Massachusetts has long been recognized as a global hub of innovation, from world-class universities, research institutions, and renowned healthcare systems to the thriving start-ups and business enterprises that call it home. These strengths, combined with a high quality of life, have made Massachusetts an attractive place to live, work, start and grow a business, and raise a family. However, as we look to the future, the Commonwealth faces complex challenges that threaten our position as a premier center of innovation.

Residents, employees, and businesses have been making decisions for the past few years that show Massachusetts is not as competitive as it once was. The high costs of living and doing business, coupled with policies that are less favorable to job creation, are driving people and businesses to other states. If we want to preserve our status as a leader in innovation and maintain the quality of life that has defined Massachusetts, we cannot afford to be complacent. The Massachusetts High Technology Council is committed to addressing these challenges head-on by crafting and executing strategies, ensuring a prosperous future for all.

In CNBC’s 2025 Top States for Business rankings, Massachusetts climbed to 20th place overall, a significant improvement from 38th in 2024, but still lower than its highest rank of 14th in 2021. This marks the largest year-over-year gain of any state and reflects the Commonwealth’s enduring strengths in Education (2nd), Technology and Innovation (4th), and Access to Capital (5th). While this year’s results are encouraging, persistent challenges remain. Massachusetts continues to rank near the bottom in Cost of Doing Business (49th), Cost of Living (43rd), and Business Friendliness (42nd)—factors that directly impact our competitiveness and ability to retain talent and investment.

Although external factors play a role, some of our economic challenges are self-inflicted, such as the high cost of living and unfavorable tax and business regulations. According to the Massachusetts Taxpayers Foundation (MTF) 2025 Competitiveness Index, Massachusetts ranks 46th nationally for regional price-parity (a measure of cost of living). Additionally, the Tax Foundation’s 2026 State Tax Competitiveness Index places Massachusetts 43rd in the nation, placing us among the ten least-competitive states for tax policy. The high cost of doing business is exacerbated by the highest employer Unemployment Insurance costs in the country and rising healthcare and energy expenses. The message is clear: Massachusetts is losing ground in the competition for jobs and talent.

The erosion of Massachusetts’ competitive position should be a wake-up call for everyone in the Commonwealth. The decline in our rankings is not just a number on a chart; it has real and far-reaching consequences. The correlation between our quality of life and the competitiveness of our business climate is a delicate balance that has historically fueled the state’s success. A thriving business environment fosters innovation, investment, and job creation, driving economic growth and generating the tax revenue needed to invest in critical areas like healthcare, education, environmental sustainability, workforce training, and other services that make Massachusetts a great place to live. When the business climate deteriorates, the state’s quality of life is put at risk.

We are already witnessing the fallout. Massachusetts is among the top states for outmigration, with people and businesses increasingly relocating to more affordable, business-friendly states like Florida and New Hampshire. The 2025 MTF Competitiveness Index reports that 41% of residents aged 18-29 plan to move within five years, a population critical to the future workforce of the Commonwealth. Escalating housing and living costs remain a key driver of this trend. A Pioneer Institute analysis shows Massachusetts is one of only a handful of states that suffered a net decline in private-sector employment growth between 2023 and 2024, underscoring the economic risk of out-migration and cost burdens. 70% of CPAs surveyed in the MassCPAs 2025 Public Policy and State Competitiveness Report indicated their high-income clients changed tax domicile in 2024, citing lower taxes (47%) and cost of living (17%) as primary factors. This exodus poses substantial implications for Massachusetts, not only in terms of immediate state revenue impacts but also for long-term economic vitality and job creation.

The financial toll is significant. A study by Boston University and Pioneer Institute estimates that outmigration cost Massachusetts $4.3 billion in adjusted gross income and $214 million in tax revenue during the 2020-21 tax year (the latest available data). If current trends continue, the state could lose nearly $1 billion in tax revenue by 2030. These trends are already reflected in concerning shortfalls in the state’s revenue collections. After years of budget surpluses—including an unprecedented revenue surplus in FY22 that resulted in nearly $3B being returned to taxpayers—revenue collections fell short of budget projections for two of the last three fiscal years. Declining revenue collections in FY24 necessitated mid-year budget cuts and such cuts could still be on the table for FY26. Concerningly, state spending has continued to grow even as revenue growth has slowed. The state budget has skyrocketed 51% in just seven years, outpacing both inflation and personal income growth.

Reversing these trends is urgent and requires immediate action. The Council is committed to leading this charge, working alongside our members and state policymakers to develop strategies that address Massachusetts’ competitive disadvantages while leveraging our strengths.

In partnership with the Boston Consulting Group (BCG), we released the report “Strategic Impacts of AI on Massachusetts’ Workforce: Sector Insights & Policy Implications,” exploring AI’s impact on Massachusetts’ workforce across key sectors. The analysis found that while Massachusetts leads nationally in AI job demand within sectors such as life sciences, education and financial services, the state currently retains only ~40% of its AI-trained graduates. It also found that ~55% of statewide job skills face moderate-to-high disruption from AI, and adoption remains heavily concentrated in Greater Boston and among a limited set of large employers. The report identified four strategic priorities: talent as the centerpiece (K-12, higher ed, reskilling); broaden access to infrastructure (compute, data); compete for federal funding; and tie public incentives to inclusive workforce outcomes. Collectively, these efforts align with the MassVision2050 agenda to shape a thriving, future-ready innovation economy.

The Council’s thought leadership on AI also includes the release of a whitepaper in June 2024, “Becoming the Global Leader in Applied AI for Healthcare & Life Sciences.” Developed in collaboration with BCG and an advisory group of Council members, the whitepaper includes findings and recommendations for steps the Commonwealth can take to further our aspiration of making Massachusetts the global leader in “Applied AI” for healthcare and life sciences, realizing an AI-enabled leap in patient outcomes and health equity. Under MassVision2050, the Council is advancing policy initiatives that support growth of the state’s innovation economy, ensuring Massachusetts remains a magnet for jobs, private investment, and talent, and creating reasons for companies and workers to stay and grow in Massachusetts.