RECENT RANKINGS
A host of entities rank states and metro areas on who is best – and sometimes worst – for business. Each uses different data and weighting.
Area Development Online
Category: Top states for doing business, 2013
Georgia’s rank: 2
Metro Atlanta’s rank: 63 (among U.S. metro areas)
What was included: business environment (costs, taxes and regulations, incentives, etc.), labor climate (diversity, costs, development programs, etc.), infrastructure and global access (rail/highway access, shovel-ready sites, utility rates, logistics access).
Forbes
Category: Best places for business and careers
Metro Atlanta’s rank: 22 (out of 200 largest metro U.S. areas)
What was included: past and projected job growth, business and living costs, income growth, educational attainment, projected economic growth, net migration patterns, cultural and recreational opportunities, number of highly ranked colleges. Most weight was given to business costs and educational attainment.
Chief Executive magazine
Category: Best and worst states for business
Georgia’s rank: 10
What was included: Survey of CEOs, who were asked to grade states they were familiar with on a number of subjects, including taxes and regulations, workforce quality, living environment.
Site Selection magazine
Category: Top business climate
Georgia’s rank: 1 (fourth a year earlier).
What was included: Fifty percent based on a survey of corporate site selectors and 50 percent based on criteria such as the magazine’s earlier ranking on state competitiveness, number of significant new projects on a per capita basis and tax burdens on businesses. Site selectors surveyed considered issues such as workforce skills, transportation, taxes, utility infrastructure, land and building prices and supply, regulatory situation, flexibility of incentives.
CNBC
Category: Top states for business
Georgia’s rank: 1 (8th a year earlier).
What CNBC says was included: A range of weighted categories, led by taxes, utility, wage and rental costs, followed in order by: the state economy (growth, job creation, state budget etc.); the workforce (education levels, union membership, training programs); quality of life (crime rate, percentage of residents with health insurance, attractions etc.); technology and innovation (patents issued, high-tech busines formation); business friendliness (regulations etc.); education (scores, spending, number of higher ed institutions etc.); cost of living; and access to capital.
Georgia’s broader economic picture
The state’s “business friendliness” doesn’t necessarily translate to a rising standard of living
Per capita income
28th highest in 1992
40th in 2012
Poverty
1992 10th highest rate
2012 8th highest
Unemployment Rate rank
May 1994 22nd highest
May 2014 9th highest
Average Hourly Earnings of All Employees
May 2007* 29th highest
May 2014 24th highest (tied)
Sources: Census Bureau, Bureau of Labor Statistics, staff research
*earliest comparison available from BLS
Georgia’s ranking among 50 states for being a great place for business has become a political volleyball in this election year. Candidates for offices use the rankings to campaign or to question opponents, and to talk about their own economic agendas. The Atlanta Journal-Constitution cuts through the rhetoric to explain the importance of such rankings to businesses and Georgia’s economy. Keep up with all our coverage at myajc.com.
Georgia’s broader economic picture
The state’s “business friendliness” doesn’t necessarily translate to a rising standard of living
Per capita income
28th highest in 1992
40th in 2012
Poverty
1992 10th highest rate
2012 8th highest
Unemployment Rate rank
May 1994 22nd highest
May 2014 9th highest
Average Hourly Earnings of All Employees
May 2007* 29th highest
May 2014 24th highest (tied)
Sources: Census Bureau, Bureau of Labor Statistics, staff research
*earliest comparison available from BLS
Georgia’s ranking among 50 states for being a great place for business has become a political volleyball in this election year. Candidates for offices use the rankings to campaign or to question opponents, and to talk about their own economic agendas. The Atlanta Journal-Constitution cuts through the rhetoric to explain the importance of such rankings to businesses and Georgia’s economy. Keep up with all our coverage at myajc.com.
There’s something nice about being ranked higher than the competition, for sports stars, celebrities, taco joints — and for states, too.
Georgia’s high rankings as a place to do business not only polish the state’s image but provide public relations ammo in this year’s political campaigns and in the continuing battle to lure companies.
But are the rosy rankings accurate? Is the state recently named No. 1 for business by CNBC and 2nd by Area Development Online really the same one that was 30th in growth between 1997 and 2012, according to the University of North Carolina? Or 49th in per capita income growth during the same period?
“It all depends on what you are trying to measure and what is your intended audience,” said Ross DeVol, chief research officer at the Milken Institute.
