Why Business Rankings Matter
Monday, July 29, 2013
Rhode Island ranks near or at the bottom of many of the nation's leading business publication's rankings. From publications like Forbes to business network CNBC to vertical trade publications like Chief Executive magazine, almost all find Rhode Island to be a bad place to run a business.
Can Legislators Make a Difference
A recent press release from the RI State Senate office touts 28 bills passed this past session that are designed to "move the needle" -- an effort designed to improve Rhode Island's business rankings.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe legislative initiative, when announced in January, was designed to "move the needle" and improve Rhode Island's rankings and de facto the business environment and the economy.
Now six months later the problems seem to be forgotten. According to Senate President Theresa Paiva Weeds' office recent press release, "Passage of the legislative package builds on the General Assembly’s work over the past several sessions to improve the state’s economic competitiveness, including the creation of the Office of Regulatory Reform, pro-growth reforms to the state’s income tax, developing a single statewide electronic permitting system, and investments in workforce development."
This pronouncement issued last week runs in conflict with Paiva Weed's claim in January that the legislature has not done enough. It also runs in direct conflict with how business experts and publications are ranking Rhode Island.
A closer look at the 28 pieces of legislation that were approved this session make it difficult to see how many of the new laws will improve Rhode Island's rankings. The 28 new laws create multiple task forces and require the EDC to create a better website and other fairly obscure initiatives. The 28 bills do not directly impact the factors that the actual measures included in the rankings assess, like tax structures, cost of energy or available public financing tools.
Is it realistic to think Rhode Island can lead in these rankings
No, Rhode Island cannot beat states like Texas that have cheap energy and a much different relationship with organized labor, but that does not mean Rhode Island has to be at the bottom of most of the buckets. Rhode Island ranked #49 in the country for business in a study developed by television network CNBC has numerous advantages that other states could only wish for.
Rhode Island may suffer from some real disadvantages - some are self-inflicted, but when your state in on the coast, linked by rail and a highway infrastructure to both Boston and New York in just a few hours, then you do have some assets that can be built upon.
Perception is Reality
If the business media in the U.S. consistently ranks Rhode Island at the bottom of the state-by-state rankings -- and the business media is consumed by business leaders -- then a transitive theory is in effect, which is business leaders will think Rhode Island is a lousy place to run a business.
Moreover, perceptions take a long time to change -- and especially a long time to change when Rhode Island is not operating in a vacuum. All the states are working to improve their education systems, their infrastructures, and their financing packages to attract and retain businesses. Rhode Island needs to work twice as hard. Change needs to be real. Study commissions will not push Rhode Island's rankings up 20 slots.
This legislative session's big win was restoring a program that the state abandoned a few years ago - the Historic Tax Credits. The effect of cancelling the program was brutal. Trades workers were out of work, redevelopment of empty mill buildings came to a dead stop and the loss of jobs only increased the impact of the recession. The new program has come with some stronger safeguards, but also some limits on the size of the programs which are arbitrary and an over-reaction to the 38 Studios Tax Credit program.
The impact of rankings may be frustrating. Rhode island doesn't seem to object with we are scored on our cuisine, but when the rankings unveil our flawed economic conditions - some object.
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