But hold the applause. With the exception of health care, the state’s core knowledge industries are stuck in neutral for what is now a third straight year.
The latest: US employers added a surprisingly strong 172,000 jobs in May, the Bureau of Labor Statistics reported Friday. That brought the average for the past three months to 188,000, compared with a measly monthly average of 10,000 throughout last year.
Massachusetts is nominally on the upswing. In the year through April — the latest month available — the state gained 10,600 jobs, after shedding a combined 4,500 in 2024 and 2025.
Encouraging news? No doubt, especially since there hasn’t been much change in the conditions that slowed hiring here last year — most notably, headwinds created by high interest rates, shifting US trade policies, and the rapid acceleration in AI’s capabilities.
Yet the very sectors that have made the Massachusetts economy exceptional are still underperforming.
Why it matters: The local 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.
Growth in those industries has made Massachusetts one of the most affluent states in the country. But trends are moving in the wrong direction.
Zoom in: Payrolls in these core industries are below the high-water marks reached in the years after the pandemic.
- Lawyers, consultants, and other professional/business services providers: down 25,000 jobs from the peak, or 4 percent.
- Information firms (a sector those includes software development, internet services, and data security): down 10,000 jobs, or 10 percent.
- Banks, insurance companies, and investment and real estate firms: down 7,500 jobs, or 3.3 percent.
- Private education organizations, including colleges and universities: down 1,800 jobs, or 1 percent.
Health care, the state’s largest sector, has added more than 3,000 jobs this year, extending a long growth streak driven by an aging population requiring more services.
Construction, retail, and manufacturing have expanded, while the leisure and hospitality industry has cut jobs every month in 2026.
The big picture: The economy is growing solidly.
But the state faces a double whammy: a challenging business climate — we’re an expensive place to run a business — and hostile Trump administration policies on higher education and life sciences research funding.
Tech firms are slashing jobs after a COVID-era hiring binge. Financial services providers have been culling their workforces for years as competition forces them to cut costs. And AI has many employers rethinking their labor needs.
“After the tech industry, AI is weighing most heavily on financial services,” Mark Zandi, chief economist at Moody’s Analytics, said in an email. “Employment is falling due to little hiring and attrition.”
Blame game: AI has been the most cited reason for US job cuts this year, accounting for 22 percent of the total through May, according to Challenger, Gray & Christmas, an outplacement and executive coaching firm whose monthly layoff report is widely followed by economists.
Yet private-sector layoffs through April ran at roughly the same rate as the same period in 2025, separate data from BLS show, and job openings jumped in April to the highest level in almost two years.
“AI isn’t yet the jobpocalypse some predicted,” said Andy Challenger of Challenger Gray. “The open question isn’t whether AI changes the workforce, but how fast.”
To that, I’d add this question: Will AI boost employment or decimate it?
Final thought: I’ve heard 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, Dario Amodei, CEO of AI model maker Anthropic, said a year ago.
Torsten Slok, chief economist at Apollo Global Management, believes AI will spur demand for workers by making them more productive and lowering the costs of the services they produce.
He offers an AI twist on the Jevons paradox, economist William Stanley Jevons’ explanation for the increase in coal consumption in mid-19th-century Britain even as steam engines burned coal more efficiently.
Jevons reasoned coal use rose because demand increased enough to offset the efficiency gains.
“The same pattern is happening for cheaper legal services, consulting services, and financial services,” Slok wrote in April. “When the cost of professional work falls, the addressable market expands and the total number of firms and workers in the field grows.”
The jobs numbers we’re seeing 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.
Larry Edelman can be reached at larry.edelman@globe.com.
