The skewed data and right-wing rhetoric behind the "worst states to do business" ranking

I have strong doubts that any Fortune 500 CEO took the time to fill out any questionnaire like this. They are simply too busy.

By John Calhoun of Portland, Oregon. John is an entrepeneur and financial executive in the semiconductor, software, and biomedical technology industries.

Sunday’s Oregonian editorial (After 66 & 67: The blowback) based most of its argument on a survey of the best and worst states to do business by Chief Executive magazine. Yet a close examination of this “survey” shows that it is a highly-biased product that reflects the prejudices of the magazine more than any useful information.

With a few exceptions the rankings show that the “good” states are almost all traditionally Republican states and the “worst” states are all Democratic states. The top states are: Texas, North Carolina, Tennessee, Virginia, and Nevada and the bottom five are: California, New York, Michigan, New Jersey and Massachusetts.

How do they achieve this result? Skew the weightings.

They start with a set of objective criteria that are all equally weighted; things like taxes, living environment, and workforce quality . Using that criteria, Texas is ranked 36th, Tennessee is 41st, and Nevada 50th. Then by asking CEOs (their subscribers?) for their subjective views and re-weighting the criteria, Texas becomes number 1, Tennessee 3rd, and Nevada 5th. Oregon starts at #22 and becomes #38.

Now the first question I would ask is who are these CEOs and what do they know? Of course the magazine does not specify who responded to their survey, but I can take some guesses. Most people reading the Oregonian and seeing the title of the magazine will assume that these are giants of industry.

I have strong doubts that any Fortune 500 CEO took the time to fill out any questionnaire like this. They are simply too busy. My guess is that the respondents come from much smaller companies who have no reasonable ability to rank 50 states on anything other than their personal prejudices.

I would also suggest that most of these respondents are Republicans who oppose both taxes and regulation. Other surveys posted on the site ask if Obama’s proposal on offshore drilling should be more robust (70% yes) and "Do you think President Obama’s economic and social policies are socialist?" (55% yes).

I wonder if some of the negative views of Oregon shown in this poll come from people reading or hearing commentary based on the Oregonian editorials which the Oregonian now uses to justify its position.

What a wonderful closed loop.

Comments

  • (Show?)

    That's a pretty interesting site they've got over there. They pull together a seemingly random bunch of data that includes some pro-business factors, but ignores others - and completely misses some things. (Schools per capita? Does anyone think the NUMBER of schools is any kind of criteria for how good or bad the education system is?)

    They also allow you to check and uncheck what's most important to you.

    I thought I'd try an experiment. I unchecked everything and then checked just the boxes that I think everyone would agree upon as business criteria: Corporate taxes, property taxes, sales taxes, and net domestic migration since 2008 (i.e. new customers.)

    If you do that, Oregon ranks #5 in the nation. (And if you throw in "regulatory environment", however the magazine defines that, Oregon ranks #8.)

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    So if Oregon were in the top 10, I am guessing this poll would have be hailed by BO'ers as proof they are right.

    It doesn't say what you want it to, so you attack it with guesses and suppositions.

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    Lies, damn lies and statistics. All data/surveys should be looked at with caution. Who prepared it, how paid for it, what were the questions, who was it sent to, who responded. All these can skew data. And there are unscrupulous firms/websites/groups on both the right and the left. Let the reader beware!

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    Hilarious! As a contract software developer, I can say with 100% certainty that I get by far the majority of my job leads from all of those "bottom five" states. In fact, in the last week, I've gotten leads from each of them, even though I've made it clear I don't want to relocate out of Portland. Of the top 5, I've only had 2 leads out of Texas in the past 4 months, and that's it. Software development is one of the few solid "middle class" career paths left in this country, and apparently businesses in those bottom five states are doing just fine enough to grow and add higher cost engineering jobs. But I know plenty of CEOs, and most of them will always think the grass is greener where they think they can save money by paying less taxes. But when it comes to relocating, that's when they look at the quality of life, mass transit, and other services provided by tax dollars, and they usually reconsider. Those who actually relocate for cash reasons are usually under some sort of corporate mandate from some corporate office in another state or some global office.

