State Labor Council Celebrates Washington's Friendly Business Climate. Really.

WashACE, along with many business groups, has labored long to improve the state business climate. So we're delighted to have the Washington State Labor Council come along to tell us we've been doing a good job. Well, that's not exactly it. Their take, announced in the first of a special series of reports called "Outside the Echo Chamber," seems to be that because a number of think tanks, magazines, and economic development outfits rate Washington as a good place to do business, we should stop talking about what we need to do to improve.

I encourage you to read the cleverly written piece. It even begins with a nice bit from back when Al Franken was intentionally funny (the good old days). Report author David Groves, riffing on the self-help schtick from Franken's Stuart Smalley bit, argues that Washington's political leaders need to get over their insecurity and recognize what a gosh-darned business friendly state this is. Specifically,

Stop believing the politically motivated, demonstrably untrue rhetoric within the state that suggests this is a bad place to do business.  Start looking at what national business publications and public policy organizations -- which don't have an agenda or vested interest in the outcome -- are saying about us.  And finally, work together to build on our considerable business-climate advantages to make Washington an even more attractive place for businesses and industries.

OK. I agree with that last sentence. And, contrary to the convenient straw man the piece relies on, we don't argue that "this is a bad place to do business." As I've written before, I don't put much stock in national "best place" ratings. I expand on the theme in this 2007 column. To the extent that they're useful, they offer us a glimpse of the factors some folks think are important.The components of the constructed indexes are generally more informative than the headline rankings, which are always artificial.

And, of course, the notion that major public policy organizations "don't have an agenda" is touchingly naive. For example, the Small Business & Entrepreneurship Council and the Tax Foundation - the two groups the WSLC cites on business taxes - routinely stack the decks against states that have an income tax. The way they construct their business tax climate rankings, as we've written before, reflects their bias. The Washington Research Council examines the issue in some depth in this 2003 report. (The indexes have changed somewhat, but without fundamentally altering the results or the biases.)

For some reason, the labor council doesn't see the value in looking beyond the headlines. Our efforts to understand better the rankings is dismissed this way.

Meanwhile, with every new positive assessment of our business climate, state business groups go into "damage-control" mode by picking apart each study's methodology and explaining why these national groups just don't understand the unique burdens state and local governments place on businesses in our state.

As if the businesses we want to retain and recruit don't have the capacity to pick apart the methodologies and understand the "unique burdens" of locating here.

Well, there are some folks who think business doesn't understand the risks and rewards inherent in location decisions. John Burbank, for example, writes today that Boeing just doesn't understand why South Carolina would be a bad place to go. I, too, want the company to put its second 787 line here. If they do, it won't be because someone tosses out offensive and dated references to the old Confederacy to put down an aggressive and qualified competitor.

If what the WSLC wants is a realistic assessment of the costs and benefits of doing business in Washington relative other states and nations, we agree. In this Washington Business column, we look at the rankings game.

In the Redbook, published by the Washington Alliance for a Competitive Economy, we include 54 separate ranking tables ranging from business taxes to science and engineering doctorates.

Washington Research Council economist Kriss Sjoblom, who guides production of the Redbook, says, "Too often, the main goal of index authors is to grab headlines or sell magazines rather than to provide guidance to policy-makers." We prefer to give people the data and let them draw their own conclusions.

That same column reviews some extensive research done by Kansas Inc., that state's economic development group. Here's the conclusion:

In the end, after all the sophisticated data analysis, the KI study concludes: "The most important elements of business climate appear to be tax and regulatory burdens imposed on firms." In other words, the bottom line is still the bottom line.

And the details still matter.