How competitive is New York?

by E.J. McMahon |  | NY Torch

New York perennially lands at or near the bottom of state rankings based heavily on measures of government spending, taxes and regulatory burdens. However, taking account of other factors that play more to New York’s strengths, the Empire State’s ranking soared to 26th in the 13th Annual State Competitiveness Report, just issued by the Beacon Hill Institute of Boston, Ma.

screen-shot-2014-04-11-at-123022-pmThe BHI’s index is derived from rankings on eight sub-indexes designed to represent factors considered important to promoting economic growth. Within those sub-indexes, the Empire State’s lowest rankings were 45th in Government & Fiscal Policy, which includes taxes and spending, and 50th in Infrastructure, which includes measures of housing affordability and energy costs as well as commuting times.

New York’s best sub-index ranking was 6th place in the category of Openness — which the BHI index uses to refer to the openness of the economy to global trade, measured by exports, as opposed to government transparency. Other relatively high sub-index rankings for New York included:

  • 11th in Tech, reflecting “research funding, the number of patents issued, the proportion of scientists and engineers in the labor force, and the importance of high tech companies”;
  • 15th in Security, a measure reflecting the crime rate and other public safety indicators;
  • 18th in Environmental Policy, “which among other things reflects the levels of air pollution and of toxic releases,” the report said, adding: “Decent air quality is a measure that states are pursuing policies that mprove the environment, and attracts workers and investors; and
  • 20th in Human Resources, reflecting the level of labor force participation and availability of skilled labor and commitments to education, training and healthcare.

New York’s overall ranking on the BHI scale has improved over time, from 40th in 2005. It reached as high as 29th in 2011 but declined to 34th last year before bouncing back to 26th for 2013.

What it all means obviously is a matter of perspective. Incumbent politicians such as Governor Cuomo might seize on the BHI index as evidence that New York isn’t all that bad and is improving. On the other side, a skeptic would note that New York doesn’t manage to rise above mediocrity even when more emphasis is given to areas in which it is stronger.

The top-ranking state on the latest index was BHI’s home base, Massachusetts, followed in order by North Dakota, New Hampshire, Nebraska and Minnesota, with Iowa, Colorado, Utah, Texas and Virginia rounding out the top 10. The lowest overall rankings were assigned to Alabama, Oklahoma, West Virginia, Hawaii and, in last place, Mississippi.

BHI’s executive director, economist David Tuerck, explained the index at a September 2012 Empire Center conference in Albany. Click here to view the video.



- E.J. McMahon is the Research Director at the Empire Center for Public Policy.