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Boston Has Competitive Advantages For Business, Says Study

Taxes and Cost of Living Are Fly In Ointment

By Ed Oliver
December 11, 2002

The Boston metro area ranks third in the nation in its ability to attract new businesses and sustain the growth of existing firms, according to a study released yesterday by the Beacon Hill Institute.

It measured the "competitiveness" of fifty of the largest metro areas in the country by looking at several economic variables. Only Seattle and San Francisco came out ahead of Boston.

Boston leads the country in human resources and technology. The disadvantages are government and fiscal policy and the high cost of living.

Boston scored well in human resources because of a high level of readily-available, skilled labor that is not too expensive. A widespread commitment to education, training and health care were also a hallmark of the region.

In technology, Boston is a leader with strong universities, research funding, patents issued, the proportion of scientists and engineers in the labor force and the importance of high tech companies.

Other competitive advantages for Boston were low crime rates and availability of mass transit.

Boston scored poorly, however, on government and fiscal policy because it lacks moderate tax rates and clear evidence of fiscal discipline as measured by state and municipal bond ratings. Workers compensation collections and high unemployment benefits were also taken into consideration. Other negatives included high cost of living such as housing and electricity.

The geographical area under study extended to southern New Hampshire, as far west as Worcester and as far south as New Bedford.

What This Study Means to the
Man-on-the-Street?

Christopher Anderson, President of the Massachusetts High Technology Council and moderator of a panel discussion about the study which was held at Suffolk University, told MassNews:

"I think the guy in the street is interested in one area of weakness that this study identifies. That is the fiscal policy of the state or the city. This study doesn't even reflect the fact that we had over a billion dollars of tax increases just six months ago.

"So if I were on the street, I would be saying, 'Hmm, how can Romney succeed in getting control of the budget without going through another round of new taxes, because doing so would further decrease our state's competitiveness or regional competitiveness. So I think that is the most direct connection.

"The other connection is, if we're going to lose competitiveness, is my job future less salinger. Is my employer likely to make some shifts, or if I'm unemployed, is it going to be more difficult to find a new job? I think that is where it connects on the street."

MassNews: What do you recommend we do to stay competitive?

If we don't get control of our taxes we will do serious harm to our state's competitiveness, says President of the Massachusetts High Technology Council, Christopher Anderson.

"If you look at how good we are doing generally based on this report, the weakest link is the role of the state, or our state/regional fiscal policy.

"If we could actually turn the state into a partner, so that the state doesn't view with arrogance this employer community, lets say the bio-tech industry in Cambridge. If they don't look with arrogance on that community but rather as a partner and help grow it, the less likely to have the first option be taxes as opposed to some other option that preserves jobs or makes it more likely that jobs won't be cut here."

MassNews: How does the state look on the employer community with arrogance?

"By saying, 'We're doing so well we can raise taxes and the industry won't leave.' That's arrogant. Or by saying, 'This report further shows that, you know what, we can afford to raise taxes because we're still highly competitive.

"You've got to look at it in terms of what the other states are doing. It's like a horse race. If the other states have a fresh jockey with a fresh pair of legs and we're still riding a horse that doesn't know where the finish line is, how long do you think it will take before we are now no longer near the leader of the pack?"

MassNews: So, this study should not be spun into a call for more spending and programs?

"No, I think it is a call for more efficient, more competitive relationship with state government. We do a lot of things well without the state. It's almost like the state has been a passive bystander to our success. Lets get the state to be to be an active advocate and participant along the lines of, for example, Colorado and North Carolina, where they work with the employer to build a new site, to find housing for the employees, to recruit and retrain employees. It's all done very easily.

"So, if you want to build a facility like BioGen in Cambridge built their facility in North Carolina. It took about a third of the time it would have taken here in Massachusetts just to get through the permitting process. State government was a partner every step of the way. They didn't cut corners, they didn't sacrifice the environment, they had a very pro-employer, team-building atmosphere to help make that project happen there. It would be very difficult to make it happen here."

MassNews: Does this study say that we do well despite state government?

"Yes, despite the lack of support that we get from state government we continue to do well, because of what I call our natural resources. The high concentration of both public and private higher education institutions, concentrated venture capital community, those and a pretty rich health care system albeit very expensive and in need of repair itself.

"But we have a lot of natural resources that are going to produce spin-offs, new jobs. The question is where do we keep them? If those companies migrate after they learn to walk, to some other part of the country, then that underscores, 'Gee we could really improve our position if we had a better relationship with the public policy part.'"