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Via Meadia Index of Cities and States: Reader Input Requested

Following last week’s rankings from the US Chamber of Commerce, another list is out ranking the “Best and Worst States for Business” in 2013, this time assembled by Chief Executive magazine. Unsurprisingly, perhaps, Texas is #1 and California #50, with many red states filling the top spots and blue states scraping the bottom.

Regular readers of Via Meadia know we have our qualms with the tax and regulatory structure of states like California, but sometimes these lists can get out of hand. The Chief Executive rankings are said to be based on state GDP, unemployment, domestic migration, debt per capita, and the state-local tax burden, but even then no heed is paid to the concentration of high-skilled labor, college grads, capital, or entrepreneurs. There are plenty of good reasons an entrepreneur would choose to start a business in Silicon Valley rather than South Dakota despite the latter’s lower tax rate.

It’s true that the entrepreneurial world is gradually shifting away from the long-established coastal hubs towards heartland locales like Austin, Houston, Raleigh, and Salt Lake City, and this is a very good thing. But this isn’t a full-scale exodus, and many college grads, entrepreneurs, and young families are still unsure which cities and states make it easiest for them to be creative and take risks.

The factors driving such decisions are different for everyone depending on age, experience and lifestyle preferences. But we suspect that many young and entrepreneurial Americans share a few priorities regarding what is most important when deciding where to begin one’s life.

Via Meadia would like to hear what they are. TAI is looking to assemble our own index of American cities and states for college grads and young families, and we want to know what readers think we should look at in order to get reasonably useful results.

Part of the problem with some rankings efforts may be that they are too general. “Favorable business climate” can mean a lot of things, and small start ups have different priorities than large corporations. Some business models require a dense concentration of affluent consumers; no matter how low the tax rates are you wouldn’t set up a boutique imported chocolate truffle business in a small Montana town. Ultimately the choice of where to set up a business or where to live is determined by individual factors which no set of rankings however thoughtfully assembled can capture.

That doesn’t mean such rankings serve no purpose; if nothing else they can serve as preliminary screens which help people zero in on locations worth a closer look. And they can also serve as guides for local governments looking at ways to enhance the standing of their communities.

Use the comments section to let us know what is most important to you and why. And if there are any rankings already out there that you think do the job pretty well, we’d like to hear that too.

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  • Anthony

    Robustness of a region’s growth presently and over time can be abstracted using Northern American Classification System categories (non farm employment, manufacturing, financial services, business and professional services, educational and health services, information, retail and wholesale trade, transportation and utilities, leisure and hospitality, and government). Its underlaying claim is affordbility + quality of life = success. Such factors probably are at top of any list when considering to “begin one’s life.”

  • dfooter

    I am a venture capitalist in San Diego, and you state that “The entrepreneurial world is gradually shifting away from the long-established coastal hubs towards heartland locales…” This isn’t really true. What is happening is that heartland locales (and San Diego) are trying to build local entrepreneurial hubs. But really they are merely serving as feeders to Silicon Valley, and to a lesser extent, New York, rather than building self-sufficient hubs. I left the Valley 6 years ago for a better quality of life, and that is a big driver away from there. But for a young entrepreneur, all roads lead to Rome, and Rome these days, and for the foreseeable future, is the Bay Area. The ecosystem is there, the money is there, the excitement is there. That may change (and New York is becoming a media hub) but it will be an addition, not a subtraction from the Valley.

  • http://www.facebook.com/corlyss.drinkard Corlyss Drinkard

    I used to live in Arlington, Va., 4 mi. from the DC border. I loved it most of the time. But from the Clinton admin on, I didn’t feel like I belonged there. I was surrounded by Peoples’ Republics, in Arlington, Alexandria, Fairfax, Montgomery Co., Prince Georges’ Co., places so blue with do-gooders bent on making sure they and their clients got their share from the government. I wanted to live some place where chasing the almighty federal dollar didn’t dictate life 24/7. I wanted to live away from population centers. I retired to what was then rural part of Utah. It isn’t any more. I’m surrounded now by the same “coziness” that made life in Arlington uncomfortable. I can hear my neighbors recreating in their yards, their mowers, their kids, their sneezes, their shouts, etc. Makes me want to move again.

  • wigwag

    Taxes matter but so do a lot of other things. That’s why New York City is both one of the worst and one of the best places for the self-employed to set up shop. On the one hand, taxes are awful. The self employed have to pay a tax called the unincorporated business tax. It amounts to four percent of gross self employment income. The tax exists no where else in the country and it means that the self employed pay four percent more in taxes than a similarly compensated person whose income comes from wage income. As a man with self-employment income Professor Mead himself must be hit with this unfair tax.

