Washington doesn’t crack the “top twenty” in Area Development magazine’s just-released list of the “top states for doing business.” The rankings are based entirely on the perceptions of site selection consultants, a methodology we find a little shaky, but, well, perceptions matter (at least to some).
Site consultants have an insider’s view into all of these factors — and an unbiased perspective, too. That’s why Area Development’s Top States for Doing Business analysis solicits the views of in-the-know consultants. For 2016, we surveyed consultants and asked them to name their top state picks in each of 10 categories that impact location and facility decisions. They shared their top picks in each category, and we weighted those scores to come up with rankings within each factor, along with overall rankings that take all of the factors into account.
We don’t know how far out of the top 20 Washington ranked because we couldn’t find a 50-state ranking associated with the survey. The methodology doesn’t really allow for much differentiation once you get past the top picks. Here’s the top 20 overall:
TOP STATES FOR DOING BUSINESS 2016
- SOUTH CAROLINA
- NORTH CAROLINA
- NEW YORK
- SOUTH DAKOTA
As we’re accustomed to seeing, particularly when rankings are done by site selection consultants, the list has a southern tilt. In an adjoining article, Bradley Migdal of Cushman and Wakefield writes,
There is a high probability that in nine of the top 10 states (Northern Indiana being the only exception) developers and users can build 365 days of the year. Winter weather conditions typically do not halt construction, and the permitting processes are ranked the most favorable in the country.
But it’s not just the sunny weather that influences location.
Fortunately, some states afford their local units of government great flexibility when it comes to incentives, enabling them to aggressively attract new development. In the South, local governments traditionally have been aggressive in incorporating incentives into every deal. They find real above-the-line costs that can ease the pain for users and developers, such as property tax abatements, sales tax abatements, site preparation grants, and free land. Additionally, power companies play a bigger role in economic development down South — offering discounted power and sometimes even infrastructure credits. Because at the end of the day, if the facilities and labor are present and costs are competitive, businesses will come.
The magazines 10 factors are dominated by cost considerations.
- Overall Cost of Doing Business
- Corporate Tax Environment
- Business Incentive Programs
- Access to Capital & Project Funding
- Competitive Labor Costs
- Leading Work Force Development Programs
- Cooperative & ResponsiveState Government
- Favorable Regulatory Environment
- Speed of Permitting
- Most Improved Economic Development Policies
Rankings like these are, perhaps, useful as a guide to how people see the various states. But they are subjective. As others have written, there’s no such thing as a “best business climate.” But there are factors most people and most analysts consider influential in making location and investment decisions. Many of those factors are on the Area Development list.