The golden dome of the State House. (Photo by Andy Metzger)

MASSACHUSETTS HAS two souls.

One is outward facing, grounded in strong institutions and using innovation to project its ideas and successfully compete with the nation and world. That is the Massachusetts of the China Trade, the Industrial Revolution, Route 128 and the rise of computing, and, more recently, biotechnology and the life sciences. It is the Massachusetts of growing prosperity.

The other soul is inward looking and parochial. It focuses on protecting existing interests, tolerates rising costs, and treats competition as a threat rather than a catalyst for innovation. This is the Massachusetts of machine politics and complacency— rooted in the patronage systems of early 20th century Boston and reflected today in the outsized influence of public-sector unions.

The state has long oscillated between these two identities. Periods of outward engagement have brought leadership; periods of retrenchment have produced stagnation and population loss.

Today, Massachusetts is firmly in a parochial phase, reflected in policy choices over the past decade that have led to job losses, rising living costs, and outmigration of talent and investment. Since 2010, state spending has grown at two times the rate of median household income; state employee compensation costs have risen even faster.

As a result, the state has increased fees and taxes while failing to address punitive housing, health care, and energy costs. It is unsurprising that families are leaving Massachusetts at every age and income level. Younger residents are departing at a particularly alarming rate.

It is not just a cost-of-living issue. As Shark Tank’s Kevin O’Leary recently noted, Massachusetts has become uninvestible, which we see as more employers move out and stop investing in new jobs here.

Since 2020, Massachusetts has lost more than 25,000 private-sector jobs, while North Carolina—with a broadly similar industry mix and size—has added more than 250,000. Florida, New Hampshire, Tennessee, and Texas all dramatically outperform us on job growth and affordability. We lose jobs while some competitor states have grown their job base by more than 10 percent.

Their success is no accident. Their leaders are choosing to compete—by lowering taxes, restraining health care and housing costs, and making it easier to hire, invest, and grow businesses.

In our forthcoming book, Agenda for Leadership 2026: Choosing to Compete, we present a comprehensive 64-policy platform to restore Massachusetts to its rightful place as a national leader in education, patient care, and economic opportunity. Fiscal discipline is not a comprehensive policy vision, but the state government’s runaway spending remains a foundational obstacle to Massachusetts realizing its potential. When government expands faster than the private economy, the consequences are predictable: higher taxes, rising costs, and weaker job creation.

Our slate of fiscal reforms is practical and measured, non-ideological, and will save the Commonwealth between $1.1 and $1.8 billion annually, while protecting essential services and strengthening long-term competitiveness.

In just the last few years, the state workforce has grown by 5,000 FTEs and compensation has jumped far more than median household income. To address this gap, we suggest strategic attrition, leaving a small share of lower-priority positions unfilled as employees retire or move on. This approach avoids layoffs and expensive buyouts while saving taxpayers hundreds of millions.

We suggest greater oversight of the Commonwealth’s sprawling network of quasi-public entities. That will also have the benefit of bringing transparency and accountability to organizations spending $9 billion in public funds with limited oversight.

Other states competitively bid public services. but because of the state’s anti-competitive Pacheco Law, we do not. In the area of public construction projects, we too often use project labor agreements that exclude the majority of firms and adversely impact minority-owned businesses. Reforms in both areas would improve quality and significantly reduce costs.

We suggest means-testing two universal benefits programs—free community college and school meals—focusing benefits on lower-income households (up to 300 percent of the federal poverty level) and eliminating subsidies for wealthier families.

Finally, AI-enabled tools offer the potential to save a minimum of 1–2 percent of the overall budget of major benefits programs like unemployment insurance, MassHealth, and public procurement by reducing “leakage”— payment errors, administrative inefficiencies, and fraud. When resources reach the right recipients more reliably and quickly, families benefit. Leakage benefits no one.

Like household income, local aid has grown at only a fraction of the state’s overall spending growth, so some of the savings should be directed at boosting frontline services through non-education local aid. It would also ease local pressure to raise property taxes and fees.

The savings can also stave off additional state tax hikes or allow tax relief for families and businesses.

Restoring Massachusetts’s leadership in education, patient care, and economic opportunity—and making Massachusetts more affordable for families and businesses alike—will require focus, discipline, and a willingness to compete.

It is a choice Massachusetts has made before. We must make that choice again.

Jim Stergios is executive director of Pioneer Institute, a Boston-based think tank.