Yesterday we reported on CNBC’s “top states for business” rankings. Washington slipped from #1 to a still-very-impressive #2 on the list. These lists always attract a lot of attention (it got ours), but nonetheless reflect the subjective evaluations of what’s important to employers. (For more context, see this 2012 Washington Research Council evaluation of the evaluations; not much has changed in the ensuing six years, other than that the field has become more crowded.)
Aaron Renn, writing in Governing magazine, has a thoughtful review of what employers want from cities.
There are various dueling popular narratives about what drives economic growth in a city or region. One narrative focuses on business climate factors such as taxes and regulation. Others stress the importance of locally available talent or affordable housing and commercial property. But the reality is that economic growth is multi-factorial. There’s no single component that drives every outcome. Places have to pay attention to many things, not just one.
There are a couple of important insights packed into this. One that is implied: employers move to cities or regions. While state rankings, like the CNBC list, get most of the attention, we know that within most states – certainly within ours – there are quite different business climates. Even within King County, there are at least two business climates, as the head tax debate demonstrated. State policies provide an overlay, often a first-tier cut, but then the focus shifts to the attributes of the metro area.
Talent, wherever it can be found, really is of great importance. If you don’t have or can’t get the labor force to meet the demands of business, it’s going to be tough to grow your jobs base. And if other places have or can get the same talent — or perhaps easily convince your talent to move there — and have other advantages over you in terms of costs and business climate, then the talent you have may not save you.
We’ve emphasized the importance of developing the talent pool required for our state’s evolving economy, especially concentrating on postsecondary training and education.
As Renn concludes, a lot of things have to come together for a community to thrive.
Beyond talent and taxes, places also need to pay attention to a variety of other factors including public services, racial inclusion and their distinctiveness in the market. And even considering all this, it can be difficult to pin down exactly why one place is growing faster than another. It would be nice if cities and states could rely on simply pulling one lever for economic growth, but in the game of economic development there is no simple rule.