New York has the worst economic outlook of any state in the nation, according to the latest index of the economic competitiveness issued by the American Legislative Exchange Council (ALEC).

ALEC ranks the states based on variables including tax rates, the size of the public sector workforce, labor expenses, and the efficiency of the tort system.  The report highlighted New York (#50), New Jersey (#48) and California (#46) as extreme examples of the fiscal and economic woes associated with chronically high taxes and excessive government spending.  The highest-ranking states – those considered to have the best economic climates and outlooks – were Utah, Colorado and Arizona.

The ALEC report, entitled “Rich States, Poor States,” was co-authored by economist Arthur B. Laffer; Stephen Moore, senior economics writer at The Wall Street Journal; and Jonathan Williams, director of ALEC’s Tax and Fiscal Policy Task Force.

If the annual ALEC report was the only index of its kind to assign a low rating to New York, it might be dismissed as flawed or biased.  But New York also is ranked poorly on a number of other measures.

For example, the annual State Competitiveness Report compiled by the Beacon Hilll Institute (BHI) in Boston, Mass., assigns heavier weights to variables favoring the Empire State, such as human resources and the crime rate.  But while neighboring Massachusetts tops the BHI list, New York still has a poor overall ranking of 35th on this index, mainly due to poor fiscal policy and infrastructure.

The California-based Milken Institute found that New York State imposed the nation’s second heaviest cost of doing business, trailing only Hawaii.

And New York scored a mediocre number 36 on CNBC’s new ranking of “America’s Top States for Business ‘09.” Based on 40 measures of competitiveness grouped into 10 categories, CNBC rated New York near the top in three categories: “Technology and Innovation,” “Education” and “Capital.” However, the Empire State ranked dead last in “Cost of Business” and “Workforce,” the latter apparently weighted heavily by New York’s high unionization rate.  Low ranks in “Cost of Living” and “Business Friendliness” also pulled down the ranking.

About the Author

Tim Hoefer

Tim Hoefer is president & CEO of the Empire Center for Public Policy.

Read more by Tim Hoefer

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