What the Rankings Tell Us

by Ryan Streeter

Utah tops the Beacon Hill Institute’s 2007 State Competitiveness Rankings, passing last year’s leader, Massachusetts, which moved into second place this year.

The rankings show which states have better policies in place for sustaining high levels of per capita income and continued economic growth. The biggest gainers, Idaho and Wyoming, moved from 14th to 5th place, and 24th to 10th place, respectively.

Southern states continue to struggle in the index: there are no southern states in the top 15. In fact, Alabama, Mississippi, and Louisiana took the last three spots, respectively.

Some people ask whether such rankings matter. They are important for two main reasons:

(1) Since they are based on weighted measure that considers data from 8 categories (such as government tax policy per capita, educational attainment data, infrastructure data, etc.), they provide a good window to how friendly states are to business growth and how likely they are to see steady per capita income growth.

The data in the rankings report can help lawmakers and businesses understand how to improve their respective state’s overall competitiveness.

(2) The rankings also provide a lens for businesses into the kinds of factors that improve quality of life for residents of a state. As such, they are particularly helpful to businesses as corporate citizens.

By understanding what is driving overall quality of life improvements, businesses are better equipped to align their philanthropic efforts with other critical objectives of their company, such as recruiting and retaining the best talent.

It is also important to weigh such rankings against others, such as Milken Institute’s Best Performing Cities rankings, which look at growth in metro regions.

Comparing the rankings provides balance. For instance, Louisiana and Alabama, 2 of the bottom 3 ranked states on the Beacon Hill list, are home to 2 of the 3 biggest gainers on the Milken list (Lafayette, LA, and Mobile, AL).

When companies are making decisions about corporate citizenship investments, the more information, the better. Businesses are interested in impact, and rankings such as these are helpful to understanding where they can play an effective role.