Washington ranks among the bottom ten states in the 2018 “Best and Worst States for Business” report from Chief Executive magazine. As the Washington page in the report shows, taxes and regulation here received particularly low marks.
Among the 50 states, Washington was ranked No. 37 in taxes and regulations, No. 26 in workforce quality, and No. 27 in living environment.
The top- and bottom-ranking states haven’t changed much.
The best place to do business in the United States is Texas, followed by No. 2 Florida and, in a tie, No. 3 North Carolina and South Carolina, according to Chief Executive’s 2018 “Best and Worst States for Business.”
Seem familiar? That’s because those are the exact same positions each of these states has occupied in each of the last four years in our annual poll of CEOs about business climates.
While the Chief Executive website doesn’t link to the survey methodology, the stability of the rankings suggests it hasn’t changed much and continues to be based on an executive survey.
We wrote last year,
The magazine says of the methodology,
…Chief Executive surveys CEOs, not corporate site-development specialists. Company leaders usually choose to focus on the big picture, so their perceptions often trump statistical minutiae.
“CEOs don’t get involved in the numbers that much, and we seldom meet with them,” says Dean Uminski, a site-selection specialist with Crowe Horwath in Chicago. “But it’s their perceptions that really matter, because usually they end up making the ultimate decision.”
And, while perceptions can take a long time to change, reality may be even more resistant. “The top-ranking states have continued to implement public policy supporting economic development to ensure that they remain as leaders,” says Larry Gigerich, executive managing director of Ginovus, a Fishers, Indiana-based site-selection concern.
And, despite the negative perceptions, the report says of Washington:
…Washington remains one of America’s top locations for STEM talent. Microsoft is still headquartered here; it is home to 80,000 of 100,000 Boeing jobs nationwide; and Amazon now employs more than 40,000 people in the state. Escalating real estate values in San Francisco means tech firms have been expanding their workforce in the Puget Sound area.
Some Seattle policy innovations doubtless shape perceptions about the state’s tax and regulatory orientation. This week, the Seattle Times reported that a group of property owners is suing the city over a new regulatory requirement.
Seattle is being sued again by landlords, this time over a new city law that mostly prohibits them from screening rental applicants based on criminal records.
And the New York Times reports that in the Amazon HQ2 search, the company hopes to avoid its Seattle experience.
When 10 representatives from Amazon visited the Denver area in late January, they did what you’d expect from a company scouting for a place to put its second headquarters. They toured more than a half-dozen potential sites for a new campus and talked about the technical talent available in the area.
But they also did something that surprised local officials: Quiz them on how, if Amazon chooses to settle there, the company could avoid the problems it confronts in Seattle, the only hometown it has ever known.
If Amazon moves in, bringing up to 50,000 high-paying jobs to town over time, how would the officials deal with traffic on its roads? And how would the company’s tax dollars contribute to the creation of affordable housing in the region?
“I think they feel in Seattle they’re the scapegoat every time there’s an issue in the community and traffic,” said Sam Bailey, vice president of economic development at the Metro Denver Economic Development Corporation, which is managing the area’s bid for Amazon’s second headquarters.
Then there’s the jobs tax, the $15 minimum wage, paid leave policies and so on.
We’ve said in the past we don’t put much stock in these annual “best states” rankings. But, there’s no disputing that perceptions make a difference when entrepreneurs make their location and expansion decisions.