Georgia’s rankings for business climate vary

Cagle cites magazine to praise state, but other ratings less generous.

Lt. Gov. Casey Cagle has pitched his candidacy for Georgia governor as a promise to maintain Georgia’s reputation as one of the most business-friendly states in the country.

“Keep Georgia the No. 1 state to do business,” the Republican’s campaign website says.

In saying Georgia is the No. 1

“For four years in a row, we are the No. 1 state to do business in.” — Lt. Gov. Casey Cagle on Thursday in a meeting with small business owners

state to do business, Cagle was citing a list put together by Site Selection, a magazine that specializes in business relocation and expansion, campaign spokesman Joseph Hendricks told us.

Site Selection said Georgia had the best business climate in the country for the fourth year in a row.

As evidence of Georgia’s success, the Site Selection article pointed to growth in foreign direct investment and the film, health and auto industries. It also listed several major corporations that have recently decided to expand in Georgia: athletic shoe manufacturer Adidas, health insurance company Anthem, diversified technology company Honeywell, and tire maker Sentury Tire.

Site Selection is the “goto magazine for site selection professionals,” said Jeff Humphreys, director of the Simon S. Selig Center for Economic Growth at the University of Georgia Terry College of Business.

Cagle is far from the only Georgia official to reference the Site Selection ranking. It’s been touted by the Georgia Department of Economic Development, Gov. Nathan Deal and the Georgia Chamber of Commerce.

Site Selection is a credible source, experts told us — but they added it’s not the only one.

Among better-known and respected rankings, CNBC places Georgia second, while Forbes places it seventh.

Other credible rankings, though, list Georgia lower. The Beacon Hill Institute for Public Policy Research, for instance, had the state 24th.

When researchers at Ball State University created a composite score for each state using a number of these best-state-for-business rankings, their measure placed Georgia No. 15 in 2016. That’s basically in the top one-third of states.

“The problem with rankings always lies in the factors they include,” said John E. Gnuschke, director of the Sparks Bureau of Business and Economic Research at the University of Memphis. “No standard scale exists for saying that one state is better.”

The Site Selection methodology gives half its weight to a survey of corporate site selectors, and the other half to an index of seven metrics, including facility locations and expansions, total projects, and tax burdens.

“This topic is an enormous can of methodological worms,” said Lee McPheters, an economist at the W.P. Carey School of Business at Arizona State University.

As researchers at Arizona State University noted in a 2014 report, the list of factors important in siting a headquarters or research and development facility “can be quite different from the most important factors in locating a manufacturing plant or some other type of facility.”

In addition, experts said, the question of how much weight to give to low business taxes and regulation ultimately owes something to a value judgment about what’s important.

Michael Leeds, who chairs the economics department at Temple University, cautioned that “the best place ‘to do business’ is not always the best place to work.”

Our ruling

Cagle, talking about Georgia, said, “for four years in a row, we are the No. 1 state to do business in.”

A well-regarded business magazine, Site Selection, has listed Georgia as its best state for business for the past four years. But that’s just one publication’s ranking; others offered different ratings, and it’s impossible to say that one methodology is the perfect one.

Cagle’s statement is partially accurate. We rate it Half True.