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It’s been Beacon Hill’s favorite buzzword for the last few years and “has been kind of discussed to death,” as one policy expert put it, but a discussion among business leaders Wednesday put a fine point on the complexity of the competitiveness conversation.
“There’s implications across the entire spectrum and I think that it’s not one thing … it’s this tsunami of little things that are having the biggest impact,” Sara Fraim, CEO of the Massachusetts Technology Leadership Council, said last week during an event co-hosted by the Greater Boston Chamber of Commerce and Massachusetts Taxpayers Foundation.
In the post-pandemic environment of weaker links between employment and residency and amid economy-wide cost pressures, Massachusetts and other states have put a particular emphasis on marketing themselves to both businesses and workers. Complaints about the high cost of living, traffic and unreliable transportation, and the business and tax environment carry even greater weight with policymakers at a time when it’s easier than ever for people to relocate.
But asking what it means to be competitive as a state and what Massachusetts should do to improve its standing will produce a wide variety of answers. Fraim said the “lens is so different” among the different tiers of the tech industry she speaks with, from startups to large enterprise companies. The people behind startups, for instance, generally want to stay in Massachusetts.
“But they have a hard time. They can’t afford rent — to live in or to work in — and they can’t afford to hire because they can’t afford the salaries to attract people so they can come and live here. … And then you talk about sort of that middle — those are people that are grounded here — they have their kids here, education, the social aspects of what makes Massachusetts amazing — they stay, [but] they can’t hire here,” she said. Fraim added, “At the enterprise level … I had a dinner with several CFOs last night and what surprised me is that the surtax, the millionaires tax, came up in conversation — again — but with real implications. Somebody was saying that more than half of their leadership team, out of 11 people VPs and up, six of them have left.”
Jane Steinmetz, the managing principal of EY’s Boston office, said it’s the “complexity” of the state’s competitiveness picture and the breadth of potential policy prescriptions that stands out to her.
“It’s not a one factor that’s going to be the silver bullet that makes Massachusetts competitive vis a vis other states. It’s really going to be multifaceted,” she said. “So I believe that if we’re going to be competitive, we’re going to have to come up with solutions that really span the spectrum of the issues that help to retain our low-wage, middle-income and high-net worth individuals, that helps to retain and attract entrepreneurs, small businesses and our large employers. And there’s just different factors that are going to come into play.”
Massachusetts Taxpayers Foundation had that complexity in mind when it produced its new Massachusetts Competitiveness Index, a report released last month that aims to take a data-driven look under the state’s hood to help inform actionable public policy changes, President Doug Howgate said Wednesday.
Howgate said the topic of competitiveness “has been kind of discussed to death,” but that much of the analysis isn’t all that constructive for “doing something about making sure Massachusetts continues to be competitive, continues to be strong in the areas that we’re historically strong at and gets better in new areas.”
He said he hopes the index, which MTF plans to update annually, will help policymakers “find things here that start to connect to policy levers Massachusetts may have in the years going forward.”
When moderator and Greater Boston Chamber head James Rooney asked the panelists to give one, two or three issue areas the state should tackle soonest, Fraim was quick with an answer.
“It’s got to be housing, like one, two and three,” she said. “It really does have to be housing, because if people can’t afford to live here and they do have the option to go someplace else, they will.”
Steinmetz said she has four kids going off to college “and all I hear is southern schools.” She said a recent Wall Street Journal article pointed out that a lower cost of living and “fun on social media” are helping fuel interest in schools in the south.
“But what really struck me is it says a lot of students are looking to southern schools; two-thirds stay. So not only do we have this phenomenon going on with southern schools, two-thirds stay because of jobs and lower-cost housing,” Steinmetz said. “So we have to fix the housing problem so that they want to come back here and they can afford to come back here.”
Transportation also got significant attention during Wednesday’s event. Howgate noted that while financial issues like the cost of housing and paying taxes in Massachusetts are important, things like commute time have become costs that businesses and workers take into account more and more in the post-pandemic world.
“When you no longer have to be in the office every day, the fact that in Massachusetts you’re likely to be stuck in traffic for longer than you are in other places, that’s going to be a competitive disadvantage for Massachusetts,” he said.
Rooney, who has been involved in transportation policy for decades and also has been one of the state’s leading marketers as the head of the chamber and in his last job running the Mass. Convention Center Authority, told the audience Wednesday that the Bay State’s traffic is a weakness that other states try to take advantage of.
“When I was in North Carolina, I asked the person who’s in charge of economic development for the state, ‘you know, what do they say about Boston and Massachusetts when they’re competing against us for something?’ And the guy didn’t hesitate, and he said, ‘I tell them about your commute time and traffic and congestion,'” Rooney said. “So having been in the business of competing with others, it’s not just telling your story. You weave in a little bit about your competitors too, and that’s what they say about us.”
