February 28, 2007
Today's Globe Op-Ed
Dear Chamber Member:
This morning, the Globe printed an op-ed piece that highlights the need for a proactive focus on job creation in
Massachusetts
. The piece is coauthored by myself and the chairman of the Chamber, Ralph Martin, and outlines specific corporate tax reforms and workforce development initiatives that the Chamber has introduced on
Beacon Hill
. Throughout the legislative session, we will be actively engaging administration officials and legislative leaders to advance these important goals and promote job creation here in Greater Boston.
As always, your feedback is welcome.
Sincerely,
Paul Guzzi
President & CEO
State must quicken pace of job growth
By Paul Guzzi and Ralph Martin | February 15, 2007
THE
MASSACHUSETTS
economy is at a crossroads.
For more than a decade -- from 1995 to 2006 -- the
Massachusetts
unemployment rate was lower than the national rate, whether the
US
economy was growing, or shrinking. Not anymore. Today, the unemployment rate stands nearly a full point higher than the national average, and exceeded the nation in all but two months of last year.
Massachusetts
has fallen behind, and the reason is slow job growth.
Slow job growth hurts the state in many ways. It means people have difficulty finding jobs and advancing their careers in
Massachusetts
. It wreaks havoc on the state budget, since much of the revenues depend on employment. It contributes to 'brain drain' and population loss, as talented workers leave the state for better opportunities.
The Greater Boston Chamber of Commerce has studied all 50 states to identify which economic factors have the greatest impact on job creation. The states with the strongest job growth share two commonalities: a highly skilled workforce and competitive business costs.
Clearly,
Massachusetts
has an educated workforce, but the data show that high-skill states with uncompetitive business costs have weak economies. To regain economic strength, the state must improve cost competitiveness as it develops talent.
On the cost front, the state is losing ground. Taxes on employers have increased five times in the past four years. At the same time, competitor regions have reformed employer taxes to attract new businesses and jobs.
In 2006, the Washington-based Tax Foundation ranked
Massachusetts
47th out of 50 states for corporate tax competitiveness. The state says it wants to compete in the global economy, but its tax structure makes it difficult to create new jobs here. That must be corrected.
Since the economy depends on investment, tax policy should be more investment-friendly. Lowering the tax rate on long-term investments and reviewing the high tax on short-term investments will promote entrepreneurship and help keep investors in
Massachusetts
.
Also, the significant burden on industries that endure boom-and-bust cycles, such as life sciences, technology, and manufacturing, must be lifted. State tax policy for companies that are not profitable is one of the most restrictive in the country.
Massachusetts
' "loss carry-forward rule" should be matched with that of the federal government and 25 other states.
Massachusetts
currently taxes companies' assets in addition to profits. This is especially damaging to financial services and start-up companies, which have intangible assets. It should be eliminated.
On the skills front, Federal Reserve Chairman Ben Bernanke recently spoke about education deficiencies that hamstring US workers. Competitor regions are laser-focused on the
United States
, and are quickly improving their education systems. But
Massachusetts
has the unique opportunity to compete by maximizing its natural resources, namely the premier academic institutions that attract the world's best students and train its future workforce.
Two steps the state can take to strengthen talent retention and training are:
?Implement new strategies for keeping students here after graduation. State incentives can help, such as a partial match of tuition assistance companies give to students who will work for them after graduation.
?Extending the state's successful community college job training incentive to state colleges and the
University
of
Massachusetts
. This incentive covers overhead costs when community colleges partner with local businesses to train workers for available jobs.
The
Massachusetts
economy is at a crossroads, and the state has a decision to make. Constructive change -- making the state more competitive, while building on its strengths -- is the best course. It will lead to job creation and position economy to be a national leader.
Paul Guzzi is president and chief executive and Ralph Martin is chairman of the Greater Boston Chamber of Commerce.