Blog: USDataLabs

Massachusetts has distinguished itself as a national leader in education, health care, and biotechnology. While many other states rely on manufacturing, energy, or tourism as their economic drivers, Massachusetts has built an economy centered around research and innovation at some of the nation’s best academic and medical institutions.

For many years, states without income taxes like Florida, New Hampshire, and Texas have been a big draw for high-wage earners looking to retain more of their salaries and retirement savings. For example, a person with an annual salary of $400,000 who moves from California to Nevada saves roughly $30,000 in income taxes. There is a strong case to be made for moving for tax purposes if a person’s income is higher than $200,000, they reside in a high-tax state, or the person is approaching retirement age with a large investment portfolio. While there are benefits to the taxpayer, these large taxpayer migrations have significant effects on the states themselves.

Adjusted for inflation, average college tuition has more than doubled since 1970 (Figure 1). This tuition rise impacts more than just college payers, as an annual $124 billion of federal tax dollars subsidizes financial aid. As tuition climbs, so does the federal contribution. Despite the rise in tuition, most of this increased funding does not go toward academic instruction. So, where is it going? Tuition circulates throughout a university, contributing to everything from student services to administrators hired to oversee compliance. Increased costs in these non-academic areas have forced universities to hire an exorbitant number of administrative staff. In fact, most universities have more administrative staff than professors (Figure 2).

Across the United States, annual homeowner insurance premiums have increased by an average of $648 from 2021 to 2024, according to the Consumer Federation of America. While there are widespread cost increases nationally, several communities have been hit harder than others due to the rise in severe weather events in the past few years. The states that saw the greatest percentage increase in premiums were Utah (59%), Illinois (50%), Arizona (48%), and Pennsylvania (44%). This contrasts with those states that saw the greatest hike in absolute dollars, which were Florida ($2,118), Louisiana ($1,775), and Kentucky ($1,426). These two pieces of data tell us two things about the effect of climate risk on insurance premiums: new areas are being exposed to disasters and known high-risk areas are facing exacerbated impacts.

Federal regulation has grown into something almost impossible to fully grasp. The U.S. Code of Federal Regulations now runs over 180,000 pages, compared to just 10,000 pages in 1950. States have not fared any better. Ohio's code recently surpassed 17 million words. At that scale, checking every rule against current law to see what is outdated or contradictory is not realistic. Therefore, almost nobody does, and the rules keep piling up. In the past some states have attempted to arduously tackle the problem by hand. For example, former Massachusetts’ Governor Charlie Baker launched a "regulatory review" effort in 2015 that ran through 2017. Many other states have attempted similar reviews over the years. Reviewing an entire regulatory code, however, is slow and labor-intensive, and many of these earlier efforts ended up incomplete.

Amid our recent harsh winter, Governor Maura Healey issued an immediate reduction of electricity bills by 25% across the state and a 10% gas bill reduction. However, these are temporary relief measures, as Massachusetts is forced to reconcile how it will address its aging infrastructure, fuel constraints, and the cost pressures placed on consumers. Currently, Massachusetts’ retail electricity cost ranges from about $0.28-$0.32/kWh, which is about 40-60% higher than the US national average of $0.20/kWh. It is also a sharp increase from Massachusetts’ last recorded rate of $0.23/kWh in 2023, according to Pioneer’s DataLabs, which placed Massachusetts fourth highest nationally. Utilities company Eversource Energy has examined the increase in residential gas bill prices since 2015, breaking down bill components into four categories: maintenance and infrastructure, Gas System Enhancement Plan (GSEP), public benefits that support state-mandated programs (i.e. Mass Save), and supply. While each component has shown increases over the past ten years, public benefits rose 200% and supply related costs rose 175%.

Massachusetts may be known for extensive public spending, but that did not prevent it from getting a “C” on the 2025 Infrastructure Report Card published by the American Society of Civil Engineers. Infrastructure problems have plagued Massachusetts since well before the pandemic, and the past several years have made maintaining and improving the systems much more difficult for many metropolitan centers in the US. Pioneer Institute’s DataLabs platform yields some insight into persistent infrastructure quality concerns with Massachusetts’ transportation network. For context, Massachusetts ranked 38th nationally, with only 74.3% of its roads in acceptable condition, compared to the national average of 81.2%. Massachusetts also ranks 4th highest in the share of bridges in poor condition. These rankings reflect longstanding infrastructure issues that have become increasingly expensive to address post-pandemic.

Entrepreneur Alex Carter invested about a quarter-million dollars to build an innovative cost-sharing service for auto repairs. Unfortunately, state regulators in Utah shut it down, not because it caused any harm, but because it resembled insurance closely enough that regulators deemed it illegal. Unable to afford lawyers to fight the ruling, Carter was ultimately forced to close his company. His experience is not uncommon. Regulations written decades ago can hamper business creation in a way lawmakers never anticipated. When a business model does not fit nicely into a regulator-recognized category, it is often treated as a violation rather than an innovation. The cost falls on businesses that quietly fail to launch. A growing number of states are now testing a policy to address this issue – regulatory sandboxes.

Since 2005, Massachusetts has achieved the top ranking in the biannual National Assessment of Educational Progress’s (NAEP) fourth-grade reading assessment. However, the Commonwealth’s lower quality Common Core-based English Language Arts (ELA) standards and lack of quality of reading pedagogy and curriculum at the local level are coming back to haunt it.

Currently, Tufts University’s American AI Jobs Risk Index projects that 9.3 million U.S. jobs are at risk of displacement in the next two-to-five years, with an associated $757 billion in household income at risk. The study focuses particularly, on “Wired Belt” metros, tech-heavy, knowledge-industry hubs such as Silicon Valley, Washington D.C., New York, and university towns like Durham-Chapel Hill and Boulder, which the researchers identify as most vulnerable to AI-driven job loss. With new technology comes new behaviors in the employment market, and employers are readjusting to this innovation.