by Chris Saxman
CNBC’s Top States for Business Ranking is quickly becoming synonymous with Major League Baseball’s best known worst umpire Angel Hernandez.
Why? Like Hernandez, CNBC’s Ranking keeps moving the strike zone and they are fast becoming the best known worst ranking.
Here is their explanation :
We assign a weight to each category based on how hard the states are pushing it in their economic development marketing.
They base their rankings on the marketing of the states? Not what works, mind you, but what the sales departments THINK will work. Not where people and capital are actually going, but what the collective thinking is of economic development officials. Hence CNBC added CRYPTOCURRENCY and CANNABIS as metrics.
Sort of like colleges selling climbing walls and lazy rivers. But the kids love it…
I would say “You can’t make this stuff up” but…they did. Again.
For 2019 and 2021, Virginia was ranked #1 in the country as the Top State for Business according to CNBC’s methodology. That’s a good thing.
No one disputes that it is better to be well regarded in a widely publicized ranking than to not be. Unfortunately, it can lead to a false sense of importance and success.
Like the Academy Awards.
Last year, CNBC added to its methodology the category of Life, Health, and Inclusion. Okay. Whatever. Some dismissed it as a Woke Index, but CNBC placed it at #3 in their ranking with a value of 375 points out of a possible 2500 for the entire survey.
Curiously, this year CNBC felt that LHI was only worth 325 points, or 50 points less than 2021. LHI fell in the CNBC ranking from #3 to #5. Because…why? Was it less trendy this year? Answer – YES. And that’s the problem.
It gets better or worse depending upon your state.
Here are the ranking categories and methodology CHANGES from 2021 to 2022. Possible points remained static at 2500. (Checked the consistency box there! Crack a cold one, fellas…)
2021 Methodology
1. 400 points – Cost of Doing Business
2. 375 points – Infrastructure
3. 375 points – Life, Health, and Inclusion
4. 325 points – Workforce
5. 250 points – Economy
6. 200 points – Business Friendliness (yes #6)
7. 175 points – Access to Capital
8. 175 points – Technology and Innovation
9. 150 points – Education
10. 75 points – Cost of Living
2022 Methodology
1. 410 points – Workforce (+85 points from ‘21) #4 last year
2. 380 points – Infrastructure (+5 points from ‘21) No Change in #
3. 345 points – Cost of Doing Business (-55 points from ‘21) #1 last year
4. 325 points – Economy (+75 points from ‘21) #5 last year
5. 325 points – Life, Health, and Inclusion (-50 points from ‘21) #3 last year
6. 250 points – Technology and Innovation (+75 points from ‘21) #8 last year
7. 200 points – Business Friendliness (No change in points) #6 last year
8. 165 points – Education (+15 points from’21) #9 last year
9. 50 points – Access to Capital (-125 points from ‘21) #7 last year (seriously? With interest rates jacked up?) #NotSerious
10. 50 points – Cost of Living (-25 points from ‘21) No Change in #
CNBC also added three new metrics bringing the total to 88. (EIGHTY-EIGHT metrics)
• New metrics in 2022 include child-care resources for employees balancing work and family, as well as support for emerging industries like cryptocurrency and cannabis.
CRYPTO as a metric? CANNABIS? I’m sorry…those just aren’t serious metrics. Actually, I’m not sorry at all.
Crypto + Cannabis = Click Bait and Advertising $
Naturally, partisans in Virginia took to social media to decry the Commonwealth’s PLUNGE from last year’s #1 ranking to this year’s bronze.
Just stop. It’s embarrassing and cannot be objectively supported. Worse, it calls into question any of our previous strong rankings — regardless of party in the Executive Mansion.
Postings about how Governor Glenn Youngkin’s policies have driven down our rankings will proliferate no doubt, but please remember that very few, if any, new laws were in effect while these rankings were being evaluated.
That’s right, new laws take effect on July 1 and I doubt very much if the last *checks calendar* TWELVE DAYS impacted our rankings – at all.
Just. Stop.
Partisan bickering aside, re-read the MASSIVE changes in CNBC’s methodology and try to make any sense of them. Now try to make policy. Stick head in blender and push PULSE.
If you want — reply to this email. I’m open-minded enough to hear anyone out on this.
CNBC’s rankings are, I am sad to say, 100% unmitigated bullshit.
Why sad? Because so many people actually put stock in this ranking.
Also – STOP.
Like Angel Hernandez’s strike zone – CNBC’s changing their methodology in the middle of the game is unserious. Moreover, economic development departments in every locality and state actually read this ranking and change behaviors to try to rank-up based on what everyone else did last year. So it goes like this…
“Damn the inflation! Full speed ahead on… crypto?”
Why bother? Next year their methodology will be — once again — completely different. Maybe they’ll add in recycling rates and EV charging stations. Who knows- – with interest rates up and Crypto down maybe CNBC will add in Bond Ratings.
Suddenly, that’s important again. #AndAlwaysIs #VirginiaAAA
Recent cryptocurrency losses underscore CNBC’s misplaced desire to stay relevant with the bicoastal cool kids.
CNBC shows alarming consistency in down-ranking COSTS in their methodology.
Costs.
Cost of Living ranked dead last again while losing 25 points of value and Cost of Doing Business (#1 in 2021) loses 55 possible points of value dropping to #3 in their rankings. This might have actually helped Virginia’s ranking since we have also been consistently mediocre/poor in those areas. Shhh….don’t tell policy makers.
It’s called housing costs and a reason why young professionals with college degrees leave with their subsidized education/skills in hand.
Smart.
If there was ever a year in which costs matter MORE – that year is 2022. But marketing departments weren’t selling that last year so…
*checks news feed*
Oh, look – inflation at 9.1% in June. NINE POINT ONE. Thankfully it’s just “transitory.” (Seriously, Joe – just fire ANYONE at this stage of the game) Makes you wonder just when CNBC puts together all this “stuff.” Maybe it was based on early last year’s marketing decisions?
Look, I was unimpressed last year with CNBC’s rankings but this year?
Meanwhile in 2021 these states ranked as the top states for people LEAVING according to Forbes via USPS:
1. California
2. New York
3. Illinois
4. Pennsylvania
5. Massachusetts
6. Washington (CNBC’s #2 state for business) *ahem*. New slogan “Business is so good here, people left!” Starbucks did close five stores in Seattle due to crime concerns. Branding opportunity!
7. Colorado (CNBC’s #4 state for business) Can you say Cannabis metric? Nah…
8. Indiana
9. Michigan
10. Wisconsin
Top Ten states to which people are moving?
1. Texas
2. Florida
3. South Carolina
4. North Carolina
5. Georgia
6. Tennessee
7. Nevada
8. Maine
9. Delaware
10. Idaho
My advice to CNBC if they want some credibility on their rankings? Go to a biennial review and stop chasing trends.
Chris Saxman is the executive director of Virginia FREE. This column has been republished with permission from The Intersection.
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