Opinion — Is Virginia really tops in nation for business?
Published 8:09 am Friday, July 30, 2021
It was great news that, according to CNBC, Virginia is the number one state in the nation to do business. An honor like this is a great thing to brag about. However, I was somewhat confused.
One of the daily media news sources I receive is The National Observer. Every day they recap business stories from around the country. Based on the numerous stories about business relocations and expansion, it appears that the states of Texas, Florida, Tennessee, and North Carolina are the hottest states. Therefore, I looked for other sources to better understand the issue. Interestingly, other entities rate Virginia differently.
Consider the ranking of Chief Executive magazine’s 2021 report based on a poll of the decision makers of corporations. That report ranked as follows: Texas, Florida, Tennessee, North Carolina. They placed Virginia in 13th place.
Likewise, according to the U.S. Department of Commerce’s Bureau of Economic Analysis, Virginia was 38th in growth rates. The best were Nevada, Utah, New Hampshire, West Virginia, and Colorado.
If one considers where people are moving, the ranking is as follows: Florida, Texas, Arizona, North Carolina, South Carolina, and Georgia. While some of this movement is for retirement, a significant portion are moving to where job opportunities are arising.
Ratings by the Tax Foundation ranks Virginia 22nd best, and for starting a business Virginia can’t be found in the top 14.
Virginia based economist Fletcher Mangum believes that the rating is probably somewhere between 13th and 19th.
Why So Many Different Rankings?
Why is there such a divergence between these various entities? Quite simply, they rate factors in different ways and weigh those factors differently. Consider how CNBC measures and weighs those factors.
- Cost of doing business – 400 points (16%)
- Infrastructure (roads, ports, etc.) – 375 points (15%)
- Life, health, and inclusion – 375 points (15%)
- Workforce – 325 points (13%)
- Economy – 250 points (10%)
- Business friendliness – 200 points (8%)
- Access to capital – 175 points (7%)
- Technology and innovation – 175 points (7%)
- Education – 150 points (6%)
- Cost of living – 75 points (3%)
Note that item No. 3 is titled life, health, and inclusion. It probably would be better titled inclusion, life and health. This reflects the legislation that passed into state law dealing with sexual and gender issues. Business leaders who make decisions about where to move or expand would rank this far below friendliness to business, workforce availability, education, the economy, and cost of living. Most decision makers make their decisions based on how issues directly impact their business. Of the many factors they consider, such things as these are most important. Can they be profitable considering the cost of doing business is clearly number one. This is followed by the ability to transport raw product in and finished products out. Likewise, can they get the workforce they need? Being wanted in a community is an important issue. Everything else pales in comparison.
A perfect example is when I attended an economic development meeting. The prospect, a heavy power user, raised the question of what would be the cost of electricity. Dominion Power stated their industrial rate. The prospect asked if that was green energy. Dominion explained that green energy would be more expensive. The prospect quickly switched the conversation to other issues that were more important to them.
The questions that should be asked of and answered by CNBC:
- Why did they decide to rank issues of limited value to decision makers higher than the core issues that business leaders consider more important?
- Did CNBC change how they weighed factors the last couple of years to be more “politically correct” rather than being honest non-partisan reporters of the news?
All said and done, it is always better to get a good rating rather than a bad one. However, be careful when you see these ratings; consider that some are quite possibly playing politics. The more regulations that Richmond piles on business will make other states such as Texas, Florida, and North Carolina beacons for our young people. We must reverse the course of the last two years.