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 population, few 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)