Tuesday, July 23rd, 2019

The best and worst states for business

Posted: Friday, June 8, 2012

By Larry Gigerich, managing director, Ginovus

The opinions and perceptions of the leaders of clients' organizations are an important factor in the work of the site selection industry. Chief Executive Magazine surveyed 650 CEOs to evaluate states based upon factors such as taxes, regulations, workforce quality and quality of life. Which states were best and worst in the United States?

While labor force, tax structure, regulatory environment, real estate, infrastructure and economic development incentive programs are all important considerations in the process of selecting a community and state, the initial list of geographic areas to be considered for the project may be shaped by the thoughts of the senior leadership of an organization. This is why regions and states must work to tell their story to corporate decision makers.

Chief Executive Magazine surveyed 650 business leaders earlier this year. CEOs were asked to evaluate states based upon factors such as tax, regulatory, workforce quality and quality of life. The survey process identified the best and worst states in the United States. Please find below a summary of the best states in the rankings.

1. Texas: Texas scored very well in tax and regulatory environment, along with workforce quality. This is the 8th year in a row that the state ranked No. 1 in the country.
2. Florida: Governor Rick Scott has enacted tax and regulatory reforms resulting in a drop of over 2 percent in the state's unemployment rate. Florida moved up from No. 3 on last year’s list.
3. North Carolina: The state scored very well in workforce quality, quality of life and regulatory environment categories. North Carolina has solid economic development incentive programs in place.
4. Tennessee: Governor Bill Haslem has brought a business perspective to state operations and economic development. Tennessee scored very well in quality of life and tax climate.
5. Indiana: Indiana is the economic development leader in the Midwest, but also a stiff competitor nationally. Indiana became the 23rd state in the nation to adopt right-to-work this year.

There are a few other interesting notes to share about states that have shown tremendous improvement in the United States. Louisiana, under the dynamic leadership of Governor Bobby Jindal, jumped 14 spots on the list. In addition, Ohio and West Virginia made significant improvements to their business climates and each jumped eight spots on this year's list.

While there are a number of good stories to share about the 2012 Chief Executive Magazine rankings, there are also some states that rank very poorly in several categories. These states start off in a deep hole due to the negative perception held by site selectors and corporate decision makers and poor business climate conditions. Please find below a list of the five worst states in this year's rankings.

46. Michigan: Governor Rick Snyder inherited a fiscal mess from his predecessor and is working hard to improve the state’s position. Michigan currently scores very low in tax and regulatory environment.
47. Massachusetts: The state has been known as "Taxachusetts" for a long time. The tax and regulatory climate conditions to be a drag on a state that possesses a well educated workforce.
48. Illinois: Illinois has raised several taxes and created an unfriendly business climate. Neighboring states such as Indiana, Iowa and Wisconsin are recruiting companies to move from Illinois into their states.
49. New York: Governor Andrew Cuomo has taken steps to address tax and regulatory issues that adversely impact businesses. Despite these efforts, the state has work to do to convince CEOs to locate there.
50. California: The recent announcement of a $16 billion state deficit does not help perception. In addition, proposed tax increases and elimination of redevelopment incentives, hurts the California's competitiveness.

Oregon dropped the furthest on the list by falling nine spots – largely due to tax increases in recent years. In addition, Kentucky, Mississippi and New Hampshire each fell eight spots on the list this year as other states took bold steps to improve their business climates, workforce and quality of life.

Like all rankings, it is important to understand that they are shaped by different issues. When a company is undertaking a site selection project, several assumptions will be used and critical decision making business factors will be evaluated. The Chief Executive Magazine rankings are informative in that they reflect the perceptions of corporate decision makers. This does not mean that the top states will win the most projects and the worst states will lose most projects. However, it does mean that the best states will get more opportunities to compete for projects. As we know, when you have more chances to compete, you are better positioned to win more projects.

Larry Gigerich serves as Managing Director of Ginovus. Ginovus is a leading provider of national site selection, community comparative analysis and economic development incentive procurement & management services to private sector, educational, governmental and not-for-profit organizations throughout North America. Ginovus is headquartered in Indianapolis, Indiana.