CNBC Top States for Business: Good News, Bad News
“It turns out that Connecticut has some definite strengths,” says CNBC, “and those strengths play directly to what businesses are looking for most these days.”
This year, CNBC switched its ranking focus away from the state’s biggest weakness—high costs—to its greatest strength, a skilled workforce.
And that change resulted in Connecticut poll-vaulting all the way up to 33rd after last year’s discouraging showing at 46th.
Even so, “There is good news and bad news for Connecticut in this year’s top states study,” said CNBC.
The bad news “is familiar to anyone who has ever considered the Constitution State’s business climate. Connecticut is expensive.”
Connecticut’s rankings for cost of doing business (unchanged at 47th), cost of living (down one spot to 49th), and business friendliness (down eight to 32nd), continue to disappoint.
But our saving grace is a strong, highly talented workforce, where Connecticut climbed from 32nd to fourth this year. The CNBC study’s authors explained the jump:
Connecticut workers are among the most educated in the nation, according to the U.S. Census Bureau. Connecticut workers are also among the most productive in the nation, based on economic output per job.
It doesn’t hurt that Connecticut has a relatively small population at about 3.6 million people, with many working in high-output industries, like finance, insurance and business services. But that just speaks to the fact that the state is an economic and intellectual force.
The state’s economy ranking also took an enormous jump in the CNBC study, now ranked 26th from 49th a year ago. However, there are two notes of caution to consider:
The CNBC study references 2013 data, when the state’s economy grew a modest 1%. The latest GDP figures, released earlier this month by the Bureau of Economic Analysis, revealed Connecticut’s 2014 economic growth was an anemic 0.6%.
And this week, the University of Connecticut’s Center for Economic Analysis issued a pessimistic economic forecast for the state, warning that “job growth this year and next will likely stall and may even now decline.”
Tax hikes threaten progress
CBIA president and CEO Joe Brennan said CNBC’s decision to change the weighting of the 10 categories used in its rankings meant Connecticut wasn’t judged as harshly this year for being a high-cost state, with the study also reflecting the importance of the workforce in the modern economy.
“The new ranking of 33rd supports our contention that Connecticut has enormous economic potential if we make smart policy choices that build on our numerous assets and enhance rather than detract from our economic competitiveness,” Brennan said.
“The ongoing debate over the state budget and tax package highlights the fragility of our competitive position. If the anti-competitive tax increases become law our forward progress will be short-lived.”
The ongoing debate over the state budget and tax package highlights the fragility of Connecticut's competitive position.
Connecticut and New Mexico (24th) were the most improved states in this year's CNBC study, both climbing 13 positions from last year.
"Connecticut owes most of its improvement to its workforce and the additional weight we have given to that category this year," said CNBC. "But things are far from perfect in the state, which remains the fourth most expensive state in which to do business.
"Yes, Connecticut improves 13 spots in our rankings, but that only means it ranks 33rd, up from a lowly 46th-place finish last year.
"A mainstay of the state economy, General Electric has been headquartered in Fairfield for more than 40 years but is threatening to move after lawmakers approved a $1.2 billion tax hike, much of it aimed at businesses.
"And a campaign by the state's business community to make Connecticut a top 20 state in our rankings by 2017 remains an uphill climb."
Strengths and weaknesses
Connecticut ranked in the top 20 states in four of the study's categories:
- Workforce: 4th (2014: 32nd)
- Quality of life: 11th (14th)
- Education: 11th (5th)
- Technology and innovation: 19th (21st)
On the flipside, CNBC ranked the state in the bottom 10 in three categories:
- Cost of doing business: 47th (47th)
- Infrastructure: 46th (42nd)
- Cost of living: 49th (48th)
While that’s a slight improvement over 2014, when Connecticut had three top 20 rankings, troubling trends include a drop from seventh to 30th in the access to capital category, and a decline of six places, from fifth to 11th in education.
"We are pleased that we are making progress but recognize that our goal of reaching the top 20 list of best states in which to do business by 2017 is still a long way off," said Brennan.
"It's also important to note that, as we continually point out, there are a number of reputable studies on this topic and Connecticut must show consistent advancement across the board in order to be legitimately thought of as a great state to do business by those whose opinions matters most--the people who are creating jobs."
Minnesota ranked first
All six New England states either improved or remained unchanged in the CNBC study, led by Massachusetts, which improved five positions to 20th overall, with strong showings in the education, workforce, and technology categories offsetting high business costs, high cost of living, and poor infrastructure.
New Hampshire was unchanged at 30th, followed by Connecticut, Vermont (42nd), Maine (45th), and Rhode Island (48th).
Minnesota was ranked first overall this year, climbing from sixth last year based on its strong economy and top 10 rankings for infrastructure, quality of life, technology and innovation, education, and workforce.
CNBC's top 10 states for business:
- Minnesota (2014 rank: 8th)
- Texas (2nd)
- Utah (3rd)
- Colorado (8th)
- Georgia (1st)
- North Dakota (10th)
- Nebraska (4th)
- Washington (7th)
- North Carolina (5th)
- Iowa (12th)
And the bottom 10:
41. Alabama (2014 rank: 34th)
42. Vermont (42nd)
43. Mississippi (36th)
44. Maine (45th)
45. Nevada (29th)
46. Louisiana (40th)
47. Alaska (47th)
48. Rhode Island (50th)
49. West Virginia (48th)
50. Hawaii (49th)
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