It seems that every few months some organization has a press conference releasing data indicating which state is best for retirees, which is best for young people, which is safest etc.
Over the past few months, FDi (Foreign Direct Investment) magazine, Forbes magazine and the Tax Foundation all released their rankings of what they consider the most business-friendly states. The criteria varied in each survey, and while New York fared better in the Forbes rankings than in FDi, in the Tax Foundation’s, it didn’t do so well. Actually, New York ranked 50th.
Are these surveys important and what effect can they have?
Well, many of the organizations that conduct the surveys have great reputations, and surveys by reputable organizations can create the perception that one location may be better than another for doing business.
And we all know that perceptions can be important.
The brain is the link between perception and decision making. Our brain forms our perceptions and then uses those perceptions to form our decisions. If we misjudge what is happening around us, we may make poor business decisions.
What perceptions might surveys create? For example, does the Tax Foundation survey ranking create a perception that there is a correlation between a state’s business taxes and jobs?
It might create a perception that it does.
Perhaps, but it could be inaccurate. Consider that Iowa is ranked 40th in the Tax Foundation survey but has a 4.9 percent unemployment rate. Minnesota, ranked 47th in the survey, has a 5.1 percent unemployment rate. Pretty enviable unemployment rates, wouldn’t you agree?
And what about Nevada, it ranked 3rd in the Tax Foundation survey with a 9.5 percent unemployment rate. Or Michigan, ranked 14th with a 9 percent unemployment rate.
Might that change your perception regarding a correlation between a state’s business taxes and jobs?
In every survey, many of the states ranked at or near the top come from the Southeast. Is the Southeast that good a location for private sector investment?
Or perhaps it’s just that southeastern states market themselves better to create the perception that they are.
An inaccurate perception is the only reason I can think of for Colorado not ranking near the top in the category of a skilled workforce. Denver has one of the highest concentrations of engineers in the country.
I’d say the same reason is behind New Jersey not being ranked at or near the top for incentive programs. New Jersey’s Business Employment Incentive Program offers benefits of up to $50,000 in grants for each new job created. New Jersey’s Urban Transit Hub Tax Credit Program will eliminate between 80 percent and 100 percent of qualifying investments.
Not too shabby as far as incentives go, but the surveys create a perception that you wouldn’t want to do business in New Jersey.
Let’s get back to New York being ranked at the bottom of almost every survey.
In spite of New York state’s low ranking, no one can dispute that Quebec-based companies are attracted to Clinton County. The Development Corporation certainly appreciates their interest in our three industrial parks.
Now, according to the website Canadian Manufacturing, Canadian manufacturers have discovered Western New York. Beyond the benefit of having a U.S. address, many of the companies surveyed cited taxes that were lower than Quebec’s, a skilled workforce and the availability of low-cost industrial land as reasons to open a facility in Western New York.
The reality differs from the perception depending on what your comparing.
Do I think New York needs to rewrite its tax code and repeal some ridiculous labor laws and regulations?
But any decision to relocate or expand a business will take into account an array of factors, including competitive business costs, good schools, a trained workforce, access to transportation (highway, rail, air) and an above-average quality of life.
So, I don’t put too much faith in surveys, but I am cognizant of the perceptions they can create. In the final analysis, they’re interesting and fun but don’t really mean much.
As a matter of fact, the only survey I’ve seen recently that had any real validity was one ranking Heidi Klum as the world’s all-time best looking model.
That’s been my perception for years.
Paul Grasso is president & CEO of The Development Corporation Clinton County.