Take ‘Benchmarks’ of state’s CEOs with a grain of salt

By DAVID GROVES

(May 17, 2013) — In his newspaper column this week headlined “Business rankings aren’t bunk,” corporate-funded think-tanker Richard Davis promotes a new collection of state business climate rankings called “Benchmarks for a Better Washington.” It was prepared by the Washington Roundtable, a public policy group comprised of the CEOs of Washington State’s biggest corporations, including Boeing Commercial Airplanes, Microsoft, Weyerhaeuser, and dozens of others.

Washington gets mixed reviews from CEOs of the Roundtable, generally scoring well on quality-of-life issues and not so well on business cost issues. But naturally, the benchmarks they choose have an agenda, one that conforms precisely to their lobbying objectives in Olympia.

For example, the Roundtable notes under “Business Costs” that Washington ranks 50th in terms of Workers’ Compensation Benefits Paid. The CEOs have very deliberately chosen the National Academy for Social Insurance’s benefits-paid ranking, rather than a business-cost ranking. They are hoping that by inverting this list — after all, some would consider high benefits to be a good thing — and declaring Washington to be dead last, readers will believe that employers here must pay the highest costs in the nation, too.

Not so.

As has been pointed out here in The Stand, Washington has very competitive workers’ compensation costs for employers. The latest Oregon Department of Consumer and Business Services study ranks us 22nd among the states in terms of employer costs. That’s because Washington is the only state where workers’ comp costs are shared by workers (who pay between 25% and 30% of the premiums) and because of the efficiency with which our voter-affirmed state-run system operates because it doesn’t have the marketing costs and profit margins private insurers have.

In other words, we do have a workers’ compensation system in Washington that offers comparatively high benefits. But we manage to offer this superior safety net for working families at a competitive cost for employers. And since that cost is what the Roundtable claims to be benchmarking in its “Business Costs” category, why would they complain that we rank dead last because of high benefits?

The simple answer, of course, is that they are looking out for their businesses’ bottom lines and they want lower workers’ compensation costs. That’s what these CEOs are paid — sometimes obscenely — to do. Their concern is to maximize profits for shareholders, not to preserve strong safety nets for injured workers. That’s somebody else’s job.

Corporate CEOs don’t pay business groups and think tanks to make Washington a better place to live and work, they pay them to lobby for lower taxes and fewer regulations. The day that Richard Davis’s Washington Research Council or the Washington Alliance for a Competitive Economy (WashACE), another corporate-funded group that publishes an annual Redbook of competitiveness rankings, declare “mission accomplished” and agree that Washington is a great state for business… well, that’s the day these groups cease to exist.

Look outside Washington’s corporate echo chamber of public policy groups and sympathetic newspaper executives — yes, Seattle Times CEO Frank Blethen sits at the Roundtable — and you’ll find very different business-climate rankings. Here are a few from national organizations/publications that also advocate for lower business taxes and fewer regulations, yet aren’t driven by specific in-state agendas like cutting injured workers’ benefits:

Small Business & Entrepreneurship Council’s 2012 Business Tax Index says Washington is 5th best in terms of its business tax system. This Virginia-based group advocates for lower business taxes across the nation and ranks states “according to the costs of their tax systems for entrepreneurship and small business.”

Tax Foundation’s 2013 Business Tax Climate Index finds Washington is 6th best in the nation for low business taxes. This conservative foundation says its report “enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare.”

Forbes’ Best States for Business says Washington is 11th best in the nation. States in this list get bonus points for actively discouraging unionization; all but one of Forbes’ top 10 states are so-called “right-to-work” states. So for a heavily unionized state like Washington to rank 11th best is high praise indeed! Which brings us to…

The Bureau of Labor Statistics says Washington ranks 4th best in unionization rate, with the state’s 513,000 union members accounting for 18.5% of the overall workforce.

No doubt, some would argue that having high unionization isn’t “best.” But that’s the point. A strong case can be made that union members are better trained and earn higher wages, which makes companies more efficient and injects more money into that state’s economy. That’s good for business, right?

Who’s to say that having the lowest business taxes is best? Unless the rest of us pay higher taxes to make up the difference, low business taxes means less money for schools, roads, public health, police and fire protection, etc. Is that what’s best? If having the fewest regulations is also best, then what state can compete with Bangladesh?

The point is, by their very nature, business-climate lists are driven by somebody’s agenda and make subjective assumptions about what is good for business. Plus, they imply that what’s good for business is good for you — if you like having a job.

That doesn’t mean corporate CEOs or business think-tankers are bad people or that they are always wrong. But there’s no question that they have an agenda and it doesn’t necessarily include what’s best for you and your family. Anybody who has been paying attention to what caused the recession, who quickly recovered and who still hasn’t, should know this.

No, their benchmarks aren’t necessarily bunk, but they should be taken with a grain of salt.

David Groves is Editor of The Stand. Contact him at david.groves@thestand.org.