THROUGHOUT THE PANDEMIC, labor shortages and supply chain issues bedeviled Massachusetts businesses. But business leaders say the housing crisis in Massachusetts is now the major existential threat to the state’s competitiveness.
“Companies have cited the cost of living as the dominant factor in their decisions about expanding and reducing their presence here,” said JD Chesloff, president and CEO of the Massachusetts Business Roundtable, at an event announcing a new coalition pushing for the state to up its housing production.
The Citizens’ Housing and Planning Association, or CHAPA, is launching the new housing coalition, for now called “Affordable Massachusetts.” The coalition is rallying behind Gov. Maura Healey’s housing bond bill and its launch event featured remarks from business leaders, housing advocates, and Lt. Gov. Kim Driscoll.
The Massachusetts Business Roundtable, in association with consultants at McKinsey & Company, releases an annual survey of its membership each June. This year’s report will be released next month, Chelsloff told the virtually gathered group, but he offered some highlights, including the fact that concern about the cost of living has increased 2 ½ times over the last two years.
While issues with finding talent to fill open jobs in the past was “just the difficulty in finding people, which was primarily a result of a tight labor market, this year the dominant factor cited was the inability to get people to move here and relocate here, again due to the high cost of housing,” he said. “To compensate, a growing number of Massachusetts companies are planning to grow their workforce outside of Massachusetts, which is particularly troubling.”
“A quarter of our members have been recruited to locate in other states,” Chelsloff said. “So for an economy that has historically been based on the access to the best talent in the world, this really is a direct threat to our competitiveness.”
Betty Francisco, CEO of the Boston Impact Initiative, noted small businesses in communities of color are feeling the same pressures to leave for cheaper housing pastures. On top of pushing for more rapid creation of new units, Francisco said, groups that try to encourage affordable housing production need funding to support the buyback of existing affordable housing.
“To do that we need public subsidy, we need philanthropy to step in and provide subsidy guarantees, and we need the business community to also provide support,” she said.
The CHAPA coalition is focused on building with equity in mind, said CEO Rachel Heller. “We have leadership at every level that agrees that we need to do something about housing, and that we can do something, and now is the time,” she said, pointing in part to the 68 communities who have voted to adopt new zoning under the MBTA Communities law.
Massachusetts faces a staggering 200,000-home shortage to meet state housing demand by 2030. As state leaders hustle to boost support for the housing bond bill – which includes policy changes like as-of-right zoning for accessory dwelling units in single family districts and would allow municipalities to assess higher real estate transfer fees – survey after survey is pointing to high housing costs as a significant reason the state is bleeding early-career young people.
In a presentation for the Pioneer Institute this month, Boston University professor Mark Williams reviewed a nine-month project on outmigration. Since 2013, his team found, Massachusetts net out-migration has increased 1,100 percent, to over 39,000 people. The largest segment leaving is in the 26 to 34 age bracket.
“The concern, of course, is as we’re seeing more of this raw material,” meaning college and university students, “being educated here, but then saying at a very young age ‘I want to get out of here,’ then that doesn’t allow for economic growth,” Williams said. The study looked at factors including income tax rates, affordability, and health care costs, but painted a muddier picture than young people just fleeing to Florida for the income tax relief.
About half of those leaving Massachusetts stayed in New England, Williams noted in his talk, including Rhode Island, Maine, and comparably taxed Vermont.
“It would be actually the wrong decision just to say to slash taxes will solve the problem,” he said, “because we know that’s a short-term solution to gain lots of revenue upfront but has long term implications in regard to supporting the needed revenue and infrastructure that’s needed actually to keep new folks happy and content.”
Chesloff said the Massachusetts housing crisis can undercut the state’s legitimate appeal. “We did hear from our members that companies by and large do like being here in Massachusetts,” he said. “They cite access to talent, the education system, access to world-renowned industry clusters, the innovation ecosystem. I mean, still in many ways, this is like no other place in the world and let’s not forget that.”
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