This column is from Trendlines, my business newsletter that covers the forces shaping the economy in Boston and beyond. If you’d like to receive it via email on Mondays and Thursdays, sign up here.
As a kid, when I brought home As and Bs on a report card, my parents always said the same thing: “Nice, but we know you can do better.”
But even one C — an F in Mom and Dad’s book — got an ominously terse warning: “Do better.”
Massachusetts has been bringing home plenty of Cs and worse for three straight years on a report card that aims to assess its economic vitality and ability to attract and retain residents and businesses.
Just as troubling, the state’s performance in areas where it has struggled has barely improved since the Massachusetts Taxpayers Foundation, a business-backed policy group, issued its first competitiveness scorecard in 2024.
Do better.
The latest: An exclusive first look at MTF’s 2026 report shows Massachusetts once again ranked near the bottom of all states in key categories.
Among them: job growth, loss of residents to other states, commute times, and, most important, costs for energy, infant child care, and employer-paid health insurance.
MTF’s rankings are data-driven, based on government and private statistics.
In addition, the state lost ground in metrics where it had scored better in previous years. On the rate of labor force growth, the increase in people working or looking for a job, Massachusetts fell to 39th from 10th, in part because of a drop in immigration.
After the unemployment rate ticked up last year, the state dropped to 43rd from 31st.
But there is good news, too.
The state remained in the top 5 in areas of traditional strength, including economic productivity (second), average weekly wages (third), and venture capital investments (second). It climbed into the top 10 for low poverty rates.
Why it matters: The lack of progress over the past three years underscores that making Massachusetts a more appealing place to live or run a company will be a slog.
“Turning the ship is a slow process,” said Doug Howgate, MTF’s president. “We are not going to lose our strengths overnight. At the same time, the work being done on things such as housing costs, energy costs, and commute times is nowhere near finished.”
Closing the gap: As the Globe has detailed in a series of stories, Massachusetts is losing jobs and people to other states with lower taxes, cheaper living costs, and less burdensome business regulations.
Florida, North Carolina, and Texas still lagged Massachusetts in economic productivity (per-capita economic output) last year, but they posted faster increases over the past one- and five-year periods.
Venture capital investments in Massachusetts rose 7 percent last year, while Florida, New York, California, and Texas saw increases of more than 50 percent.
Texas, ranked third in number of international students, increased enrollment 8.4 percent last year, while in fourth-ranked Massachusetts, enrollment grew by just 2.2 percent.
D.C. complications: MTF highlighted two examples of Trump administration policies pressuring the state.
- Immigration restrictions. The rate of international migration to Massachusetts fell by almost half last year, a major factor — along with boomer retirements — in the shrinking labor force. Meanwhile, growth in international student enrollments at colleges and universities has slowed for two years in a row, a trend that, if continued, could take a meaningful toll on their tuition revenue and research operations.
- National Institutes of Health funding. Massachusetts receives more NIH grant money per capita than any other state. Funding dropped 2.7 percent in the last federal fiscal year from the peak in 2023.
“While many NIH grants resumed after the court overturned the Trump administration’s effort to eliminate funding, new federal regulations have been announced that could further limit access to funding if research projects are not aligned with the administration’s agenda,” MTF said.
Final thought: There are no simple solutions for improving the state’s competitiveness.
But MTF, like other business groups, has policy priorities.
Cut the estate tax and the amount employers pay into the unemployment insurance fund. Spur housing production in downtown areas. Support research institutions hit by federal funding cuts. And enact a rigorous statewide high school graduation standard to ensure that the state protects its highly ranked K-12 education system.
Offsetting lost tax revenues and funding incentives to build more housing without sacrificing essential services are not insignificant challenges. But ideas like these should be getting more serious attention from state and local leaders.
I know we can do better.
Larry Edelman can be reached at larry.edelman@globe.com.