    On the other hand, there are major advantages to being in New York. If you are a freelancer in the finance, advertising, banking, finance, non-profit, fashion or import-export worlds there is a good chance that many of your clients are here and living in proximity to clients is a big plus.

    There is also a major intangible benefit to New York City that few other places in America can match; the diversity. Those who enjoy living in an environment where their neighbors speak every language, practice every religion and come from every cultural background imaginable love New York. New York also has the lowest crime rate of any large city in America.

    Again, Professor Mead, neighborhood is instructive. He’s mentioned that he lives in Jackson Heights, Queens. That neighborhood is the most diverse neighborhood in the most diverse county in America. No wonder he thinks its a great place to live.

  • http://twitter.com/gtotango Greg Olsen

    I am a veteran of 4 startups in the San Francisco Bay Area and currently are parked at a big tech company until the next big thing (and a stable paycheck while I’m paying $51k a year in child care for 3 kids under 5.) I don’t see evidence of an exodus from the Valley. Big tech companies are not expanding in California for the obvious reasons, but the business cycle at least for enterprise software that I’ve been in my career is very sensitive to the world economy. The last start up I was at got into trouble due to the economic meltdown in Europe, where 40% of revenues came from that dried up completely in 2010.

    The biggest challenge we’ve had in the past is recruiting talent. We’ve needed current developer skills, sales engineers, enterprise software sales reps, and had trouble getting good ones. The two kinds of people that matter in a company are the people that make things and the people that sell things and finding ones with the requisite skills is really difficult. We can’t afford to bring on junior developers and train them. Startups can’t afford that.

  • Stephen

    Cost of a 1 bedroom apartment, 2 bedroom apartment, and 3 bedroom house. Roughly tracking life as a young professional, experienced young professional, and an experienced professional looking to grow his/her family.

  • BrianFrankie

    My primary criterion for community livableness and ease of enterpreneurial activity is a simple question: Where is the regulatory burden lowest?

    I lived in the Bay Area for several years, and ended up moving to Texas back in the mid-2000’s. The reason was not the tax burden, although I will certainly admit that California has managed to extract more feathers from the geese than I would have thought possible without much hissing. The reason was primarily regulatory – the burden of always having government entities looking over your shoulder, in your business, asking constant questions, continually making you apply for permission to do things they have no business being involved in. As Heinlein said:

    “Do this. Don’t do that. Stay back in line. Where’s tax receipt? Fill out form. Let’s see license. Submit six copies. Exit only. No left turn. No right turn. Queue up and pay fine. Take back and get stamped. Drop dead— but first get permit.”
    It drove me crazy, and wasted so much time I couldn’t stand it. So I moved. Obviously, there are many factors in any move, but this was the largest single annoyance for me.
    The type of business/startup activity is an important part of the discussion. California is adept in nurturing information technology businesses – companies that often have no physical product. They have removed, or simply do not apply, many of the regulatory burdens that drove me away for these IT businesses. I work in the energy and chemicals business. The technologies and Projects I work on developing costs hundreds of millions to billions of dollars, and involve considerable hardware and impact on the environment. Regulatory scrutiny is much more comprehensive, to the point that government compliance teams are often larger than the engineering and operations teams. Public input and NIMBYism has a great impact on the ability to get anything done and, from that perspective, the CA government is simply responding to the wishes of their constituents. But the effect is that it is basically impossible to develop many new technologies in CA. For example, I do not believe that development of the Monterey Shale will be possible.

  • Jim Luebke

    The advice that a venture capitalist gave my startup was, “Don’t settle on a location until you’ve asked everyone for money.”

    I’m rooting for Silicon Valley, myself, but only because I’m a 3rd-generation Californian and have deep roots in the area. Also, my side of the business is software / planning, and will not have anything to do with fabrication… that will all be done in other states. California’s just brutal to manufacturing.

    Anyone else who wants to base a business in California is insane, frankly.

    If the startup takes off and I move elsewhere (there’s no good reason this startup should expand in Silicon Valley … none) I’ll cash in the house here and buy a mansion elsewhere.

    The Credentialed Elite of California is working very hard to make sure that only their type of people can succeed here.

  • Mark Sizer

    you wouldn’t set up a boutique imported chocolate truffle business in a small Montana town

    Why not? It doesn’t cost any more to ship the ingredients in or the finished product out – assuming the Internet Sales Tax bill dies a well deserved death in the House – than running the business anywhere else. Moving to Montana just to do this is probably not wise; however, if one is already there, what’s the problem?

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