We study the generation of spin-squeezing in arrays of long-lived dipoles subject to collective emission, coherent drive, elastic interactions, and spontaneous emission. Counter-intuitively, it is found that the introduction of spontaneous emission leads to an enhancement of the achievable spin-squeezing, relative to that which emerges in the steady-state of the purely collective dynamics for the same model parameters. This behavior is connected to the dynamical self-tuning of the system through a dissipative phase transition that is present in the collective system alone. Our findings will be applicable to next-generation quantum sensors harnessing correlated quantum matter, including cavity-QED and trapped ion systems.
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