Report warns Massachusetts could lose competitive edge with rise of remote work

Massachusetts has been an expensive state for a long time. But the consequences of being a place where residents have to pay more for things like housing, utilities and child care are becoming more severe.

According to census data, more than 46,000 people emigrated out of Massachusetts between 2020 and 2021, the fourth largest exodus in the country behind New York, California, and Illinois. A new report warns this is one of several concerning trends that could erode the state's economic growth, particularly at a time when more employees can work from almost anywhere.

"People are moving in droves to lower cost jurisdictions." said Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, a fiscal watchdog group that authored the report. "We may have to more proactively recruit and retain talent than we've had to in the recent past."

Massachusetts has enjoyed the largest population growth of any other New England state over the last decade. The state's population grew by 7.2% since 2010, which is a reflection of its overall healthy economy. But McAnneny worries that in a new phase of flexible work, that could change. She said rising costs for employers — especially for things like health care and unemployment insurance — make them more likely to hire out-of-state workers.

This spring, a survey from The Massachusetts Business Roundtable found the number of businesses with 10% of their employees working out of state has tripled from pre-COVID.

The new report urges policymakers to address some of the costs of doing business in the state and to be more aggressive when it comes to tackling high costs for residents, such as housing. It also suggests improving the beleaguered MBTA and increasing access to child care.

The nonpartisan public policy group released the report ahead of a constitutional amendment on the November ballot, which would add a 4% tax on incomes greater than $1 million. The group has come out strongly against the measure, known as the Fair Share Amendment.

Advocates for the measure say it would provide funding for transportation, child care and housing. But McAnneny said the tax, which would be embedded in the state's constitution, could cause the state to lose money.

"If you have a constitutional amendment with the tax rate in the constitution, you're stuck with it for a while," McAnneny said "I think it's a very inflexible policy that could be harmful."