Why Massachusetts' Plans for Economic Development Could (And Should) Blaze a Trail for Other States
In a year when most everyone is struggling to figure out the best path forward for economic growth, Massachusetts has set the bar high with a plan that could serve as a model for those looking to give small businesses a boost.
With bipartisan support and the signature of Governor Deval Patrick, Massachusetts passed an $80 million economic development act that over the next few years will bolster job training in the state's high-growth industries, provide capital to its startups, and support business communities outside of the traditional business thoroughfares of Boston and Cambridge.
"This is a great example of leaders in the public and private sectors coming together around a playbook for growing our economy and creating good-paying jobs," Karen Mills, former head of the U.S. Small Business Administration and a senior fellow at Harvard Business School said about the act in a statement.
In some ways, Massachusetts' development act mirrors the national effort to help support small businesses through the Workforce Innovation and Opportunity Act, passed by Congress in July. Although the national legislation is focused on a checklist demonstrating hiring progress for federal dollars spent on training, it also focuses on training and matching workers in high-demand industries, such as technology, with jobs at small businesses.
Still, Massachusetts' plan is different in meaningful ways. Here's a look:
- $12 million for a skills and job training grant fund that supports advanced manufacturing, mechanical and technical skills at vocational-technical schools and community colleges, and $1.5 million for the Workforce Competitiveness Trust Fund to train Massachusetts residents for new jobs in high-demand occupations.
- $2 million for a Big Data Innovation and Workforce Fund, to promote the use of big data, open data and analytics, and $2 million for the Innovation Institute Fund at the Massachusetts Technology Collaborative.
- $1 million to create a 'talent pipeline' program that will provide matching grants that will increase technology and innovation internships, and another $1 million for a start-up mentoring program to connect early-stage entrepreneurs, technology startups and small business with experienced businesses and capital financing.
- Tax credits for jobs created in "gateway cities," or the state's mid-sized metropolises.
After California, Massachusetts leads the nation for venture capital investment. In the second quarter of 2014, 112 Massachusetts companies brought in $1.1 billion of VC dollars, compared to 465 businesses in California that netted $8 billion for the same time period, according to the National Venture Capital Association.
To increase the competitiveness of these venture-supported businesses, Governor Patrick refiled legislation that would limit the use of non-competes in the state. While most states allow companies to enforce non-compete agreements, Massachusetts is currently debating overturning its law. Increasing numbers of companies--including Apple and Google--have attempted to use various forms of non-competes to prevent employees from changing jobs and taking their expertise with them to new companies. Research shows this can throttle innovation. California bans non-competes outright, and has done so for 80 years.
Taken together, Massachusetts' economic development plan is one that other states may want to pay attention to.
“We think it does a lot of things that will contribute to the accelerated growth of our innovation economy and do a better job of spreading it around the state,” Massachusetts Secretary of Housing and Economic Development Greg Bialecki told the Boston Herald last Thursday. “A lot of the money we’re targeting is really to create the same kind of positive environment for young entrepreneurs all around the state that exists now in Boston and Cambridge.”