Michigan 9th, Indiana 11th in latest list of Top States for Business

Earlier this month, CNBC released its rankings of the top states for business. They are one of the dozens of organizations that prepare these types of lists, generally produced to drive internet clicks as residents seek to see how their state stacks up against others. Michigan (9th) and Indiana (11th) both fared well in the latest survey and that should be celebrated.

Lists like this are a nice report card for a state and help businesses compare one state to another. They also help policymakers identify critical areas they need to improve on. When states like how they fared, they brag about the results to all who will listen. Conversely, when they aren’t pleased with the results, they tend to discount the methodology used to rank the states. Let’s hope this list helps move both states to some action.

In the CNBC study, 128 metrics were used over ten broad categories. They are then weighted based on how states use them as a selling point in economic development marketing. Virginia, North Carolina, and Texas topped the list, while Alaska, Mississippi, and Hawaii were at the bottom. Indiana moved up two spots from thirteen on the previous list, and Michigan was up one from tenth.

Indiana scored well in infrastructure, cost of doing business, cost of living, and business friendliness. Michigan’s strengths included the cost of doing business, cost of living, technology and innovation, and business friendliness.

Indiana was just average in categories like workforce, economy, and access to capital. Michigan was average in categories like quality of life, education, and access to capital. Indiana didn’t fare well in quality of life (49th) or education (39th). Michigan struggled most in the education (41st) and economy categories (38th).  

Kudos to our lawmakers who have advanced policies, in Indiana especially, related to costs and business climate. But much work remains to be done on a handful of those other categories.

The education numbers caught my attention. We should be alarmed by our low education scores in both States. Virginia, by comparison, is the top state for business and is #1 for education. Hopefully, education officials in both states are seeking to better understand the secret to Virginia’s success and that of other top states in the education space.

Education is a critical factor for businesses and families locating to our states and key to advancing our economy and improving our rankings.

Education spending is a top priority for both states, consuming one of the largest chunks of each state's budget. In the most recent budget, Indiana invested about $22.25 billion annually, and Michigan invested about $23.4 billion annually. Education dollars are largely dependent on property taxes in both states. Calls for changes to property taxes could impact education spending in a negative way.

Money alone won't fix education.  We must continue to think differently about how we educate our children. The current system isn’t working for a lot of our kids. No one person or entity is to blame, but no fix will be possible without the cooperation of students, parents, teachers, administrators, and the community. What if both States made this their top priority and marshaled the resources to make necessary improvements to improve our education ranking?

Finally, that quality of life metric was also concerning, especially in Indiana. Only Texas scored worse. Programs like Regional Cities, READI, and READI 2.0 will certainly help, but it could take years to see the full effect of those investments. Communities must continue to double down on quality of place investments and on the practices that make them welcoming to those who seek to relocate here.