That Republican-friendly journal of business affairs, Forbes Magazine, just reprised its annual survey of 50 states and ranked them on its "Best States For Business and Careers" list for 2014. We come in at a respectable #14 on the list, which grades the states on a number of criteria, coming up with an overall ranking that probably doesn't mean much to anybody other than those South Dakota public relations honks who are constantly touting our state's placement (usually very high) in lists of this nature. Generally those lists are about "business-friendliness" or "-environment" or something similar. With some reason our chief economic development advocates, both inside and outside the government, frequently tout them while attempting to woo businesses and skilled workers into South Dakota.
But as has been said in many other contexts, he who lives by business rankings dies by business rankings. Among those who now have some 'splainin' to do is Governor Daugaard, who rarely lets a public appearance go by without bragging on last year's #1 ranking that South Dakota got from financial channel CNBC. Forbes hasn't been quite so generous about its opinion on South Dakota's business climate, placing us at #11 and #12 during the past couple of years. This year's slippage to #14 supports my general sense that South Dakota's economy has at best been drifting sideways for the past few years. I wonder if CNBC will give us a #1 rating again this year, and if it does, will Governor Daugaard's promotion of the accolade contain a rhetorical asterisk noting that Forbes doesn't think quite so highly of us?
In fact, our strongest showing among the ratings criteria in the Forbes list is, in a way, the most telling about our overall economic climate: We're ranked #1 by Forbes for low business costs. That might be a come-on for some people, but to me, low cost goods and services reflect weak overall demand for them. In a healthy, vibrant, growing economy I would expect business costs to be on the high side, not stagnating at the bottom of the barrel for lack of demand. And if South Dakota's chronically low wages are, as I believe, the responsible component for our low-business-cost environment, I'd say that ranking is more a detriment than an asset. What career-minded individual wants to make a life in a low-wage place like that?
Two other internal rankings in the Forbes list are also troublesome. South Dakota is ranked #45 in growth prospects and #30 in quality of life. The former is an assessment that would probably be a deal-killer for anybody using this list as a gauge for expanding a business into this state. In its way it merges with that #30 ranking in SD's quality of life. There doesn't seem to be much in the Forbes piece on criteria-determinants, but it's clear that in- and out-migration patterns in recent years show South Dakota is a net gainer of those with high school diplomas and less, a net loser of those with college and post-graduate degrees. Nothing against those who haven't advanced their educations much beyond high school, but this trend basically tells us that people are expressing with their feet just how they feel about SD's growth prospects and quality of life.