Is Boston’s Health Care Industry Still Growing? Here’s What the Data Says.

From 1998 to 2018 in Massachusetts, employment in the Health Care and Social Assistance sector grew by 45% and the number of establishments grew by 149%, as seen in Figures 1.a. and 1.b. below. The number of establishments has increased steadily over time with the exception of 2014-2015, while employment growth has fluctuated after the 2008 recession. Generally, year-to-year changes in employment and the number of establishments are positively correlated, with the major exception of the recession in 2008-2010, in which employment in the industry contracted and the number of business establishments grew.

Figure 1.a. The number of employees in the Health Care and Social Assistance industry in Massachusetts over time

Figure 1.b. The number of employers in the Health Care and Social Assistance industry in Massachusetts over time

Between 1998 and 2016, there were 38% more business births than business deaths in the Health Care and Social Assistance industry in Massachusetts (see Figure 2 below). Generally, the level of business turnover has remained a stable percentage of total industry establishments over this period, but the absolute number of firms entering or exiting the market has increased as the industry has grown.

While the number of establishments in this industry generally increased between 1998 and 2016, the industry had a large number of establishments go out of business in 2013 and 2014. This is especially true in Suffolk and Worcester Counties, and the struggles of health care businesses in these areas in 2013 and 2014 may be related to a mini-boom in suburban development as the nation recovered from the 2008 housing crisis. In fact, Nantucket and Dukes Counties saw the largest gains in health care establishments between 2013 and 2018. In 2018, the number of health care establishments in Suffolk County (which includes Boston) remained 10% less than its 2013 peak.

Curiously, the number of new businesses in the Health Care and Social Assistance sector was higher during the Great Recession than in the prior period of economic expansion. This may be attributable to a significant growth in social and health care services targeted at financially struggling families and individuals. In fact, there is another spike in business births in this industry in 2001, also a recession year. A smaller surge in the number of industry births in 2006 notably coincides with a state-level health care reform under Chapter 58 enacted in that year.

The number of business deaths is very stable until 2013. The net business births figure for the industry has proved quite volatile in recent years, with a couple annual swings of over 5,000 net births.

Figure 2: The number of business births and deaths in the Health Care and Social Assistance industry in Massachusetts over time

More information on business trends, whether by industry, geography, or in the aggregate, is available at MassEconomix.com.

Andrew Mikula is the Lovett & Ruth Peters Economic Opportunity Fellow at the Pioneer Institute. Research areas of particular interest to Mr. Mikula include urban issues, affordability, and regulatory structures. Mr. Mikula was previously a Roger Perry Government Transparency Intern at the Institute and studied economics at Bates College.

Study: “Millionaire’s Tax” Would Have Far-Reaching Effects on “Pass-Through” Businesses

November 17, 2021

A proposed graduated income tax that will appear on the statewide ballot in November 2022 will have much more far-reaching implications than most people realize because the surtax also extends to “pass-through” income from entities such as S and limited liability corporations, partnerships, and sole proprietorships that are taxed on individual tax returns, according to a new study published by Pioneer Institute.

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Study Warns that New Hampshire Tax Policies Would Exacerbate Impacts of a Graduated Income Tax

October 7, 2021

Drawing on migration patterns between Massachusetts and states like Rhode Island and Tennessee, Pioneer Institute is releasing a study showing a direct correlation between personal income tax rates and household domestic migration patterns between 2004 and 2019. The study suggests that instituting a graduated income tax will shrink the tax base and deter talented workers and innovative employers from coming to and staying in the Bay State.

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Study Finds SALT Deduction Cap, Graduated Income Tax Will Combine to More Than Double Tax Burden on Some Households

September 27, 2021

A provision of the federal Tax Cuts and Jobs Act of 2017 strictly limiting deductions for state and local taxes (SALT) will greatly exacerbate the adverse effects of a proposal to create a constitutionally mandated graduated income tax, according to a new study published by Pioneer Institute.

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Study Suggests How to Advance Fairness, Predictability of “Payment in Lieu of Taxes” Programs Aimed at Nonprofits

August 10, 2021

A new white paper by Pioneer Institute calls for increased transparency over the basis for payment in lieu of taxes (“PILOT”) agreements between municipal governments and nonprofit organizations, while also encouraging nonprofits to publicize and expand the community benefits they provide.

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Public Statement on Implementation of the Charitable Giving Deduction

August 5, 2021

Despite being awash in cash, the state Legislature just overrode Gov. Charlie Baker’s veto of a provision to delay by yet another year a tax deduction for charitable donations. Rep. Mark Cusack, House chair of the Joint Committee on Revenue, said “it doesn’t mean no, just not now.” If not now, when?

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Study Says Massachusetts Surtax Proposal Could Reduce Taxable Income in the State by Over $2 Billion

June 17, 2021

As voters now begin to weigh the potential impact of a ballot proposal to increase taxes on business owners, retirees and wealthier households, a new literature review by Pioneer Institute shows that many existing academic studies find that wealthy individuals are particularly sensitive to changes in tax policy. Other studies explicitly warn policymakers that behavioral responses to taxing the rich could erode the tax base and ultimately strain state budgets.

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