field in both categories for the ninth consecutive year. The state also does very well in security and business incubation, ranking 3rd and 8th, respectively.
The index says little about how resources and talent are spread across a state and within regions. But some lessons can be learned. For example, in per-capita income, the difference between the Boston and Worcester metro areas is approximately 29 percent. Worcester could improve by doing what Massachusetts has been doing more broadly: drawing more science and engineering graduates, immigrants with entrepreneurial energy, venture capital and foreign investment, while improving on its disadvantages, such as relatively high housing and energy costs.
No “business climate” index provides a perfect picture. But as other states converge on the path to economic growth, Massachusetts must continue to find ways to remain competitive. n
Frank Conte is director of communications at the Beacon Hill Institute at Suffolk University, where he manages the State Competitiveness Project. Mark Olivera, an economics major at the University of Massachusetts Boston, helped in the preparation of the latest index and this article.
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