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    What I find interesting is that a year ago, Oregon ranked 24 and Washington ranked 40. Does anyone remember reading about that in the Oregonian at the time?

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    What I find most galling about the Oregonian's editorial, and the survey the "O" dug up to build their anti-business fiction on, is that the negative ranking is based on the "perceived" attitude of government toward business. Where does that anti-business perception come from? Certainly not from the Pro-Measure 66 & 67 campaign. Unless these so-called business executives spend their time reading anonymous bloggers on PortlandIndyMedia, the principle places I saw towing the anti-business line were the big business lobbies like AOI and OBA (who are paid to say such things) and the Oregonian. I also have to agree that any competent business executive is going to perform due-diligent analysis of a given locale before making any business siting decision. That investigation would go far beyond accepting what the "O" editorial board or PortlandIndyMedia had to say on a regions business-worthy features or "climate".

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    Its a fact whether you liberals like it or not Oregons progressive high tax,fee,regulate and arrogant anti business attitude is ruining this state.Whats killing us too is none of the progressive democrat leaders including our do nothing invisible governor Kulongoski who the private sector never sees in public regularly have done a darn thing about unemployment and putting the private sector back to work and have no plan to either.The democrats including Kitzhaber have no plan to either and could care less about anyone in the private sector who isnt a state worker getting a pers pension..Tell me Blue Oregon crowd before you start blaming republicans and etc remember the liberals have the majorities in the house and senate. If Oregon is such a low tax state like you claim then why is private sector unemployment still so high then?Explain to me what Kulongoski or any progressive has done about unemployment recently?explain to me what Kitzhaber's plan is to get unemployment down and the private sector back to work?I looked at Kitzhaber's website and sorry he has no plan to get the private sector back to work and dont care either.

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      Once again, Oregon does not have a progressive tax system. Until Measure 66, our highest tax rate kicked in at $7601 of annual income. (And now, everyone between $7601 and $125k - $250k for couples - has the same tax rate. Hardly progressive.)

      I think y'all have started sticking "progressive" in randomly as some kind of general-purpose epithet.

      The word does have a definition. Actually, several of them.

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        Oregon has a progressive tax system that has hardly been adjusted for inflation. This goes not only for the tax rates, but also some of the deductions and other adjustments that tie to the federal system.

        I agree, that as things stand now, it is effectively a flat system where almost everyone pays the same rate.

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      glad to see you didn't waste too many of the taxpayers' dollars by wasting time in English composition class in school.

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    The Oregonian is in a tough spot, and they're handling things exactly the wrong way. Media is changing. The dead-tree business model is outdated, and to continue to stay (marginally) profitable, the O has chosen to cater to advertisers, not readers.

    A newspaper's lifeblood is its credibility. The moment readers believe that has been compromised to sell papers, the delicate balance that makes the "news hole" worth reading is lost.

    Faced with the loss of both readers and advertisers, the O has thrown in their lot with the one that pays the bills. You can't blame them, but you also can't see how this is a long-term strategy to save the paper. Using juiced stats to make an editorial point can't be justified. The O knows this--and that's what's sad.

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      After years, no decades (!) of home delivery or daily purchase, I have let it go. I was willing to pay $1.00 for 24 pages (with net 14 pages of editorial content, including 5 about sports). But no more. I haven't found a reliable replacement for local and state-wide news, so OPB's newscasts become more important to me (and I suppose I'll throw some extra $$ at them).

      I think the loss of a trusted newspaper is a huge blow to an informed citizenry and I'm left to pray that Steve Jobs or some other tech wizard can create a replacement. I'd certainly pay for it.

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    How do they achieve this result? Skew the weightings.

    Well duh. Of course they skew the ratings to reflect which parameters are more important to them.

    If you are looking at buying a house, you might have 10 criteria that you are looking at. I would suspect that # of bedrooms, quality of schools, and crime levels might have a higher weight than the color of the house.

