A sign for Longwood Medical Center, an area of Boston where several hospitals are located. (Photo by Sarah Betancourt)

MASSACHUSETTS IS IN a talent panic. The headlines have been steady for months.

The Greater Boston Chamber of Commerce reports that 26 percent of young Boston area residents plan to leave the region within the next five years. The Mass Opportunity Alliance, a coalition of the state’s largest business groups, found in a December poll that one in three Massachusetts voters are considering leaving themselves or know someone who is. IRS data show 182,000 net residents left Massachusetts since 2020, with the largest losses among workers aged 26 to 34. Two ballot initiatives backed by some in the business community were slated to ask voters this fall to cut taxes (one was tossed from the ballot on a technicality).

The conversation about how to respond has narrowed to a single word: affordability. Three-quarters of Massachusetts employers say housing costs are hurting their ability to recruit workers. If people cannot afford to live here, they will not stay.

The Healey administration is right to lead with affordability. But it is only one part of the story. Massachusetts is so focused on the high-skill talent it stands to lose that it has forgotten the wealth of underutilized talent it already has.

The young professional in a job that does not use her training. The mid-career worker displaced from one industry who could move to another. The foreign-credentialed immigrant whose qualifications do not transfer. The recent graduate who cannot find a pathway into the sectors she trained for. The resident in a community of color who cannot find her way into the cluster economy growing around her. Connecting them with jobs is not a side initiative or an equity portfolio. It is the most powerful economic competitiveness strategy the state has not yet used.

In the regions I have worked with, the most consequential talent is almost always the talent that remains untapped. Standard workforce metrics miss most of them. The talent the economy is leaving on the table is invisible to the dashboard.

Massachusetts has both a talent shortage and an underutilization problem. The state is projected to face a shortfall of roughly 192,000 college-educated workers by 2030, even though nearly half of its adults hold bachelor’s degrees, the highest rate in the country. At the same time, the untapped workforce is everywhere, from underutilized professionals in Greater Boston to mid-skill workers in the state’s 26 Gateway Cities, places like Lawrence, Lowell, Worcester, Fall River, Springfield, Brockton, and New Bedford.

Many of these residents’ skills and ambitions have yet to be matched to sectors that are hiring nearby. Worcester sits 25 minutes from a biomanufacturing corridor that has been expanding for a decade. Springfield is at the edge of the Pioneer Valley life sciences corridor. Mattapan and Dorchester are a short transit ride from the Longwood Medical Area. The talent is not missing. The infrastructure that could match them with jobs has not been built.

AI makes that gap even more costly. The jobs most vulnerable to AI are held by precisely the highly educated knowledge class that the Commonwealth has spent the last 40 years attracting. This spring, a Tufts University study identified Massachusetts as the most AI-vulnerable state in the country. At the same time, many mid-skill and frontline jobs are relatively safe, and thousands of them remain unfilled.

In my work with cities, I have sat in many rooms where business and political leaders strategize about how to attract more biotech PhDs and engineers. The conversation rarely turns to whether a worker living 30 minutes from a biomanufacturing site even knows it has job openings. That asymmetry is no longer survivable.

Most states compete for the workers everyone else wants. Talent activation is a different discipline. It starts not with who might move to the state, but with who is already here. High-skill talent recruitment runs on incentives and marketing. Talent activation runs on alignment.

My firm is helping to build an integrated workforce system in Los Angeles that will bring 50,000 residents into the region’s growing economy by 2030, and we are part of a similar effort underway in Austin. The logic is straightforward, even if the work is hard. First, you map the industries that are hiring. Second, you identify the residents who are not connected to them. Then you build a bridge between them.

Massachusetts has already laid much of the groundwork for such a structure. Since MassReconnect and MassEducate made community college tuition-free, adult enrollment has jumped roughly 40 percent. The governor’s skills-based hiring executive order and the new MassSkills Coalition have brought employers, workforce providers, and labor into the same room.

Three things remain to be done. First, the state must treat the Gateway Cities and Boston’s immigrant and working-class neighborhoods as the front line of talent activation.

Every dollar spent on workforce development should move residents into growing sectors. Second, it needs to put the brakes on credential inflation. Bachelor’s degrees are required for more and more jobs that do not need them. Third, workers themselves need a seat at the table. The young workers, apprentices, and mid-career professionals the strategy is meant to serve understand the barriers they face better than the institutions designing around them. Every region I have worked with that closed this gap did it by treating underutilized workers as part of the answer rather than evidence of the problem.

Massachusetts has built the most enviable knowledge economy in the country. For its next chapter it should ask potential workers in Lawrence, Mattapan, or Chelsea what they could build if the doors were open to them. Then it needs to open the door.

Steven Pedigo is a co-founder of CivicSol, an economic development and public strategy firm, and a professor of practice at the LBJ School of Public Affairs at the University of Texas at Austin. He joins Northeastern University’s School of Public Policy and Urban Affairs this fall.