IN THE RECENT, fourth annual Talent and Competitiveness Survey of members of the Massachusetts Business Roundtable, conducted by McKinsey & Company, one business leader commented, “I bet on Massachusetts, I bet on Boston every time. The resources that we have here, they take a long time to build. It’s impossible to build what we have.”
Yes, Massachusetts continues to be a world leader in education, technological innovation, and health care, and it remains an attractive home for top talent and businesses. The state has received top rankings as the most educated state in the nation, #1 in technology and innovation and health system performance, the best state for young professionals, and has even been named the happiest state in the country!
As our survey found, Roundtable members – CEOs and senior executives from some of the largest employers across the Commonwealth – continue to value the state’s access to world class talent, its education system, industry clusters, and top research institutions as factors impacting their presence here, with each increasing in importance since last year’s survey.
At the same time, not surprisingly, the rising cost of living, led by the cost of housing, and the cost of doing business are the dominant factors influencing employers’ decisions to remain in Massachusetts. This is impacting hiring, as it is becoming increasingly difficult to recruit talent to Massachusetts and more employers are planning to grow their presence outside of the state. For an economy historically based on access to the best talent in the world, the negative impacts from cost of living and doing business pose a threat to the state’s long-term competitiveness.
More specifically, of those surveyed, 83 percent cited the cost of living as critical to their decision to remain in Massachusetts, up more than two-fold from just two years ago, and more than 50 percent indicated the largest hurdle to recruiting is candidates’ unwillingness to move here. This has resulted in 40 percent of employers planning to grow their workforce outside of the state, doubling since 2023 and increasing almost six-fold from 2022. Indeed, more than 20 percent of Roundtable members report being recruited to move to or expand in other US states.
Other top-of-mind trends most likely to impact business that have shown the largest increases since last year’s survey are developments with the federal government, driven by the upcoming presidential election, and the impact of artificial intelligence. Additionally, employers continue to be spooked by an uncertain economy, with nearly three-quarters expressing concern about inflation and interest rates, and 70 percent indicating they expect these economic issues to impact profits.
Combined with state real GDP growth that lags the national average and a contracting labor force, the urgency to act to make Massachusetts a more competitive place to do business is upon us.
Fortunately, solutions are at hand. First, Roundtable members nearly unanimously – 91 percent – support investments in housing production to address the survey’s trends. And a majority believe other investments like those in the economic development bond bill (Mass Leads Act), pending before the Legislature, such as building an AI hub (64 percent), reauthorizing the life sciences investments (63 percent), and launching a climate tech initiative (53 percent) would benefit the state’s competitiveness. The Roundtable urges action on these critical initiatives before the end of the legislative session.
Next, to address their own talent challenges, employers are exploring innovative workforce development strategies. Targeted recruitment partnerships and upskilling existing talent have been the primary levers for organizations to close their skill gaps. In addition, nearly a third of those surveyed are focusing on skills-based hiring, consistent with the goals of the MassSkills Coalition, which the Roundtable co-chairs with the Executive Office of Labor and Workforce Development, the Massachusetts AFL-CIO, and the Eastern Bank Foundation.
Finally, companies are increasingly turning to artificial intelligence in order to, as one Roundtable member put it, “see how we can take the mundane off of the plates of our staff, not because we want to reduce staff, but we want them to be using their time for higher and better means.” Larger companies with more than $1 billion in revenue have implemented AI across functions to augment recruiting and human resource processes, as well as for generative AI and to enhance sales and marketing.
This year’s survey of Roundtable members shows that macroeconomic headwinds are outweighing tailwinds as factors influencing where employers are growing their workforce and footprint, and that the impacts of the cost of living and doing business on the state’s competitiveness have accelerated over the past few years.
It also confirms that there are solutions requiring immediate action. Investments in housing production and economic development, increased use of innovative workforce development practices, and the continued integration of AI all would have positive impacts on the state’s talent challenges and our short- and long-term competitiveness.
Now is the time to bet on Massachusetts, and we are all in.
JD Chesloff is president & CEO of the Massachusetts Business Roundtable, a statewide public policy organization comprised of chief executive officers and senior executives from some of the state’s largest employers.
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