MIGRATION PATTERNS are a report card on how well Massachusetts is doing at attracting, retaining, and growing its population. On that front, there is, as the adage goes, good news and bad news.

First the bad news: According to a new Boston University study, Bay State net outmigration, the number of folks leaving versus arriving, has soared by a stunning 1,100 percent since 2013. In 2023, net outflow of residents was 39,000 and if this slide is not reversed, by 2030 it could exceed 96,000 per year.

Outmigration is not just a people problem; it’s a money problem. Residents who move take their income and purchasing power with them. The tax revenue they generated for the state leaves too.

Based on most current government data, outmigration cost the state $4.3 billion in adjusted gross income (AGI) and $213.7 million in lost tax revenue in 2021. That year alone, Florida, New Hampshire, and Maine captured $1.77 billion, $1.1 billion, and $393 million, respectively, of AGI from those exiting Massachusetts. If the trend persists, by 2030, the Bay State could lose about $19 billion in AGI and almost $1 billion in annual tax revenue. In such a scenario, Beacon Hill will either need to make cuts or find new revenue sources to fill this large fiscal gap.

The workforce exodus is broad, spanning the 24-64 age brackets. Over half of those moving earned 1.3 to over 2.6 times the state average, placing them at the top 15 percent or higher wage earners. 

The biggest loss to the state in AGI was among the 55-64 age bracket. Equally as troubling is that the largest number of departures was in the 26-34 age bracket. The younger the exit group, the greater the cumulative impact on lost tax receipts.

Massachusetts’ economic success has hinged on a knowledge-based economy, and its greatest resource is a well-educated workforce. That’s why the departures of this prime age workforce are so problematic. The rise of remote work options has also reduced financial barriers, allowing employees to “try before they buy,” seeing if they like a new state before committing to a permanent move.

In the past, the Commonwealth has counteracted net outmigration by welcoming large numbers of highly skilled immigrants. More recently, foreign students who attend Massachusetts universities and colleges, post-graduation, have also found it trickier to secure employment. As immigration becomes an increasingly divisive political issue, the likelihood of favorable policies diminishes.

For years, the belief was that the bulk of the Commonwealth’s outmigration was made up of retirees moving to Florida. But we now understand that more than half who move, remain in New England. From an economic perspective, 30-year-olds moving to Maine is a lot more troubling than 70-year-olds heading to Boca Raton.

Now for the relatively good news:  Knowing why folks are leaving gives us the ability to do something about it. The BU outmigration study provides policymakers with a to-do list to address. The three major drivers of outmigration are income taxes, housing, and healthcare cost. The 11 states that captured the lion’s share of Massachusetts residents all scored better in those categories. Eight of the 11 also scored better in level of housing burden (the proportion of household income allocated to housing costs). Gov. Maura Healy’s commitment to earmark funds to address housing is a start but only one piece in a multifactual puzzle.

The research covered a period before the recent 4 percent surtax went into effect last year. It is highly plausible that future data will show such tax hikes are not helping to stem the tide of outmigration. 

Massachusetts’ strength is in its premier healthcare quality. Yet, increasingly, healthcare cost, compared to other states, is proving a competitive disadvantage. Study results highlighted the Commonwealth’s competitive advantage in economic health and educational quality.

In recent years, a strong economy and large state budget surpluses made it easier to downplay troubling outmigration trends. No state has a lock on growing its population; it’s something that isn’t static, must be continually reassessed and nurtured.

The volume and composition of residents leaving the state are proof this problem will have long-lasting financial implications if not corrected.  

Here is an eight-step action plan to address outmigration:

  • Beacon Hill needs to acknowledge that net outmigration is not temporary. It’s multifaceted, driven by more than high housing costs. The Commonwealth’s competitive advantage to attract, grow, and retain population and workforce is slipping. This is an important first step as it will finally create a sense of urgency.  
  • The governor should establish a “resident retention” task force to help formulate effective policies, set milestones, measurements, and report progress. The task force should include community and business leaders.
  • More focus needs to be placed on building upon the state’s competitive strengths around education and economic health, including developing programs that target prime age workforce (26-54), highlighting core industries (e.g., high-tech, biotech, FinTech, and healthcare) and encouraging growth and retention.
  • Fiscal policies shouldn’t be decided in a vacuum. It is short-sighted economic policy for states to simply slash taxes as much as it is flawed policy for states to increase taxes without fully studying the longer-term implications. Income tax policy and its level of impact on outbound migration, especially given the recent 4 percent surtax enacted in 2023, needs to be closely examined.
  • The state has already put into law a policy to reduce housing costs in numerous towns serviced by the MBTA, yet NIMBY resistance is mounting. The attorney general was correct in suing Milton and needs to maintain an aggressive stance towards other towns that are in noncompliance.
  • Create fast-track permitting processes, reduce fees charged, and provide builders with tax incentives to construct homes that meet defined affordability standards.
  • The BU study demonstrates that high healthcare costs are also a central driver of outbound traffic. The Health Policy Commission has voiced similar concerns. The governor needs to make reining in healthcare costs a higher priority. The state has long enjoyed top rankings for healthcare quality, but it has paid less attention than other states to how to better control these costs that continue to grow at rates greater than inflation.
  • Ramp up lobbying through the state governors’ association to enact federal policy that fast tracks foreign students, allowing them to stay and work post-graduation. Doing so would make it easier for Massachusetts to start to close its migration gap.  

While policymakers can’t influence the state’s (sometimes) less than ideal weather conditions, they still have levers they can pull to impact the core drivers causing residents to exit the state. Addressing these factors will help stem the Bay State’s growing outmigration crisis.  

Mark T. Williams teaches finance at Boston University’s Questrom School of Business, led the recently released BU Migration Study, and is the past president of the Boston Economic Club.