UMass economist: State has recovered from COVID, but federal research funding cuts could be catastrophic
Photo | Eric Casey
Mark Melnik, UMass Donahue Institute director of economic & public policy research, speaks at Worcester Business Journal’s Economic Forecast & Central Mass Real Estate Forum on Tuesday.
A prominent Massachusetts economist said the state’s economy has recovered since the COVID-19 pandemic, but he joined a growing chorus of voices expressing concerns about the impact of federal funding cuts and other proposed President Donald Trump Administration policies on the Massachusetts economy.
Speaking at Worcester Business Journal’s Economic Forecast & Central Mass Real Estate Forum on Tuesday, Mark Melnik said both proposed cuts to federal research funding provided by the National Institutes of Health and potential H-1B visa reform could have a significant negative impact on the state’s economy. Melnik is the UMass Donahue Institute director of economic & public policy research.
With Massachusetts third in the nation for H-1B visas per capita and leading the nation in receiving federal research and development funding per capita in 2024, Melnik said proposed cuts to funding and reform of the country’s immigration policies could have a particularly strong impact in the region.
“Changes in NIH funding could be catastrophic with the state, because it really drives a lot of what's happening at the colleges and universities and the hospitals,” Melnik said during his keynote address at the forum.
Melnik is the latest voice to express concern about the impact of federal funding cuts, which are currently held up in court after 22 states, including Massachusetts, sued to block the proposed Trump Administration move to impose a 15% cap on indirect costs for grants. A federal judge in Massachusetts temporarily blocked the proposed cap on Monday, according to The Guardian.
UMass Chan Chancellor Dr. Michael Collins wrote a memo on Sunday raising alarm about the potential impact on the university, as Massachusetts Attorney General Andrea Joy Campbell applauded the court’s move to block the grant cap, saying it was a victory for those counting on the life saving science funded by federal grants.
Impacts from changing federal policies could disrupt what Melnik said has been otherwise a mostly successful recovery from the impact of the pandemic, as job numbers have recovered to pre-pandemic levels, but not much above those levels.
“We've come back up to our pre-pandemic numbers in terms of jobs, but we've stalled a little bit in job growth,” he said. “A lot of what's been driving the economic success in the state has been our strengths in the knowledge economy, particularly things like [education and medicine] and research and development.”
Melnik pointed to a few bright spots in the Central Massachusetts economy signaling it has recovered particularly well, including the region’s hot real estate market and the significant bounceback of Worcester Regional Transit Authority ridership.
Melnik pointed out the recovery has not been felt evenly across the state, both demographically and geographically, as median household income levels for Black residents continues to lag behind that of white households, and median household incomes are significantly higher in Middlesex County than in Worcester County.
Melnik said the state’s relatively low poverty rate is a bit misleading, as many residents struggle with the cost of living in Massachusetts.
“We have low poverty in Massachusetts at 10.4%, but poverty is a terrible measure for relative deprivation, because the poverty line is the same everywhere in the nation,” he said, “The cost of living really isn't a factor inside that. In Massachusetts, we know that we have folks who are not in poverty by federal standards, but are living in poverty-like conditions.”
Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the manufacturing and real estate industries.
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