AIM’s Thomson Says State Needs To Stay Mindful Of Key Business Issues
JAN. 21, 2025…..Warning that the Massachusetts economy might fall “victim to its own success” without action, the head of an influential business group renewed calls for Beacon Hill to rein in employer costs and strengthen the labor pool.
Brooke Thomson, president of the Associated Industries of Massachusetts, urged lawmakers to reform the unemployment insurance system a day after the Healey administration revealed the state owes $2.1 billion to the federal government due to a mistake under the Baker administration.
Thomson also called for the Legislature and state officials to further reduce capital gains taxes, expand capacity at vocational high schools and continue to focus on expanding housing production.
Thomson, who took over leading AIM last year, cautioned in a State of Massachusetts Business address posted Tuesday that “the very ascendancy of the Massachusetts economy has created issues that, left unaddressed, threaten our prosperity now and in the future.”
“Massachusetts, in short, has figured out how to create a dynamic, world-class economy that adapts to changing conditions at the vanguard of innovation,” Thomson said in her recorded remarks. “The challenge before us today is how to preserve our economy from falling victim to its own success.”
AIM published Thomson’s speech as lawmakers are settling in for the 2025-2026 term and days after Gov. Maura Healey outlined her own priorities in her latest State of the Commonwealth address.
The governor will file her annual budget on Wednesday and on Thursday is the scheduled featured speaker at an AIM event in Waltham.
Thomson praised new laws to fund housing development and economic growth and deliver tax relief, but warned of home prices “near unattainable levels,” a shaky transportation system and competition from states that are “aggressively picking off pieces of our flagship industries like life sciences and climate technology.”
Thomson urged Healey and legislative leaders to focus on “moderating one of the highest levels of business costs in the nation,” starting with action to reform the state’s unemployment insurance system.
Healey on Monday announced a settlement with the U.S. Department of Labor after the Baker administration used $2.5 billion in federal funds to cover jobless benefits the state should have paid with its own money. The deal calls for Massachusetts to pay the federal government $2.1 billion over the next decade.
While Healey said unemployment insurance tax rates will not increase for employers through at least 2026 and pledged to seek reforms, the longer-term outlook is cloudy. Even before accounting for the debt, labor officials projected that the fund used to pay jobless benefits could fall hundreds of millions of dollars into the red within four years, in the process pushing the taxes that employers owe to cover benefits to the highest rates.
“Our friends at the Massachusetts Taxpayers Foundation report that Massachusetts ranks in the bottom 10 of all states in about 40 percent of competitiveness metrics, and among those poorly performing metrics two themes are apparent: cost and location,” Thomson said. “From business taxes, energy costs, and child care, to housing and commute times, Massachusetts is asking more from its residents than the vast majority of other states.”
Thomson also called for another cut in the short-term capital gains tax rate to 5%, and to allow deductions for business interest “so that companies will not be penalized for borrowing and investing in growth.”
Another pressure point she believes poses a “long-term threat” is a shortage of skilled labor. Unemployment in Massachusetts remains below the national level, and many employers say they are still struggling to fill open positions or find properly qualified candidates.
Thomson voiced support for expanding capacity at the state’s “oversubscribed” vocational and technical high schools. She also stressed that lowering costs for workers is a key factor in strengthening the labor pool.
Other industry organizations are rolling out agendas for the year ahead. The Greater Boston Chamber of Commerce will host a virtual event in February where its president, Jim Rooney, will discuss “the state of the economy, headwinds and tailwinds, and how it all matters to business, residents, and policymakers.”
Correction: An earlier version of this story listed the incorrect date for the Greater Boston Chamber of Commerce annual address. That event has been postponed to Feb. 13.