“It really is how you frame it.”
Business rankings are a growth business. Every month produces a few – best growth, best economic climate, best for entrepreneurs, best for technology. On the Internet, the rankings have become a sort of thinking person’s “click bait,” come-ons to lure readers onto business, news and niche Web sites.
They also fuel political campaigns. After Site Selection magazine last fall slapped the big Number One on Georgia, Gov. Nathan Deal put the endorsement at the center of his campaign for re-election. That drew a critical response from his challenger, Democrat Jason Carter, who said the rating missed the mark.
So what is the real value of the ratings?
For all the attention such ratings get, Peachtree City-based site consultant Jay Garner said he’s never had a client use a published ranking to help decide where to go.
“When a company is spending tens of millions or billions of dollars in investments they are going through that process in a very, very methodical way,” said Garner, a 30-plus year veteran of the game.
With so much on the line, most companies want analysis done specifically for their project and based on their own needs, he said.
Outlets that come up with rankings often don’t share details about their methodologies or sources. And many rankings don’t agree because they have different ways of crunching data.
Garner said he uses rankings by the Tax Foundation, a non-profit tax research organization, in his initial analysis of communities, then relies on other data to dig into specifics.
Rankings can be jarring when paired with broader economic indicators.
Georgia, for instance, has one of the nation’s 10 worst jobless rates. About 1.7 million residents are getting food stamps and roughly 1.3 million are below the poverty line — above the national average for each.
“It all depends on what lens you are viewing through,” DeVol said.
Some crucial components of a good business climate cannot be measured.
The Edward Lowe Foundation, which studies young companies, believes that the lion’s share of job growth comes not from recruiting companies from elsewhere but from careful cultivation of young, locally-based firms.
“Everything doesn’t have to be a daggone home run – sometimes we need to celebrate our singles and doubles,” Penny Lewandowski, the foundation’s vice president of entrepreneurship and strategic direction. “You should encourage the businesses that you already have and make them stronger.
“A lot of our answer revolves around culture,” she said. “A place that gets it – they believe in business growth. They believe collaboration is really important.”
Maria Meyers, director of the University of Kansas at Missouri innovation center, said several factors are key to success: access to financing, connections between established companies and emerging businesses and a strong talent pool.
Don’t make the mistake of ignoring what you cannot measure, she said. “The tax burden may not tell you what your community needs to do to meet the objective of growing business.”
Factors making the difference between success and failure may be much more micro than macro, such as variations in county ordinances.
For instance, Marietta-based Sundial Plumbing does business in 10 counties. Business has been slowly improving the past several years, said Mitzi Moore, owner of 40-worker Sundial. “We are very encouraged with what we see.”
But the business is complicated by rules for some basic services that can change when you cross a county line.
“If you are getting a water heater, it’s very different in Atlanta versus Cherokee County, which is different from Cobb County,” Moore said. “It is a challenge to keep up with all of it.”
On the other hand, some experts argue it’s best to ignore surveys that poll businesses or recruiters and to judge a regional economy on data: investment, income, hiring and jobs.
“The critique of a survey is: Talk is cheap. The advantage of data is, those are real dollars,” said Campbell Harvey, professor at Duke University’s Fuqua School of Business,
Ali Dadpay, an economist and assistant dean at Clayton State University, said he rarely sees surveys that use the metrics that he thinks are best for getting the sharpest view of Georgia’s future.
“What about the number of young people moving to Georgia? We are doing very well at that.”
And some experts reject rankings altogether.
“Rankings are stupid,” said Brent Lane, who directs the Center for Competitive Economies at the University of North Carolina at Chapel Hill. “They are political tools; they are not economic tools.”
Rankings don’t reveal what the general public may think they do, Lane said. “You can find no correlation between rankings of business climate and whether your citizens are better off.”
North Carolina regularly is ranked by Site Selection magazine as a top state for business climate, yet, like Georgia’s, the state’s ranking on per-capita income has fallen sharply.
“We are winning by one measure and losing by more important measures,” Lane said.
Duke University’s Harvey said business leaders and state officials need to ask first where they want to go before they pick a measure to matter.
“Leaders need to ask, ‘What do you want the state of Georgia to look like?’ It all comes down to what you want the state to be,” Harvey said. “You need a plan for the future.”
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