A new report from the Kauffman Foundation, in partnership with Thumbtack.com, sheds some light on the debate about reviving Georgia’s economy. Focused on the role of small businesses, the report surveyed more than 6,000 local business owners across the country on whether or not their states are sufficiently “business-friendly.” The results come as no surprise—Georgia fares well.
Ranking 6th highest nationwide, the state receives an overall A grade for its small business-friendliness and performs well across all available measures, including tax code (B), regulations (B+), and ease of starting a business (A). The report does point out some areas where all states can improve, such as licensing requirements and local zoning laws, but not a single area is identified as an abnormal problem in Georgia. These findings add to the virtually unanimous chorus of similar reports that have graded Georgia as one of the most business-friendly states in the country.
Yet at the same time, Georgia today ranks 40th in job growth since the start of the recession, has an unemployment rate above the national average, and has seen its median household income drop to early‘90s levels. If being sufficiently pro-business is the key to economic growth (as Georgia’s leaders often claim), then why is the state’s economy lagging behind? Where’s the disconnect?
It’s simple: the policies we typically consider to be business concerns –taxes, corporate incentives, and regulations – aren’t the only ingredients to growing the economy and creating jobs. Other areas like education, infrastructure, and quality of life are equally essential, but are rarely considered in debates over business-friendliness. Imagine a state with the lowest taxes and loosest regulations on one hand, but with gridlocked roads and undereducated workers on the other—would that be a good place to start a company, invest, or raise a family?
For Georgia to regain its position as an economically vibrant state with a high standard of living, leaders’ narrow view of being pro-business will need to change. Business-friendliness can mean reasonable tax policy and fair regulations, but it also must mean world class schools, quality roads, and safe communities. Until it does, state leaders will continue overestimating the need for tax and spending cuts, while underestimating the need for positive investments in the future—and the revenue needed to pay for them.