• WisBusiness

Monday, May 7, 2012

Tom Still: With magazine rankings on business climate, perception can become reality


By Tom Still
The first thing to recognize about magazine polls on state business rankings is they are all, by nature, subjective.

That's not necessarily bad, of course, and it's not meant in the least to downplay the fact that Wisconsin has climbed to No. 20 on the list of "Best States/Worst States" list published by Chief Executive magazine.

In fact, it's intended to underscore the importance of public perception when it comes to economic development.

Two years ago, Wisconsin was ranked 41st in the Chief Executive rankings, one of many such rankings published by national trade magazines that follow the economic ups and downs of the 50 states. This year, Wisconsin ranked 20th – thanks to a 17-place leap the previous year and four more notches up in the 2012 rankings.

Because the Chief Executive rankings rely in part on a survey of C-level executives around the country, it reflects perception as much as it does hard statistical fact. For many of those execs, the word is out that Wisconsin's budget is coming back into balance, that tax burdens are moderating, and there are strong incentives to grow, retain and attract businesses.

Chief Executive writer Dale Buss, who once worked in Madison, took note that part of Wisconsin's climb is based on how it treats entrepreneurs.

"The state ranked fourth last year in tax costs on new firms, as calculated by the Tax Foundation, and a Kauffman Center Index on Entrepreneurial Activity showed Wisconsin with the seventh-largest rise last year among the handful of states that did better at all," he wrote.

The magazine also cited Wisconsin's new public-private approach to economic development, led by the transition of the former Wisconsin Department of Commerce into the Wisconsin Economic Development Corp.

"In the short time since WEDC was formed, we've created a groundbreaking model for advancing target industry sectors—one which delivers customized programs that support significant job creation," said Secretary Paul Jadin in reacting to the magazine rankings. "We've refocused and expanded our international outreach efforts. And we're taking innovative steps for entrepreneurial support through early stage investment strategies."

The magazine also praised specific sector initiatives, such as Wisconsin's drive to become the nation's water-technology leader, and its innovative tax credit program for angel investors. Since they took effect in January 2005, Wisconsin's angel tax credit program and related efforts have increased angel investments from less than $2 million to more than $61 million.

Make no mistake, the rankings also reflected politics. The Chief Executive survey reflected the anti-union sentiments of some business leaders, who scored right-to-work states higher and who praised Gov. Scott Walker for his fight with key public-employee unions.

For the record, Texas was No. 1 and the top-tier of the magazine's rankings reflected the usual mix of Sunbelt and Rocky Mountain states. California, which is fighting a massive exodus of talent and companies, was a dismal 50th.

For Wisconsin, it was instructive to see how the rest of the neighborhood is doing. Indiana was fifth on the list, thanks to a steady record of attracting venture capital and keeping taxes in line, while Iowa was 22nd, Minnesota 36th, Michigan 46th and Illinois 48th. Just beyond our immediate borders, North Dakota was 15th, South Dakota 19th, Missouri 24th and Ohio 35th.

State-by-state rankings on just about anything from bicycle paths to food to alternative lifestyles sell magazines, so it's no surprise that so many publications take a hard, regular look at state business climates. In a country where commerce flows freely over state borders, those kinds of facts and perceptions matter.

While rankings in individual rankings should be taken with a grain of salt, the collective picture can be important. If Wisconsin is on the rise – or perceived as much – in the eyes of editors, writers and pollsters in a number of locations, it becomes easier to make the case that there's more behind the rankings than just fluff.

So, let's accept the good news while we can – and continue to make the case that Wisconsin's new-found perception is truly reality.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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