Image Overhaul: Business leaders have ideas on how to make Mass. more accommodating
Although Massachusetts is recognized for its robust medical, high-tech and education industries, it routinely ranks in the bottom half of surveys ranking business friendliness among the states.
Most recently, it dropped from an overall ranking of sixth to 28th in cable news channel CNBC's survey of top states for doing business. While the Bay State improved over 2011 in education (from fourth to third) and got top honors for access to capital, it fell from 15th to 29th in business friendliness, ranked according to perceptions of how easy or difficult a state's regulatory policies are. And the cost of doing business remained a thorn in the state's side, its ranking in that category slipping from 41st to 49th, better than only Hawaii.
Upon the survey's release in July, Gov. Deval Patrick released a statement: "Over the last several years, Massachusetts has cut corporate taxes and burdensome regulations, reduced health care and energy costs and continued record investments in education, innovation and infrastructure.”
But while one negative ranking may be easy to dismiss, it can be harder to do when other surveys are similar.
For instance, The Small Business & Entrepreneurship Council's 2011 Small Business Survival Index ranked Massachusetts 42nd, with especially low rankings for categories based on tax rates. And the state ranked 45th for electricity costs.
Another ranking that surveyed CEOs for Chief Executive magazine put Massachusetts at 47th, with one CEO remarking that “taxes and regulations in California and Massachusetts are becoming intolerable.”
‘Time Tax’
Mike Hruby, president of nonprofit New Jobs for Massachusetts Inc. of Boxborough, has started businesses and helped others launch them, finding the same frustrating trends.
“The thing that has struck me is something that … I call the time tax. It's not paid in money; it's paid in the entrepreneur's time,” Hruby said. “Everything that the state does that absorbs that time takes away business.”
He said it's frustrating for an entrepreneur to go through the process of starting a business in Massachusetts and register with all the appropriate agencies at the right junctures.
Hruby's suggestion? The state should use a web portal system in which a business owner can log in to find pertinent information in one spot, with a checklist of the necessary steps to launching the business.
“It's not inconceivable at all. A lot of business operating systems provide this kind of dashboard experience,” he said.
He also suggested that documentation be written in layman's terms.
“You should ask your average entrepreneur, 'Can you understand this?' That's how business normally does it with a product,” he said.
Worcester Regional Chamber of Commerce President and CEO Richard Kennedy said wages include benefits, including the ever-more-expensive health care coverage.
“You have to address those and see if you can slow the growth of those cost structures down, and that's a very significant problem,” he said. “We've always been a high-labor cost state and I think if you take a look at the days when there was a predominance of manufacturing here and if you look at the labor content of the products, it didn't matter because the cost of the workers was less. You have to go back a long time to find the cost of labor at a level when it was easy to justify doing business here.”
Kennedy said recent legislation aimed at containing health care costs is on the right track and that legislators are in tune to what needs to be done to grow business. He noted that the unemployment insurance tax rate, one of the highest in the nation, hasn't moved significantly recently, which is helpful. Kennedy and Brian Gilmore, executive vice president of public affairs for Associated Industries of Massachusetts, said the state's corporate tax laws need to stabilize to improve business growth.
“It's hard sometimes to plan accordingly … for your best interest,” Gilmore said.
He said uncertainty makes it difficult for businesses owned by national or global firms to pitch to their headquarters why they should invest here.
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