Massachusetts' economy is experiencing a paradoxical situation, where the state is nominally on the upswing, yet its core knowledge industries are stuck in neutral for the third straight year. The state's economy is built on a foundation of high-paying jobs in health care delivery and medical research, higher education, professional and business services, and finance. However, these sectors are underperforming, with payrolls below their high-water marks reached in the years after the pandemic. This is despite the state's solid economic growth and the absence of significant changes in the conditions that slowed hiring last year. The state faces a double whammy: a challenging business climate and hostile Trump administration policies on higher education and life sciences research funding. The tech industry is slashing jobs after a COVID-era hiring binge, and AI has many employers rethinking their labor needs. AI has been cited as the most significant reason for US job cuts this year, accounting for 22 percent of the total through May. However, private-sector layoffs through April were at the same rate as the same period in 2025, and job openings jumped in April to the highest level in almost two years. This raises a deeper question: Will AI boost employment or decimate it? Smart people argue both sides, as well as scenarios that fall somewhere in the middle. AI could wipe out half of all entry-level white-collar jobs and spike unemployment up to 20 percent over the next one to five years, according to some experts. Others believe AI will spur demand for workers by making them more productive and lowering the costs of the services they produce, similar to the Jevons paradox. The jobs numbers in Massachusetts don't tell us much about the future, but it's not lost on me that coal is largely a thing of the past. The state's economy is at a critical juncture, and it remains to be seen whether AI will ultimately boost or decimate employment in these core knowledge industries.
