Missouri Drops in CNBC Ranking

CNBC has just released its annual ranking of America’s top states in which to do business.

After comparing more than 60 measures across states, all from publicly available data, CNBC put Missouri at a mediocre 31st in 2016. This is down five notches from its 2015 position of 26th. (Utah gained the top spot; a complete listing is available at http://www.cnbc.com/2016/07/12/americas-top-states-for-business-2016-the-list-and-ranking.html.)

Where a state lands in CNBC’s annual ranking may not be that important. But if that state is headed in the wrong direction or seems mired in the lower tiers, that could well signal that something is amiss. The table below reports Missouri’s overall rankings in the CNBC study since 2012. In all five years Missouri has had a middling outcome, though its 2016 showing is the worst. And the last three years show a downward trend.

The table also shows the areas where Missouri did its best and worst since 2012. The state has done well in the areas of “cost of doing business” and “infrastructure.” The former category looks at a state’s tax climate and government incentives to lower costs of doing business. This is a double-edged sword: Providing companies with corporate welfare may lower costs of doing business but it also impairs market forces. Infrastructure focuses on transportation: lower commuting times, the value of shipments by air, water and land, and the quality of roads and bridges improve a state’s score in this category.

On the negative side, Missouri often ranked nearly dead last when it comes to “work force” and “quality of life.” Workforce captures the education of the workforce, the ability to retain and attract workers, and workforce productivity. Quality of life encompasses factors like crime rates, quality of health care, and overall population health. While some measures included in quality of life are based on subjective survey responses (e.g., local attractions) most of this category gets to the idea that when businesses plan to relocate, there are noneconomic aspects at work.

Even though state boosters may discount CNBC’s ranking, consider the fact that three of Missouri’s neighbors—Iowa, Kansas, and Nebraska—attained a higher overall rank than Missouri every year since 2012. Suppose their promoters will use this information to our disadvantage?