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Mass. is again ranked at the top for tech and innovation, but challenges loom

An increase in remote work is seen as a significant threat to the state’s competitiveness

The presence of MIT and other top universities in Massachusetts isn't going to change once the pandemic is over. But that advantage could be offset by the high cost of living here, in a work-from-home world.  (AP Photo/Charles Krupa, File)
The presence of MIT and other top universities in Massachusetts isn't going to change once the pandemic is over. But that advantage could be offset by the high cost of living here, in a work-from-home world. (AP Photo/Charles Krupa, File)Charles Krupa/Associated Press

Massachusetts has once again captured the No. 1 spot in the Milken Institute’s ranking of technology and science clusters. But how long this dynasty will last in a post-pandemic world, where many tech employees will be able to work from just about anywhere, is an open question.

Milken, a nonpartisan think tank based in California, has put Massachusetts in the top spot every time this list has come out — essentially every other year since 2002. This time around, Massachusetts ranked the highest of any state in the subcategories of research and development, which considers academic, private and federal R&D funding, and in “human capital,” a rating that in part reflects graduate degrees held by residents, particularly those specific to science and engineering.

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Kevin Klowden, the report’s lead author, said these assets put Massachusetts in a strong position to rebound once the COVID-19 pandemic is over. But the pandemic also poses a big problem to Massachusetts and other high-cost states: Many office employers, still in work-from-home mode now, plan to have a significant number of employees working remotely even after the pandemic subsides. Klowden indicated that could be an advantage for lower-cost states such as Colorado (No. 2 in this year’s ranking) and New Hampshire (No. 7).

“It will hurt Boston, San Jose, San Francisco, New York, these higher-cost centers,” Klowden said. “You’re going to see a circumstance, honestly, in which Massachusetts is facing competition structurally in a way that it hadn’t otherwise."

Klowden said Massachusetts' core strengths — the concentration of prestigious universities such as MIT and Harvard, cutting-edge spinoffs and startups, and venture capital and private equity funding — will still be there once the pandemic is over. “That is not something that is suddenly, magically, going to change,” Klowden said.

But as companies in the state look to expand, those with flexible work-from-home policies post-pandemic will inevitably consider employing talent in places where it’s much less expensive to own a home and raise a family. “The decision-making that people come to about where they want to locate — where they want to live, where they want to work — is a real threat,” Klowden said. “Are the tech businesses going to grow in Massachusetts? That’s what we wonder.”

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Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.