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New Survey Underscores Fragile Nature of Massachusetts Economy

Posted on October 20, 2020

A new Associated Industries of Massachusetts survey of Massachusetts employers tells the story of businesses in the state and underscores the uniquely fragile nature of the economy.

AIM polled more than 300 businesses and heard from companies of all sizes, and from all industries and locations. What we heard from the Berkshires to Boston, from Cape Cod to the Nashoba Valley, and from Worcester County to the North Shore, was that the global pandemic and resulting economic collapse have taken an enormous toll on businesses.

  • Two-thirds of companies surveyed report that sales for 2020 remain below projections.
  • More than half of companies surveyed reported their workforce has been impacted by childcare issues, resulting from closures of daycare centers, and hybrid and remote schooling. This has had a disproportionate impact on women, minorities and those in lower-income professions where working remotely isn’t an option.

For the past eight months, Massachusetts businesses have prioritized their employees and customers by investing in and implementing workplace-safety protocols, adapting operations to ensure compliance with business-specific requirements and finding creative ways to offer their services and goods while attempting to remain operational during the pandemic. Massachusetts businesses prioritized these things because this is what our businesses do. They invest, they change, and they adapt. These are the qualities that have made Massachusetts an economic leader for decades.

The real challenges brought about by the pandemic have nevertheless been painful for businesses.


More than 400,000 Massachusetts residents, many in lower-wage occupations, have lost their jobs since February. Massachusetts is facing one of the highest unemployment rates in the country – as of Friday, the state unemployment rate improved but remained high at 9.6 percent.

With the expiration of federal stimulus relief for unemployment insurance and other programs like the Paycheck Protection Program, many businesses have run out of the support they so desperately need. Many are facing tough choices regarding layoffs, relocations or closures this winter.

We already know that a quarter of all restaurants in the state have closed and are unlikely to re-open. More than a quarter of small businesses have closed or will close over the next several months.  And traditional Massachusetts economic drivers like health care and higher education took a huge hit and haven’t fully recovered.

The goal of the data collected from the AIM survey is to show first-hand how Massachusetts businesses are doing. During this difficult time, AIM is here for our more than 3,500 member businesses. If you are not yet part of this network, we are here for you as well.

We know that in order to advocate for Massachusetts businesses, we have to share their stories. We have to celebrate their resilience and also share their struggles.

Seeing how businesses have been impacted by the pandemic and the resulting economic collapse, helps to drive public policy aimed at addressing the needs of workers and businesses in our state.


The survey results revealed that in order to deal with slumping revenues and increased costs, many companies are planning layoffs, furloughs, reduced hours or pay reductions as current business conditions and the rising cost of complying with state regulations makes continuing operation challenging and uncertain.

This is on top of increased cost pressures on Massachusetts businesses.

The Unemployment Insurance Trust Fund is projected to have a $5 billion deficit by end of 2022. UI Premiums are expected to increase $319 per employee in 2021, a 60 percent increase to employers.

The Division of Insurance announced average health-insurance premium increases of 8 percent for 2021.

Paid family and medical leave will cost employers $1 billion when fully implemented, offering 12 to 26 weeks of paid family leave and 20 weeks of paid medical leave.  In addition to the cost of the program, employers have to assume the additional cost of filling positions while their employees are out on leave.

The minimum wage is scheduled to increase by 75 cents to $13.50 per hour from $12.75 for hourly workers and 60 cents to $5.55 from $4.95 for tipped employees effective January 1, 2021. Employers will pay an additional $1,560 per full-time worker making minimum wage next year.

And, on top of all of this, employers are struggling with rising pandemic-related costs for personal protective equipment, technology investments and slowed business development.

The AIM employer survey data demonstrates the fragility of the state economy. This is data state policy makers can use in making decisions about pending legislation.

It is data that suggests strongly that now is the time to support our businesses and not increase their costs. It’s a time to collaborate with them on ways to grow and strengthen the economy to bring back those high quality, good-paying jobs our residents need to take care of their families. It’s a time to focus on relief and not new taxes.

One person who agrees with that point of view is Governor Charlie Baker, who last week unveiled a $45.5 billion budget for Fiscal Year 2021 that balances the state’s books without increasing broad-based taxes on struggling businesses or individuals. AIM remains concerned about proposed targeted fees impacting industries from TNC, and targeted tax proposals impacting pharmaceutical industry and any businesses conducting sales tax transactions.

The blueprint overall proposes to manage through the fiscal uncertainty caused by the COVID-19 pandemic by concentrating on stabilizing the economy, tapping the state’s reserve fund and anticipating federal relief funding.

Please take a moment to read our article on the governor’s budget proposal. You may also wish to read AIM’s blog entitled Massachusetts Businesses Need Support – Not New Taxes, which clearly outlines our position.

To get more details on where the state is headed on budget and tax discussions, register for our Thursday webcast with Secretary of Administration and Finance Michael J. Heffernan, who manages the state budget and knows more than almost anyone else about the Massachusetts fiscal picture. Budgets affect taxes and taxes affect employers, so join us for what should be an enormously interesting discussion.

AIM and its members urge policymakers to use this survey data to focus on policies that support and strengthen businesses during this difficult time so Massachusetts may emerge from this economic and public- health crisis stronger and better than ever before. Surveys like this one will help us do just that – because when AIM speaks, it’s our 3,500 members that are speaking; and people listen.