If you were trying to understand and rank businesses on their customer service, would you rather trust a survey of what businesses said about themselves, or a survey of what their customers said?
There are a variety of rankings out there calling themselves something like “Best States for Business.” They have different methods. For example, the Small Business & Entrepreneurship Council (SBE Council) has published a “Small Business Policy Index,” based on a thorough analysis of 62 factors relating to taxes, regulations, government finances, and business support programs. Chief Executive Magazine takes a different tack with its annual “Best States for Business” ranking, surveying CEOs directly for their views on state tax policy, regulation, and talent availability.
The CNBC news network takes yet another tack with their “America’s Top States for Business” rankings. In their own words, CNBC says:
To rank America’s Top States for Business in 2021, CNBC scored all 50 states on 85 metrics in 10 broad categories of competitiveness. Each category is weighted based on how frequently states use them as a selling point in economic development marketing materials. That way, our study ranks the states based on the attributes they use to sell themselves.
Businesses can be considered customers of government services, including government regulations on business. In return, they (and their own customers) pay taxes. Is it possible that a survey of what governments say about their business-friendliness tells you something different than what a survey of what businesses says about how friendly their government is?
Yes.
Using the tools available in our Data-Z website, I just developed a “State Chestpounding Index.” First, I examined the correlations for the 50 states on the three different surveys noted above. The CEO Magazine and SBE Council rankings are significantly positively correlated with each other, but neither of them are significantly correlated with the CNBC rankings.
Then, I put together a simple average of the rankings for CEO Magazine and SBE Council for each state, and subtracted the CNBC ranking for each state. The 10 states with biggest positive difference between the CNBC rankings and the average for the CEO Magazine and SBE Council rankings – states that score better on CNBC than to be expected by the average for those other two rankings – are:
- California
- Connecticut
- Illinois
- Maryland
- Massachusetts
- Minnesota
- Nebraska
- New Jersey
- New York
- Washington
Coincidentally, or not, the average “Taxpayer Burden” that TIA calculates for these ten states runs six times higher than the average for the rest of the states in the nation. And those 10 states tend to rank significantly worse on United Van Lines latest migration survey (the more chestpounding, the higher the outmigration).
A “State Chestpounding Index.” Or a “State Desperation Index.”