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      Yeah, but on two key criteria that are actually quantifiable and provable - property tax and sales tax - Oregon is at the low-tax end. (Though I fail to understand how we're #4 for sales tax when our sales tax is zero.)

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        Like you always say, taxes aren't the only factors...

        I have no clue how they distinguished between the 5 no sales tax states. They clearly don't assign the same number to states with the same score. All 5 should have been given a 1 ranking.

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    The Oregonian and their editorial board is clearly in the back pocket of the democrat party.The Oregonian clearly is blatantly left wing biased and thats is a big reason why they are losing so many subscribers.When has the Oregonian ever mentioned in an editorial or ever published a letter to the editior mentioning how much we really actually spend per pupil on k-12 education or how much the state govt all funds budget really is?

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    Kari when you actually include every hidden tax like fees,system development charges,excise taxes,property taxes and etc people and businesses actually really pay which your argument dont include we are not at the low tax end like you progressives claim.We are much higher than you claim.Kari if we are at the low tax end on property and sales taxes like you claim then tell us why Oregon still has a double digit unemployment rate then?

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      When the world's largest businesses say Oregon is very nearly the best state to do business in based on the overall tax burden, they make you look pretty foolish there, Matt. Reference the COST study.

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      Kari if we are at the low tax end on property and sales taxes like you claim then tell us why Oregon still has a double digit unemployment rate then?

      Simple. Low taxes have nothing to do with employment.

      I know that's right-wing dogma, but I challenge you to prove your principle.

      Show some data that proves that states with lower business taxes have consistently higher rates of employment.

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    I didn't follow the methodology- are the ranks based on asking people to evaluate every state, or are they asking about the relative importance of different factors, then applying that weighting to a basket of statistical indicators compiled by state?

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      BJ, the methodology is not spelled out, but you raise a good question. If the people who responded only ranked a limited number of states, how did they compare states with rankings by different groups of people without a common standard. At the same time, if everyone ranked every state you would have most of the respondents ranking states without any real personal insight. How many states would you be able to honestly comment on regarding their attitude toward business.

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        My thoughts as well. It's hard to make anything of this without knowing what they did.

        That said, there is plenty to talk about on this meme here: http://www.oregonlive.com/business/index.ssf/2010/02/oregon_startups_find_success_-.html

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          Jive is now moving its headquarters to Silicon Valley to be closer to the talent:

          "Our reason for being in the valley is really clear — this is where the talent resides," said Zingale (CEO), adding that Jive expected to compete with Facebook and Google to lure engineering talent. It will keep a presence in Portland, its former headquarters.

          http://www.siliconvalley.com/news/ci_15112563

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            Jive is a classic case. The CEO lives in Palo Alto and the venture funds are there so even though it is more expensive and the taxes are higher the headquarters was moved. However, because of the lower cost to operate in Oregon, the bulk of the staff will remain here. The same logic is true for Intel.

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              I'm not sure if "keep a presence" is the same as "the bulk will remain here". Short term, perhaps.

              There may be more to this in the coming months.

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    Just admit it! For better or worse, Oregon is not a pro-business state, and it shouldn't surprise anyone that it does not appear at the top of the rankings.

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    OK, gang, someone answer me this one: Chief Executive says that their survey was "conducted in late January of this year." The M66-67 election took place on Jan. 26th. The O editorial wants to see it as a backlash against passage of the measures - so we're to assume it took place between Jan. 27-31? Hmmm.

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    The Oregonian, now in the Chis Anderson era, seems obsessive about beating a dead horse. I really don't recall such obsession with a past ballot measure campaign. How many FEATURED Ed Board OpEds have they run since Jan. 26 in full volume whine about 66-67?!

    If any of the Corps faced w/ the minimum (estimates 2/3 - 3/4 of Oregon corps would only pay the minimum, a $140 increase), moved northward to Washington, their "savings" would have been sucked up by the registration of their first company vehicle.

