BOSTON — Massachusetts likes to think of itself as the economic engine of New England. The state with the best hospitals, the best universities, the deepest talent pool, and the most venture capital.
None of that matters anymore. Every state in New England is outgrowing it — and the gap is embarrassing. The closest neighbor is doing 15 times better.
A Pioneer Institute report analyzing Bureau of Labor Statistics data found that from Q1 2020 to Q3 2024, every New England state posted a higher average quarterly net business formation rate than Massachusetts:
- Connecticut: 0.94%
- Rhode Island: 0.86%
- Maine: 0.78%
- New Hampshire: 0.78%
- Vermont: 0.75%
- Massachusetts: 0.05%
The gap isn't close. Connecticut's rate is nearly 19 times higher. Even Vermont — population 647,000, no major city, no research corridor — is forming businesses at 15 times Massachusetts' rate.
Read that last number again. Massachusetts — home to Harvard, MIT, Mass General, and the most educated workforce in America — is forming new businesses at a rate of 0.05%. The national average is 0.60%. That's not underperforming. That's flatlined.
What does 0.05% actually mean? For every 10,000 businesses in Massachusetts, only 5 more are opening than closing each quarter. The state is barely treading water — for every new shop, restaurant, or startup that opens, another one is shutting its doors.
In Connecticut, that number is 94. In Rhode Island, 86. In Maine and New Hampshire, 78. In Vermont, 75. In Massachusetts, 5.
Same region. Same economy. One of these states decided to tax its way to prosperity. The other five didn't.
The reversal
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Between 2010 and 2019, the picture was completely different. Massachusetts had the second-highest business formation rate in the country, behind only Utah. It consistently outperformed its New England neighbors.
Then COVID hit, and Massachusetts never recovered the way its neighbors did. More than 180,000 net domestic residents have left the state since April 2020. Many of them packed U-Hauls for Florida, Texas, and the Carolinas. Others didn't go far — New Hampshire and Connecticut were happy to take them.
More than 180,000 residents have left Massachusetts since 2020. Many headed to states with lower taxes and cheaper housing. Photo: HireAHelper / Wikimedia Commons / CC BY 2.0.
The Pioneer Institute notes that the relative shift "potentially indicates that establishments that would have been created in Massachusetts instead were created in nearby states." In other words: the businesses didn't disappear. They just opened somewhere else.
In professional, scientific, and technical services — the innovation economy — the gap is striking. Connecticut grew 35.6%. New Hampshire grew 30.7%. Vermont grew 29.4%. Maine grew 17.2%. Massachusetts grew 10.2%.
Jenne Farm in Reading, Vermont. The state with no major city and fewer people than Boston is forming businesses at 15 times Massachusetts' rate. Photo: Jitze Couperus / Wikimedia Commons / CC BY 2.0.
What Healey did differently
COVID hit every state. But only Massachusetts responded by making it more expensive to do business here.
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Governor Maura Healey presided over the implementation of a surtax on incomes above $1 million — the only state in New England to pass one. Her administration piled on aggressive climate mandates through BERDO and Net Zero Carbon Zoning. Housing costs climbed to the highest in the region. The regulatory environment became the most complex in New England.
Governor Maura Healey. Under her watch, Massachusetts has fallen to dead last in New England for business formation — behind every single neighbor. Photo: Office of the Governor.
Connecticut didn't pass a surtax. New Hampshire doesn't have a state income tax. Vermont didn't layer on climate mandates. They all grew. Massachusetts didn't.
Meanwhile in Boston
It's not just Beacon Hill. In Boston, Mayor Michelle Wu has been piling on from the city level — doubling developer fees, adding climate mandates, and watching developer payments to the city have collapsed 97% from $61.4 million to $2.1 million. Construction is at its lowest level in decades. Her response this week was posting "Solidarity forever" on Instagram for May Day.
Boston Mayor Michelle Wu. Developer payments to the city have collapsed 97% as construction hits its lowest level in decades. Photo: Boston University News Service / CC BY 3.0.
The broader report found that Massachusetts has fallen to dead last nationally — losing 17,549 businesses in nine consecutive quarters. But the New England comparison is perhaps the most damning data point. These aren't Sun Belt states with fundamentally different economies. These are Massachusetts' neighbors — similar climates, similar workforces, similar proximity to Boston. And they're all growing. Massachusetts isn't.
When Vermont is outperforming you 15-to-1, the problem isn't the national economy. The problem is you.
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