Wyoming Not Best for Businesses

In their annual state business climate study, CNBC ranks Wyoming an overall 26th for state business climate. This study, which is far more comprehensive than what the Tax Foundation puts out every year, is never quoted by our state lawmakers. 

The study consists of ten categories and more than 60 variables, where we rank as follows:

Cost of doing business: 20. This category weighs together tax climate, "business incentives" (think economic development, a.k.a., corporate welfare), utility costs, costs of renting offices, warehouses and other business facilities, and wages and other workforce costs. 

One problem for Wyoming under this category is that health insurance is expensive. Unless a business is ERISA exempt and can provide a plan for its own employees across state lines, it has to buy insurance locally. This is not cheap in Wyoming, much thanks to the regulatory burden and monopolization that our state legislators have allowed to happen in both health insurance and health care. In addition to basically having only one insurance provider, we have a creeping socialization going on in our hospitals. There comes a point where this process makes a key element in workforce compensation - health insurance - prohibitively expensive for smaller businesses. 

A corporate income tax, currently being considered by the Revenue Committee, would hit Wyoming hard in this category.

Business friendliness: 10. This is the category that measures regulations and litigation climate. Since regulatory compliance is really a business cost, it would make sense to merge this category with the previous one, but it is also more difficult to measure the cost of the regulatory burden on businesses. This is also a category that tends to hit businesses differently depending on industry. Regardless, by being ranked tenth, Wyoming has to be very careful not to put any more regulatory burdens on our state, especially since there are talks about a corporate income tax, which would hit ur hard in the previous category. 

Workforce: 22. This is an important category, in part because it measures how skilled our workforce is. The often-mentioned STEM (Science, Technology, Engineering, Math) categories weigh heavily. This metric for our state's business climate was discussed individually during the Republican gubernatorial primary campaign, and was then inaccurately used as a reason to throw more money after corporate welfare. 

However, there is one part in this category that has not been given much attention: workforce productivity. This is a variable where we know very little about our state's performance. When the Wyoming Center for Political Economy is up and running (help me make it happen!), we will study this as part of a tutorial about the Wyoming economy.

Infrastructure: 12. Given the loud complaints about how we do not have 27 daily flights between Wyoming and Denver, you would think that we as a state are an isolated island, drifting off the Arctic coast somewhere. With that in mind, scoring 12th out of the 50 states is surprisingly good. 

Overall economy: 30. This category measures job creation, GDP growth, consumer spending, the real estate market, and a few other variables. Our 30th place is better than one would expect, given our abysmal growth record in recent years, both in GDP and in private-sector jobs. However, a recent recovery in minerals production is likely to have boosted our GDP numbers. That said, any change in our tax structure that makes it more costly to do business here, and makes life more expensive for our families, will easily send us tumbling in this category. 

Quality of life: 20. Contrary to what some political insiders suggest, this category is not about access to Gold's Gym or Saks Fifth Avenue. This is about access to quality, affordable health care, low crime, access to parks and recreation, and environmental quality. 

Technology and innovation: 49. Only West Virginia does worse here. Again, we have a category that has been misrepresented by our politicians. This is partly about the high-tech industry and its presence in our state, but it is also about the number of patents issued, relative the size of the state. There is a very good reason why Wyoming does not score well here: our government sector is so big that it gobbles up workforce that would otherwise be available for both local an immigrating businesses. It is hard for a corporate start-up to compete with a government that uses taxpayers to artificially inflate compensation up to 50 percent above the average compensation in the private sector. This cost threshold is hard to overcome, and therefore it is difficult for new businesses to establish, including those that pop up around new patents.

Speaking of patents, we also score poorly in a closely related category:

Access to capital: 47. It is difficult for Wyoming businesses to attract venture capital. I have repeatedly pointed to this category as a sore spot for our state, but our elected officials continue to ignore it. They prefer to use taxpayer money and "economic development" to fund businesses. 

Wyoming cannot afford to worsen its business climate even one inch. We are losing population, we have not been doing well in growing the private sector and we continue to rank as having the biggest government of all states. We cannot afford higher taxes, we cannot afford to waste time on useless "efficiency" studies, and we certainly cannot afford to wait longer with structural spending reforms. 

You can read the full list of categories and methodology here

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