    Back to the Survey - that Nevada is in the top 5 "favorables" is balderdash. Vegas is one of the top Housing sink-holes, the state has HUGE unemployment #s, and in Reno, where the construction and growth had never stopped since the town was dubbed "Lake's Crossing," the construction industry is in the tank w/ literally no new building.

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      I really don't recall such obsession with a past ballot measure campaign.

      You obviously weren't around during the "Death With Dignity" ballot measure elections.

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    Last year (2009) Oregon was ranked 18th out of the 50 states and the District of Columbia as business friedly by CNBC.

    Oregon's job gain in April (2010) is the largest since 2007. Most of the major industries performed near their normal pattern.

    Business owners across Oregon complain about the lack of a well trained educated work force. Business owners want team players who show up for work on time with adequate verbal, reading and math skills and can pass the drug test.

    Hard core unemployment is always around 3% in good times and bad. Subtract 3% from the current unemployment rate in Oregon of 10.6% and the real unemployment rate hovers at 7%.

    As to M66/67 the Oregonian's obsession (per Carla's excellent post), suggests a motivation on their part to continue to float the phantom exodus of businesses.

    Take note: The messaging from the GOP is the same in every state. Taxes are too high on businesses (insert any state name) so we're leaving.

    Oregon had the third lowest ratio among 50 states prior to the passage of M66/67. Oregon now ranks 5th from the lowest in business taxes since the passage of M66/67.

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    Taxes, fees and excessive regulation Kari have a lot to do with employment.low taxes, low fees and a very business friendly environment is what Oregon lacks no and a dynamite wow everyone leader.Low taxes Mr Chisholm contrary to what you progressives believe have a huge effect on jobs because businesses will want to be in a business friendly environment that has low taxes, low fees, less regulations and etc.Prove it to me otherwise that low taxes have nothing to do with employment because yes they do.Oregon is not as low a tax state Kari as you claim.prove it taxes and regulations Kari have nothing to do with employment and where businesses locate and want to remain?look at Texas and Washington Kari they have lower overall total taxes even with only a sales tax and no state income tax than Oregon does,so consequently they have less fees,less regualtions,lower unemployment rates and a significantly more business friendly environment than Oregon has.Care to refute that Kari?

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    Oregon has constitutional limits on property taxes and has no sales tax. That makes Oregon highly dependent on income taxes. Local taxes are set by local governments and voters. Oregon could and should have a sales tax and reduce personal income taxes but has voted sales taxes down 9 times. Oregon ranks high in correction spending, due to an inititive put forward by the GOP (Kevin Mannix) and approved by voters.

    The Tax Foundation is where Matthew would find that Oregon ranks about in the middle when local taxes are included. Where Oregon's spending is near the top is the spending on pension benefits and employee health care due to strong public employee unions. That is where legislators on both sides of the aisle will focus because it is crippling local school districts resulting in shorter school years and high class sizes.

    The district I am most familiar with cut 9 million with salary reductions for every single employee last year. This year the district must cut nearly 5 million dollars. In 2011-13 school districts expect even more devastating cuts when a very deep reduction in state funding is expected.

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    Paulie the only problem with your argument is taxfounadtion which i have looked at does not include all the hidden taxes like fees,system development charges,excise taxes,property taxes,space lease payments and total taxes on profits and etc that businesses pay.We are much higher when you include everything people and businesses really actually pay which taxfounadtion does not include.Look at California and see how far in debt they are before you say that a sales tax is the solution.Paulie the solution in Oregon is a major league cut in the size of the state govt and eliminate all spending on consultants thereby saving the state millions of dollars that could be put in a rainy day fun.When is the last time the size of the state govt in Oregon has ever been cut Paulie?You are so right about pers and public employee benefits.

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    There are 4 states with lower business taxes than Oregon.

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      But 62% of Oregon corporations are S-Corps, which passthrough their corp income to the individual owners. Those owners then pay at the individual tax rate, which could be the highest in the country.

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