Pay No Attention to the Thieves From New Hampshire

How do we create jobs? If you read media accounts, you’d think it was luring companies to relocate from other states. And politicians feed that beast, issuing press releases every time a company relocates (scroll through the press releases from the Mass Life Sciences Center to see tons of examples).

A few weeks back, the Globe had an entertaining piece on the “thief” sent by the New Hampshire to talk Massachusetts employers into moving over the border. (And New Hampshire seemed pleased with the attention, particularly to the state’s low-cost business climate.)

Guess what? It’s all relatively meaningless. Of course the loss or gain of jobs is important, but in the big picture, firms relocating in and out of Massachusetts just don’t amount to much.

From 1990 to 2007, the absolute value of the jobs created and destroyed by firms coming and going from the state was 1.8 percent of the all jobs created and destroyed. (Other drivers like start-ups, and existing firm expansion and contraction were far more important.)

And New Hampshire? During that same period, Massachusetts lost 8,499 jobs to New Hampshire on a net basis, or about 500 per year. Meanwhile, the creation of new businesses and expansion of existing businesses was producing far more jobs over the period.

So, should we try to get businesses to move here? Absolutely. But we should understand the value of this job creation tactic relative to getting new businesses to start here and existing firms to expand within the state. The latter two tactics are far more important and productive.


Crossposted at Pioneer Institute’s blog.