MASSACHUSETTS WAS RECENTLY ranked as having the best economy in the country by WalletHub, which cited our investments in both industry and academic R&D, and leadership in innovation, workforce, and technology as factors leading to “big payoffs in economic growth.”   

In a recent survey of members of the Massachusetts Business Roundtable – CEOs and senior executives from some of the largest employers throughout the Commonwealth – business leaders similarly cite access to world class talent, industry clusters, and research institutions as important factors influencing their decisions to grow and invest in Massachusetts.  

Yet the survey —conducted annually for the past five years in collaboration with McKinsey & Company—also found cracks in our foundation, primarily due to the high cost of housing, cost of doing business, and the quality of our infrastructure, all made worse by federal policy uncertainty.  

More than 84 percent of employers expect national challenges to worsen the state’s economy, citing the threat of recession, the impact of trade and tariffs, and changes in federal policy as top concerns. The uncertainty caused by the constant churn of federal policy change has caused a quarter of respondents to put new investment and hiring decisions on hold, and more than half tabling plans to move, expand or change their footprint in the next year. 

Housing, in particular, is top of mind, with 74 percent of respondents indicating that it is negatively impacting their ability to recruit and retain talent. The most cited challenge in recruiting was employees’ higher expectations for compensation due to the high cost of living, and 73 percent of employers have already increased compensation as a result.  

The cost of living has become a cost of doing business issue in Massachusetts. Over 85 percent of employers now report having at least some staff based outside Massachusetts—up from approximately 75 percent last year and 70 percent the year before. Hybrid and remote work have become lasting elements in the talent strategy playbook. 

To address these headwinds, employers are embracing more talent-friendly policies and deploying AI to continue boosting productivity. More than half are increasing salary and benefits, offering professional development opportunities, and settling on flexible, hybrid work arrangements. In fact, 90 percent do not expect any additional changes in their work model. Regarding AI, more than two-thirds of employers are focused on AI and technology solutions to improve performance. Notably, more than 80 percent believe AI will actually support hiring and retention in Massachusetts. 

The key takeaway from this year’s survey is that in these uncertain times, there is great opportunity to think and collaborate in new and innovative ways. AI adoption, for example, is scaling rapidly, with 35 percent of respondents anticipating AI being a top trend impacting their business over the next year, up from 23 percent last year and 11 percent the year before.  

Half of the survey respondents see expanding workforce development programs to build a stronger AI talent pipeline and continuing to foster AI adoption in key industries as the greatest opportunities for Massachusetts. The Massachusetts AI Hub, created through the MassLeads Act, is already helping to jumpstart implementation of many of these strategies, and the Business Roundtable is working closely with them on education and workforce strategies. 

The Roundtable recently partnered with Citizens to convene a discussion at MassChallenge on “Future-Proofing Massachusetts’ Innovation Economy.” In a flash poll at that event, nearly three-quarters of the audience said they think the region already has the talent it needs to boost innovation, but panelists noted that the region is losing talent as founders start companies here but grow them elsewhere. That means the challenge, and the opportunity, are clear. The state has a robust pipeline to build on, and we need to be intentional about how we continue to do so. 

There is also opportunity to foster new partnerships and alliances of unlikely allies coming together to solve problems. Nearly three fourths of Roundtable members surveyed expressed interest in partnering with other companies and/or state government to tackle competitiveness challenges.  

In areas of AI adoption, workforce development, and job creation, there is the opportunity to, as one Roundtable member said, “reset the working relationship between companies and the state, so that each side contributes to problem solving together.” In Massachusetts, this is what we do – and have always done – best. 

In that spirit, the Roundtable recently joined with our colleagues from the Associated Industries of Massachusetts, Greater Boston Chamber of Commerce, and Massachusetts Taxpayers Foundation to come together around a framework of competitiveness, convey our urgent focus on ensuring that Massachusetts can compete in an increasingly uncertain global economy, and offer our continued collaboration with state policy makers “as we pursue our shared goal of making Massachusetts a highly desirable place to live, work, and do business.” Encouragingly, productive conversations with the Healey-Driscoll administration and Legislature have followed.   

The vulnerability of the foundations of the Massachusetts economy, and the uncertainty of the moment we are in, is unsettling and threatening. This moment demands that private and public sectors collaborate as we conceive of new and innovative ways to keep Massachusetts competitive.  

As a Roundtable member urged, “The federal government’s retreat from key sectors, while very regrettable, gives the state an opportunity to step up and be a national leader in global industries, secure our leadership role in life sciences, and work together toward establishing the state as a leader in areas such as clean tech and AI.”  

If we move quickly and collaboratively, Massachusetts has the chance not just to adapt to the new environment—but to lead, and find opportunity in these uncertain times. 

JD Chesloff is the president and CEO of the Massachusetts Business Roundtable, a public policy organization comprised of CEOs and senior executives from large employers across the Commonwealth with the mission to make Massachusetts the most desirable place to live, work, and do business. Lisa Murray is the Massachusetts state president for Citizens, and chair of the Massachusetts Business Roundtable board of directors.