So, is California a good place to do business?
Well, my trusty spreadsheet is certain of one thing. No state draws a wider difference of opinions on the quality of its business climate than California.
A review of eight state-vs.-state scorecards found wide division when grading the Golden State’s economy. Rankings ran from a third-best showing as a place to start a business in a WalletHub study to being dubbed the worst place to do any business by a CEO magazine survey.
To understand the breadth of disagreement, ponder how California scored in my ranking of rankings. When grading the state using the median, or mid-point, of all eight rankings, California had the fifth-best economy. When the average score was used instead, the Golden State ranked 16th.
Both results put California in the top third of state economies, an enviable spot. Yet the underlying differences are hard to ignore.
Only Wyoming came close in terms of split thinking with its Nos. 44 and 34 rankings. (Attention, math geeks:, California’s “standard deviation” was also highest!)
Note that my ranking of rankings did show some overall consistency: The median and average rankings each had similar names at the top — Utah, Idaho and Texas — and the bottom — West Virginia, New Jersey and Hawaii.
Why such divergence for California? Remember, rankings are part science and part art, so the study author’s view of the world is an often unspoken factor.
A few variances can be tied to how expenses are weighted in a scorecard, which is not a strength for pricey California. And does the state’s troublesome economic inequalities count?
And then there’s what I’ll politely call “economic philosophy” built into some of these gradings. California’s progressive policies don’t score well with some business types.
At a minimum, this muddled math is a fine example of why the state is such a flashpoint for so many heated debates — especially economic ones. Consider California’s grades, from best to worst …
WalletHub: No. 3 on a scorecard using 28 entrepreneurial metrics. Tops were Texas, Georgia and California. Worst? New Jersey, Connecticut and Rhode Island.
Kaufmann: No. 4 for small business success, defined as a new firm’s share of making a payroll in two years. Tops: Maine, Washington and Oregon. Worst? Delaware, Louisiana and Mississippi.
Forbes: No. 7 in a study of gross domestic product growth rates. Tops: Utah, Washington and Idaho. Worst? Wyoming, Hawaii and Alaska.
US News: No. 10 for business climate, growth and hiring patterns. Tops: Utah, Colorado and Idaho. Worst? Alaska, Mississippi and West Virginia.
Blueprint/Motley Fool: No. 11 as a place to start a business. Tops: Montana, South Dakota and Florida. Worst? Connecticut, Virginia and Rhode Island.
CNBC: No. 33 on a broad economic scorecard. Tops: Virginia, North Carolina, and Utah. Worst? Alaska, Hawaii and Maine.
American Legislative Exchange Council: No. 45 on a “competitiveness” tally evaluating both economic and government factors from a “limited government, free-market” group. Tops: Utah, Florida and Oklahoma. Worst? New York, Vermont and New Jersey.
CEO magazine: California every year claims the last-place spot in this business climate survey of business executives. Tops: Texas, Florida and Tennessee. Worst after California? New York and Illinois.
I’ll note that California’s leaders — political and business — should not overlook weaknesses exposed by the rankings. But there seems to be plenty of math supporting the state’s economic bragging rights, too.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
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