CNBC Rankings Shouldn’t be Ignored
In light of the recent CNBC report that ranks Rhode Island last, #50, in the U.S. for being “business friendly”, Bob Plain wrote this morning–under the heading of “Making Sense of the CNBC Report”–that we should “get ready for the conservative barrage that because Rhode Island ranked as the least business-friendly state we should adjust policy to appease the good editors at CNBC.” Well, since I don’t want Bob to be wrong (any more than usual ;), I’ll confirm his prediction–and I’ll start with something Bob wrote.
He continued his foray into “making sense of the CNBC report” by comparing CNBC’s top two business friendly states (Texas and Utah) to the bottom two (Rhode Island and Hawaii) and asking, “Where would you rather move your business to?” And that was it. As if it is obvious that the bottom two are better places to live than the former. Well, that is pretty much a matter of taste, isn’t it? But it’s also beside the point.
The real question that should be posed isn’t where Bob or I or just anyone would rather move to, it’s where they or we would rather move a business to. Clearly, as the CNBC data shows–and they aren’t exactly some little-known outlier here–Texas and Utah are two of the states whose economies and population have continued to grow throughout the decade, recession or not. Clearly, many people would rather move themselves and their businesses to these places instead of Hawaii (which is kind of a special case, isn’t it?) or Rhode Island. To put it another way, people in every other state in the country can take solace in the fact that, “Hey, at least we’re not Rhode Island.”
Take a look at the main page of the story on CNBC’s website where it lists the Top 5 and Bottom 5 plain as day. And we’re sitting at the bottom for the second year in a row. Like it or not, these reports make national news and affect the perception of our state. Especially when it’s a well-respected outlet like CNBC, which business leaders and decision-makers across the country rely upon for financial news and the like and whose findings will be propagated across the country (particularly in the business community and their local and national publications).
Maybe “denial” is a river in Rhode Island. We Rhode Islanders don’t do ourselves any favors by continually sticking our collective heads in the sands of our beautiful beaches and believing that everyone else has it wrong when the evidence continually shows that Rhode Island is the one with a problem.
Any Rhode Islander who pooh-pooh’s the CNBC story is displaying an all-too typical sort of myopic insularity endemic to the state. Newsflash, folks: Rhode Island doesn’t have it all figured out while the rest of the country is crazy. But believing it, or at least telling ourselves we believe it, does serve to mitigate the need for the hard work it would take to actually change things. Including the perceptions of others.
Regardless, for those of us who really do want to change the national perception and, more importantly, the actual economic climate in the Ocean State, things like the CNBC rankings need to be taken seriously. So let’s take a closer look at them:
50th in Infrastructure and Transportation – CNBC “measured the vitality of each state’s transportation system by the value of goods shipped by air, land and water. We looked at the availability of air travel in each state, and the quality of the roads.” It would seem road quality killed us here.
49th in Business Friendliness – “Regulation and litigation are the bane of business. Sure, some of each is inevitable. But we graded the states on the perceived ‘friendliness’ of their legal and regulatory frameworks to business.” No surprise.
49th in Economy – “We looked at basic indicators of economic health and growth.” This is a case where our own personal, anecdotal experiences can confirm a study’s findings. Right?
46th in Workforce – “We rated states based on the education level of their workforce, as well as the numbers of available workers. We also considered union membership. While organized labor contends that a union workforce is a quality workforce, that argument, more often than not, doesn’t resonate with business. We also looked at the relative success of each state’s worker training programs in placing their participants in jobs.”
45th in Cost of Doing Business – “We looked at the tax burden, including individual income and property taxes, as well as business taxes, particularly as they apply to new investments. Utility costs can add up to a huge expense for business, and they vary widely by state. We also looked at the cost of wages, as well as rental costs for office and industrial space…”
44th in Cost of Living – “From housing to food and energy, wages go further when the cost of living is low.”
37th in Technology and Innovation – “We evaluated the states on their support for innovation, the number of patents issued to their residents, and the deployment of broadband services. We also considered federal health and science research grants to the states.”
23rd in Education – “Not only do companies want to draw from an educated pool of workers, they want to offer their employees a great place to raise a family. Higher education institutions offer companies a source to recruit new talent, as well as a partner in research and development. We looked at traditional measures of K-12 education including test scores, class size and spending. We also considered the number of higher education institutions in each state.” Now we’re getting to places where Rhode Island has some possible strengths to build on. My guess is that Rhode Island was boosted by high education spending per pupil and relatively lower student/teacher ratios. Another guess: they must have indexed number of higher ed institutions to population, giving RI a good mark. Test scores were most likely a drag.
23rd in Quality of Life – “The best places to do business are also the best places to live. We scored the states on several factors, including local attractions, the crime rate, health care, as well as air and water quality.” A la Dan Yorke: Water. Here’s where Bob Plain is shown to be partially correct. But whereas Bob seems to base the entirety of his analysis on quality of life (and living in East Greenwich cove certainly adds to one’s good vibes!), CNBC only considers this as 1/10th of the overall picture.
10th – Access to Capital – “Companies go where the money is, and venture capital flows to some states more than others.” While it’s nice to be in the Top 10 for something, methinks that in the wake of 38 Studios we will see a lower number next year.
Instead of dealing with issues that would directly address some of the above concerns, we had a General Assembly that spent time maintaining the status quo, at best. Right now, the status quo is being the worst in the nation. Is that really where we want to be? Unfortunately, I think too many Rhode Islanders would respond, “Whatever.”
Well, at least we’ve got the beaches and Downcity and Waterfire and Newport….