How competitive is NY? (cont’d…)

by E.J. McMahon |  | NY Torch

New York State’s relative economic performance wasn’t so hot in the recent past — but its outlook for the future is worse, according to the just-released 7th Annual Rich States, Poor States report, an economic competitiveness index produced by the American Legislative Exchange Council (ALEC).

screen-shot-2014-04-14-at-111831-amThe report—co-authored by noted supply-side economist Arthur Laffer Stephen Moore and Jonathan Williams—ranks states in two ways.

The backward-looking Economic Performance Measure is based on each state’s 2002-12 performance on three variables: State Gross Product (GSP), Absolute Domestic Migration, and Non-Farm Payroll Employment—”all of which,” the report notes, “are highly influenced by state policy.” New York had an overall ranking of 35th out of 50 states, based on sub-index ranking of 28th on GSP growth, 50th in domestic migration, and 21st in payroll jobs growth.

ALEC’s forward-looking Economic Outlook rankings are based on 15 equally weighted policy variables. Based on those variables, New York’s economic outlook is ranked at 50th, suggesting it will grow more slowly than any state in the future.

Other states assigned very low Economic Outlook rankings in the ALEC report include neighboring Connecticut (44) and New Jersey (45), as well as Vermont (49), Illinois (48), California (47) and Minnesota (46). At the other extreme, the five most highly ranked states, starting at the top, are Utah, South Dakota, Indiana, North Dakota and Idaho.

Methodology matters

Another New York neighbor and sometimes-competitor, Massachusetts, has an outlook ranking of 28th in the ALEC report. The Bay State ranked #1 in the Annual State Competitiveness Index released last week by the Beacon Hill Institute of Boston.

The BHI report, which put New York at 26th as of 2013, was based on a different methodology that considered different factors considered important to business, such as labor force skills and per-capita patent issues.

ALEC’s heavier emphasis on fiscal and cost factors results in above-median rankings for states like  Alabama and Mississippi, which ranked very low on the BHI scale.



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