Readers Rate Their Own States

 

Readers in Missouri and Nevada don't think we should have given their states an F (as in flunk) in our recent report card on state business climates (October 1981, page 90). They'd give their states a much more respectable C. On the other hand, Minnesotans and Mississippians wouldn't grant their states the A rating we gave them. Minnesota, they say, deserves a C at best, and Mississippi barely passes with a D.

In its special report, INC. included a ballot on which readers could rate their own states from A (excellent) to F (poor) in six major categories: taxes, capital resources, labor, energy costs, government support of small business programs, and quality of life. We received 784 responses from small business executives in all 50 states. And it turns out that readers in about a third of the states, 17 to be exact, thought we were right on target in our assessment of business climates. But the readers said our scores were too low in 15 states and too high in 18 others.

Readers in Alaska, Iowa, Maryland, and New Jersey, for example, think their states should have B's rather than the D's we gave them. Nebraska, rated C by INC., earns straight A's from those actually doing business there. But New Mexicans, like the readers in Minnesota and Mississippi, werent's as impressed with their business claimate as we were: New Mexico slipped from B to D in their ratings.

In our report, we ranked the top 10 states in five of the six categories (excluding "quality of life" as impossible to quantify). With few exceptions, readers concurred with those rankings. Alaska and Florida were ranked by INC. in the top 10 for energy costs; readers in those two states disagreed, citing energy costs as a major drawback to doing business.

Alaskans also argued with our perception of their state's tax climate. While INC. ranked Alaska dead last in the tax category, both readers and public officials argued that low taxes made Alaska a great place to do business. That's a case where statistics tell one story, while experience tells another. Over 80% of Alaska's revenues come from the major oil-and-gas companies. Needless to say, none of INC.'s small business respondents were among those heavy taxpayers.

The reader ballots also told us what businesspeople see as their states' greatest assets and liabilities. Readers in 8 states, for example, say their tax structure is a major plus. Besides Alaska, the list includes Indiana, Louisiana, Missouri, Nevada, North Dakota, South Dakota, and Wyoming. Readers in 16 states found taxes their greatest burden.

Fourteen states were ranked by readers as tops in capital resources. Not surprisingly, these include the major money centers, while readers in 12 states that are predominantly rural find capital to be small business's chief hurdle.

The 6 states where energy costs are ranked as a prime asset are either in the Sunbelt -- Arkansas, Hawaii, and South Carolina -- or rich in hydroelectric resources -- Idaho, Oregon, and Washington. And the 10 that rate energy costs as a chief liability include not only 5 chilly New England states, but also air-conditioned Sunbelt states like Arizona and Texas.

Government support for small business -- in the form of procurement set-asides, business advisory offices, and legislative activity -- gets high marks in only 3 states: Ohio, Vermont, and West Virginia. In 10 other states, the lack of government support turns out to be a major shortcoming.

Quality and availability of workers seems to be the least of small business's problems. Only in Mississippi and Nevada is labor cited as a deterrent to doing business. The work force is ranked as the most favorable asset in the business climates of 19 states.

Labor is also the most important of all the factors in doing business, according to the comments on the readers' ballots. Respondents ranked taxes second, and then capital resources, government support, and energy costs. Almost three out of four (72%) of the respondents were service businesses, naturally more concerned with manpower and taxes than they would be with capital formation and energy bills. The majority (55%) also represent small companies whose annual sales are less than $1 million.

On the whole, the people who responded to the survey are glad they're doing business where they are. While their rankings for quality of life weren't included in the overall grade for the state, readers were asked to rate the quality of life in their states on a scale from 1 (poor) to 4 (excellent). No state emerged with a "poor" rating. Alaska, Utah, and Vermont came out on top, with an average score of 4. In 41 other states, the average is 3. Only in Georgia, Idaho, Illinois, Montana, New York, and West Virginia were readers less complimentary about the quality of life.

One other observation can be drawn from the responses: The larger the company, the higher its rating of the state in which it does business. That suggests that INC. and its readers still have a lot of work to do in making the climate for small business better.