Executive Summary

Executive Summary2018 LTS Stats text boxes: Massachusetts Stats: 2017 POP: 6,859,819 2017 GDP ($M): $456,176 # of IE Jobs: 1,319,706 % of IE Jobs: 37.3%  Massachusetts Key Sectors: Biopharma &  Medical Devices,  Computer & Communications Hardware, Defense Manufacturing & Instrumentation, Financial Services, Healthcare Delivery, Postsecondary Education, Scientific, Technical, & Management Services Software & Communications Services  2018 Leading Technology States: Massachusetts, California, Pennsylvania, New York, Ohio, Minnesota, Illinois, New Jersey, Connecticut, Texas, North Carolina, New Hampshire, Rhode Island, Wisconsin, Florida

The 22nd Edition of the Index of the Massachusetts Innovation Economy shows that the Commonwealth is still a top state for innovation, bolstered by our well-trained and talented workers, network of top-tier colleges and universities, and a research & development (R&D) enterprise that, compared to the size of our economy, is second to none. Despite the continued improvement of other states and a handful of challenges faced by the Commonwealth, based on the Massachusetts Technology Collaborative’s analysis of 22 indicators that cover the categories of Economic Impact, Research, Technology & Business Development, Capital, and Talent (pages 18-55), we found several areas where Massachusetts’ performance continues to stand out:

  • Superior Workforce and Talent Pipeline: In Massachusetts, 48.7% of working age adults had at least a bachelor’s degree as of 2017 (1st nationally) while the state also produced more than 121,000 college graduates (8th nationally);
  • STEM Leadership: Massachusetts produced 22,500 STEM graduates in 2016 (7th nationally) and more STEM graduates per capita than any state in the country; and
  • Healthy R&D: Massachusetts had the second highest level of National Institute of Health (NIH) awards in the country in 2017 ($2.7 billion, behind first place California ($3.9 billion) and ahead of third place New York ($2.4 billion). Given the Commonwealth's smaller size relative to these nearest competitors, the total NIH awards show how Massachusetts ‘punches above its weight’ when it comes to healthcare R&D.

While a top performer on many metrics, Massachusetts does face some headwinds. The Index also shows several areas where Massachusetts needs to improve relative to other Leading Technology States (LTS) and national trends facing Massachusetts and most LTS, including:

  • Venture Capital Investment Lags U.S. Growth: Venture capital (VC) investment in Massachusetts grew by 5% in 2017 to a total of $6.9 billion, but the Commonwealth’s share of U.S. VC investment fell 7.9%.
  • Increasingly Long Commute Times:  The average commuter in a Large Metro area (250,000+ commuters) in Massachusetts spends 253 hours a year commuting, up 19 hours from 2012. Massachusetts has the 5th longest commute time among the LTS.
  • Middling Innovation Economy (IE) Job Growth:  From 2016-2017, Massachusetts Innovation Economy jobs increased by 1.5%, similar to the Commonwealth’s overall rate of job creation of 1.3%. Massachusetts placed 8th in the LTS on this measure.

This year’s Index contains a Special Analysis section highlighting education and training efforts focused on preparing people to succeed in a future of work driven by increasingly intelligent and capable machines (pages 6-16).  MassTech asked four leaders from the business, youth education, higher education, and adult education fields in Massachusetts to provide commentary on how education and training organizations around the state can improve their offerings to meet the needs of the economy in the decades to come.

For this edition, continued from 2016 and 2017, the Index has kept the expanded field of LTS, comparing Massachusetts with 14 other states. All of the 2017 LTS made the list in 2018.

We have included profiles for each state that list key data points, economic sectors, major universities & research institutions, and a selection of representative innovation economy companies.

We have also provided three examples of unique economic development initiatives that impact and support the development of the Innovation Economy for each LTS member (pages 56-62).

Massachusetts Performs Well

Economic Impact

  • Massachusetts has higher wages than the average LTS in all occupational groups aside from social services.
  • Massachusetts’ median household income is more than $10K higher than the LTS average and is 6th in the U.S.
  • Massachusetts output per capita is higher than the LTS average in all key sectors except Advanced Materials.

Research

  • Massachusetts is a national leader in R&D, with $28.7 billion in R&D investment in 2015.  This places the Commonwealth 2nd nationally, behind only California, and 1st among the LTS as a percent of GDP.

  • Massachusetts is 1st nationally in utility patents granted per capita and 1st nationally in tech patents per capita.

Technology and Business Development

  • Business Formation: Massachusetts had strong growth in both business establishments, with a net gain of 2,620, and start-ups initiated, where it was 2nd in the LTS behind California.
  • Massachusetts received $270M in Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards in 2017, the second highest amount in the U.S. and placing the Commonwealth first as a percentage of GDP.

Capital

  • Massachusetts had 20 IPOs in 2018, 2nd most behind California, and was 4th in the LTS in both companies acquired and acquiring companies.
  • Venture Capital investment in Computer Hardware & Services and Software both had strong growth from 2016 into 2017, at 31% and 19% respectively.

Massachusetts Need Improvement

Economic Impact

  • Massachusetts lags many LTS members in innovation economy employment growth, falling 8th out of 15.
  • Massachusetts falls behind many LTS members in exports as a percentage of GDP, coming in 12th, with Canada, Mexico, and China as the largest export destinations.

Talent

  • Massachusetts housing costs are high, with the third highest FHA Housing Price Index in the nation and over a quarter of homeowners and almost half of all renters burdened by housing costs.