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The key to turning our economy around is to streamline and focus
our economic development efforts and encourage business to expand and set
up shop here in Massachusetts. At the end of February, I released an
economic development reform plan aimed at reaching these goals. The
following is an op-ed I wrote outlining the bill and my economic
development reform efforts.
Creating jobs. That is the key to turning our economy around and
reinforcing it against future recessions. However, in order to do that
we have to make a better effort to encourage business development in
Massachusetts. By improving the business climate for small businesses, we
are focusing on the right component of the Massachusetts economy.
A recent report by the Pioneer Institute, "Failure to
Thrive," makes startling and provocative findings about business
size in Massachusetts. Between 1990 and 2007, the number of firms in
Massachusetts increased 67 percent. But the average size of those firms
has shrunk almost 40 percent.
In 1990, firms in Massachusetts employed 16.69 people. By 2007, the
average firm size in Massachusetts was almost exactly 10 people. The
combined effect of these two trends is flat employment levels.
That report also suggests new directions for our state's efforts to
grow our economy. New firm births during that period created 3.086
million jobs in Massachusetts during that period. This sounds
impressive, until one realizes the unfortunate fact that new firm
deaths destroyed 3.4 million jobs in Massachusetts during that time
period.
The report concludes that these two events — firm births and firm
deaths — account for 57 percent of all job flux in the state during
that period. These numbers suggest that we can grow our economy, even
in these rough times, if we increase our focus on existing businesses,
and encourage even more new firm births.
We have no shortage of agencies whose mission encompasses economic
development. In fact, at the state level there are over 30 different
executive branch agencies, state authorities and public-private
agencies that fall under that umbrella. So when a business is looking
to set up shop or expand here, instead of a streamlined, responsive
economic development pipeline, they get lost in the weeds. If we want
to encourage business development that system needs to change.
On Tuesday, I testified on legislation I have written that works to
improve the way in which our state government supports the efforts of
the private sector to create jobs.
For instance, one of those improvements is to require the state to
contract with regional economic development organizations that would
lead business development efforts in the regions they cover. Our local
and regional chambers of commerce, tourism councils and economic
development agencies know their area better than anyone else, and they
are predominantly private sector, with significant public sector
participation. These organizations, which are doing the work, are much
more likely to dedicate themselves to and advocate for the needs of
local businesses.
Another component consolidates our tourism and marketing efforts
under one agency so that we have a consistent, clear message and
direction to expand one of our top industries in this state. Promoting
our state properly will not only draw visitors from across the country
and around the globe, but will increase our profile and make us more
attractive to prospective business.
This bill is important, but it is only one of the legs of a
four-legged chair to support the Massachusetts economy. The second leg,
legislation freezing the rate schedule for unemployment insurance, was
already passed by the Legislature and signed into law. The third leg is
a tax incentive proposal for small businesses that looks to create and
retain jobs. I support that effort as well, and I anticipate swift
action by the Legislature on a proposal.
The fourth leg of that chair is restraining the cost of health
insurance for small business. This issue tops most lists of greatest
concerns for small businesses. The Joint Committee on Health Care
Financing is continuing to hear bills on that important topic. There is
an immediate emergency in the increasing costs for small business
health insurance that requires swift action, even as we work toward
payment reform for the long-term.
Improving our business climate will only make Massachusetts
stronger. Loosening the restrictions on loans to businesses, creating a
streamlined economic development effort, reining in the cost of health
care for small businesses and creating an overall environment when
people will want to expand and set up shop will create jobs. That, in
turn, will allow this commonwealth to thrive.
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