Wednesday, January 31, 2007

Stuck in the middle in Illinois

Posted By on 01.31.07 at 06:18 AM

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Ranking states economically is usually a game played to promote some political idea. At least the Corporation for Economic Development's 2007 "Development Report Card" is more sophisticated than the usual business-climate rankings.

"In the 1980s, 'economic development' was frequently viewed as primarily about companies. This outlook was further popularized by the many tools available that compared states’ 'business friendliness.' While these ratings captured some important points, they often emphasized 'low cost' instead of 'high value.' The cheapest locations—those with low taxes and wages—got the best grades.  These tools encouraged policies to weaken regulation, even if that regulation protected things like the environment and worker safety. An area’s good business rating could be damaged if workers were paid wages and provided benefits that were sufficient for their needs, even when public incentives were provided to their employers."

CFED's more balanced report card uses 67 measures for each state, including infant mortality rates, teacher pay, and income distribution. It gives Illinois mixed grades, ranging from an F in "employment" to an A in both "competitiveness of existing businesses" and "financial resources." Overall, Illinois' grades seem a little better than average. Last summer the more conventional Forbes.com ("the best states for business") ranked Illinois a dismal 44th out of 50.

While the two rating schemes often disagree, they don't seem radically out of line with each other. CFED's only straight-A states, Delaware and Connecticut, were ranked 8th and 28th by Forbes. Forbes.com's favorite state, Virginia, got  straight Bs from CFED; Forbes.com's least favorite state, Louisiana, got two Fs and a C from CFED.

But things are about to change. Illinois' greatest strength in the 2007 CFED report card was being number two in "change in energy costs." Com Ed's big rate hike seems likely to blow our 2008 report card.

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