Washington State Falls to 37th in CEO Ranking for Best Places to Do Business

According to an annual survey of 650 business leaders conducted by Chief Executive—a magazine for CEOs of U.S. companies—Washington State ranks 37th out of U.S. states as a place to do business, a ranking that saw the Evergreen State drop three places since last year.

(See the complete rankings and supporting data in the article at Chief Executive.)

Chief Executive asked business leaders to grade each state on its tax and regulation policy, the quality of its workforce and its living environment.

On the specific grade for taxes and regulation—key legs of successful business posture—Washington ranked 34th, and each of Washington’s candidates for governor will be working hard to convince voters this fall that they alone can begin to bring Washington out of its current malaise.

If the results from the Chief Executive survey are any indication, Republican gubernatorial contender Rob McKenna has a real advantage when making the case that Republican ideas about free enterprise promote a pro-business climate in a state where Democratic policies tend to chill the attitude of leaders in the private sector.

We went beyond the poor individual ranking of Washington State to take a deeper look at the Chief Executive survey data, adding on a layer of information about the partisan composition of each state’s government. We found a strong correlation between the perception of a state as a good or bad place to do business and which political party is in control, and the disparity grows in relation to the control one party has.

In this case, the trends we found in the data support a belief held by many Americans—Republicans do much, much better at arranging government in a way that supports private sector growth.

To see the top-level trend, one does not need to go much further than the states at the poll’s extremes. Republican-controlled Texas held the top spot for the eighth successive year, a streak Democrat-dominated California matched only in length by coming in dead last for an astonishing eighth consecutive year.

Of the states ranked in the top 10, nine have Republican governors; in the bottom 10, seven have Democratic governors. As a group, states with Republican governors in the survey had an average ranking of 19.66. The average ranking for states with Democratic chief executives was 33.30.

An even more stunning statistic is that between 2011 and 2012, states with Republican governors bettered their Chief Executive survey rankings by a combined 30 places; those with Democratic chiefs lost 26 places.

If the phenomenon of how dangerous Democratic governors appear to be for state economies seems unreal, the effect of partisan control is exaggerated further when the degree of control one party has over state government is considered.

We took the next step to factor legislative control into our enhanced tabulation, and found that states in which Republicans have total control of the governor’s office and the legislature fared even better—the average ranking in that cohort was 18.32—than those with only a Republican governor. Comparatively, states in which Democrats held solid control of government averaged 38.41, even worse than when only the governor’s office was in Democratic hands.

While it may be problematic to use a single survey to make conclusions about which political party is doing a better job of cultivating business and by extension jobs, the Chief Executive rankings represent the opinions of men and women who make their living by choosing where to do commerce and hire workers.

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[feature photo credit: kag2u]