Massachusetts' research and development ecosystem directly employs 376,000 workers and generates $347 billion in total economic activity, and cuts to federal research funding could damage the state's economy for at least a decade, according to a first-of-its-kind analysis by the University of Massachusetts Donahue Institute.

The report, produced by the institute's Economic & Public Policy Research group, defines the R&D ecosystem as jobs in scientific research and development activities plus high-tech innovation industries such as life sciences, semiconductors and computer systems. It draws on public data from the National Science Foundation and the U.S. Bureau of Labor Statistics, interviews with policy, industry and academia leaders, and multiplier effects calculated with the IMPLAN econometric model.

Mark Melnik, director of the Economic & Public Policy Research group at UMass Amherst Donahue Institute, put the stakes bluntly.

"The economic consequences of federal research funding uncertainties are real. Research is the engine of the Massachusetts economy, and any funding disruptions will not only stymy innovation but also threaten the development of the next generation of scientific and engineering talent in the state," Melnik said. "This is a threat to our global competitiveness now and in the long term."

The study lands as federal support for early-stage research — particularly at Massachusetts universities and research hospitals — has declined amid shifting federal priorities. That funding historically enabled institutions to develop and test new technologies that, once commercially viable, attracted private investment for market launch and scale-up.

What does the ecosystem actually support?

Counting direct employment plus spin-off effects from business-to-business and consumer spending, the report finds the R&D ecosystem supports:

• Just over one million jobs statewide — 28% of 2024 employment
• $142 billion in labor income, or 40% of all wages in the state
• $218 billion in gross state product, 28% of the state economy
• $8.7 billion in state taxes, equivalent to 15% of the FY2024 state budget
• $4.6 billion in local taxes

The tax figures — more than $13 billion combined in state and local revenue — give state policymakers a direct fiscal stake in federal research budget decisions.

Where does the money come from?

Federal research funding obligations in Massachusetts totaled $10 billion in 2023, ranking fourth nationwide both in total federal R&D funding and in per capita obligations. The National Institutes of Health accounts for over one-third of federal R&D funding destined for the state, and Massachusetts is the largest per capita recipient of NIH funding in the country.

On a per capita basis, the state also drew the most funding from Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards in 2024.

Private capital flows are similarly concentrated. Business spending on R&D in Massachusetts reached $49 billion in 2023, third nationally behind California and Washington. Venture capital investment totaled nearly $16 billion in 2024, third behind California and New York.

For every 1,000 residents, 52 people work in the R&D ecosystem — the highest density of any state. The state's ecosystem is a quarter the size of California's and just over half the size of Texas' despite Massachusetts having a fraction of either state's population.

Is the talent pipeline at risk?

The report flags tightening visa policy as a compounding threat. In early 2026, visa issuances to residents of 75 countries were paused, including Brazil — the fourth largest origin of research and short-term scholars in the nation. In FY2025, H1-B visas in Massachusetts fell 18% year over year; the state ranked seventh in H1-B approvals for new employees.

If restrictions tighten further, the report warns, international talent will divert to competing nations. China, Germany, the United Kingdom and Japan already offer visa programs and other incentives aimed at that pool.

What weaknesses predate the funding crunch?

The Donahue analysis separates measured results from structural concerns. Massachusetts' R&D ecosystem grew 29% between 2014 and 2024 — below the national rate, ranking the state only seventh among its top competitor states.

Other pressure points:

• California and New York, driven by AI investment, have pulled away from Massachusetts in venture capital over the last several years.
• Census Bureau data shows domestic outmigration is largely driven by 25-to-34-year-olds, many of them educated in-state.
• High real estate and utility costs — among the country's highest — mean firms may start up in Massachusetts but scale elsewhere.

The report notes countervailing assets: highly regarded schools, excellent hospitals, and a broad range of recreational and cultural offerings. Costs, however, remain a barrier to retention and expansion.

For R&D managers and lab directors in the state, the report effectively quantifies what is at stake in the current federal budget cycle: a decade-long economic drag if early-stage research funding does not recover. The full report is available through the Donahue Institute's publications page, and its findings will likely inform state-level arguments for offsetting federal declines as the 2026 budget negotiations proceed.