Coastal state loses over 180,000 residents to domestic migration over high taxes

Massachusetts, a coastal blue state with progressive laws and high taxes, has an outmigration problem, according to a new analysis from the Pioneer Institute. In its recent report, the free market think tank noted that over 180,000 net domestic residents, mainly young, have exited the state to settle elsewhere in the past five years. As per the researchers, the sustained mass exodus from the community marks a structural shift that could put the future of its labor force in jeopardy. 

The report, “The Massachusetts Labor Force: Now and Beyond,” showed that the state has been grappling with a demographic decline and slowing economic momentum in the past half-decade. "With domestic out-migration levels growing prior to the pandemic and remaining significantly elevated beyond it, it is clear out-migration is a structural phenomenon that is here to stay and not just a byproduct of remote work and the pandemic," the report said. Between April 2020 and July 2025, there was a sustained outflow of a net total of 182,000 residents, which, according to research, is a major headwind to labor force growth in the state. The observation is alarming, as immigration has come to a standstill, the report found that those leaving the state were mainly in the age group of 26 to 34, who represented the state's future workforce and tax base. 

Furthermore, in the Tax Foundation's 2026 State Tax Competitiveness Index, Massachusetts was 43rd among the 10 lowest states, meaning taxes are high in the state, which, according to Fox Business, could be a driver of the exodus. "The states in the bottom 10 tend to have a number of issues in common: complex, non-neutral taxes with comparatively high rates," the Tax Foundation report said. Meanwhile, the unemployment rate in the state has also climbed to 4.8%, which is more than most of its neighbouring states.

While the labor force rebounded to pre-pandemic levels with nearly 4 million workers at its peak in 2025, as a result of record international immigration, which added 230,000 new residents between 2022 and 2024. However, as per the report, the jump in the labor force masks deeper structural issues. "Out-migration could lead to population loss and a reduction in the labor force in 2026, as immigration is expected to drop sharply," the authors noted. The economic outlook also looks bleak, with growth bottoming out at 3.2% in 2023, the report found. “Strong economic tailwinds create the conditions necessary for businesses to confidently expand and hire workers, while uncertainty and downturn can lead the private sector to pull back," the researchers cautioned.

Demographics of the state aren't looking great as well, as the blue state had the seventh-lowest fertility rate in the nation in 2024, and a falling rate of natural population growth. As per the New York Post, only 15.5% of residents in the state are under 15 years of age, which is two percentage points below the national average, and the share of older adults in the state is on a steady rise. However, Massachusetts continues to be the most educated state in the country, with 53% of adults holding a bachelor's degree. But that strength may soon wear off, as a separate estimate cited in the report noted that the college-educated workforce in the state could also shrink by 192,000 by 2030, due to domestic outflows and retirement. 

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