Why does RI lag Minnesota and Mass. in the CNBC rankings?

It’s that time of year again – time for Rhode Islanders to gnash their teeth over the new CNBC rankings.

Rhode Island is #49 on this year’s Top States for Business list – up from #50 last year, with Hawaii taking over last place. While some liberal experts argue the rankings are misguided at best, Rhode Island Senate President M. Teresa Paiva Weed has publicly committed to improving the state’s standing.

A quick glance at the top three states – South Dakota, Texas and North Dakota – suggests the General Assembly’s first step should be to tap into Rhode Island’s huge oil and gas reserves. Alas, those don’t exist.

A better starting point for comparisons would be two other blue states that nevertheless manage to do quite well – and much better than Rhode Island – by CNBC’s estimation: Minnesota (#15) and Massachusetts (#16).

The first surprise is the one and only category – out of 10 – where Rhode Island beats the other two blue states: Cost of Doing Business, where Rhode Island ranks #34, Minnesota ranks #39 and Massachusetts ranks #47. CNBC says the category measures state and local taxes, utility costs, wages and rents.

Then there are the three categories where Rhode Island does much worse than both Massachusetts and Minnesota, rather than just one or the other:

  • The first is Economy (Mass. #3, Minn. #10, R.I. #49) – no surprise considering the jobless rate.
  • The second is Technology & Innovation (Mass. #7, Minn. #18, R.I. #42) – a perennial problem for a state with a less educated populationfew major corporations to invest in R&D and limited taxpayer support for tech companies and basic research.
  • The third is Business Friendliness (Minn. #15, Mass. #22, R.I. #46), which CNBC says reflects “the ‘friendliness’ of their regulatory frameworks, with particular attention to the legal and liability climates,” though it’s unclear how that was actually quantified.

Rhode Island also performs especially poorly – though not much worse than Massachusetts – in the CNBC categories of Infrastructure (Minn. #8, Mass. #40, R.I. #47) and Cost of Living (Minn. #34, Mass. #43, R.I. #44), and a good deal worse than both in Workforce (Mass. #28, Minn. #32, R.I. #42).

Another way to look at it: Massachusetts and Minnesota both rank among the top half of states in seven of CNBC’s 10 categories, but Rhode Island only ranks among the top half in three – and even in those three Rhode Island doesn’t do better than the other two states: Quality of Life (Minn. #1, Mass. #13, R.I. #20), Access to Capital (Mass. #1, Minn. #17, R.I. #21) and Education (Mass. #7, R.I./Minn. tied #23).

Basically, in the areas where Rhode Island is good it’s not that good – but in the areas where Rhode Island is bad it’s really bad (at least if you trust CNBC’s methodology).

As Rob Atkinson told me last year, “You’ve got two choices as a state: You can be Minnesota, where you have high costs but super-good quality, or you can be Mississippi, where you’ve got low costs but bad quality. And the whole problem is Rhode Island’s got the costs of Minnesota and the quality of Mississippi.”

The question Rhode Island lawmakers – and their constituents – should be asking is this: if the General Assembly’s Democrats are ideologically committed to Minnesota-level costs, what did they do during this year’s legislative session to make sure they achieve Minnesota-level quality, too?

• Related: The anti-CNBC rankings – why RI is a well-being success story (July 26)

7 thoughts on “Why does RI lag Minnesota and Mass. in the CNBC rankings?

  1. All of the top 20 except mass and minn. are red states. So, the best thing pava weed and the dems can do for RI is not run again.

  2. Ted, does it really matter what CNBC states? You are talking about Rhode Islanders. If it isn’t NESN, Jerry Springer, Maury, Dr. Phil,ESPN, or WJAR, Rhode Islanders don’t watch it. The average Rhode Island dosen’t even know what CNBC is for that matter.

  3. I think there is some interesting data than cannot be ignored. However it also should be noted that in Texas, which consistently ranks high in these business rankings (#1 last year in CNBC and #2 this year), one-in-four of its residents do not have health coverage. They may have a good business climate for bottom feeding businesses but certainly Texas is not an economic model for the rest of the country. http://www.texmed.org/Uninsured_in_Texas/

    • I Heart Well Stone, They don’t have 20% of their population on food stamps as Rhode Island does. The downside to Texas is that Houston has 400K illegal ailens, they have over twice the population as Rhode Island but have 17 times as many millionaires. Give me Houston over Rhode Island. Houston has better quaility restaurants, better housing which is affordable, better paying jobs, a more ethical government and does not have over compensated public sector employees like Rhode Island. Houston is a place where two thirds of the mothers of young children can afford and stay home with their kids. That means being able to have a house on one salary. In Rhode Island most families need at least two jobs to get by. You stay in Rhode Island with the rest of the ghetto trash that thinks Federal Hill and pasta are the best things in the world.

  4. I don’t think I’ll be gnashing my teeth over this, pretty much obvious to anybody with two working brain cells. If you need this report to figure out that Rhode Island is an economic toilet please do not reproduce, heaven knows we don’t need any more nitwits in this state then we have already. As for the GA working to improve the ranking, I was rolling on the floor laughing at that one. As if.

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