Owen: Good for business

Sunday, December 12, 2010 at 10:05pm
By Justin Owen

Each year, the Tennessee Center for Policy Research ranks the state’s 50 most populous cities according to their business climate. The categories we choose reflect cities’ commitment to creating a business-friendly atmosphere free of stifling taxes and restrictive regulatory burdens.

Cities with low tax burdens, less regulation, quality education systems and low crime rates fare better at attracting and retaining business than those with high taxes, burdensome red tape, poor schools and high crime.

This year, three categories accounted for each city’s overall score: Economic Vitality, Business Tax Burden and Community Allure. These categories included factors such as job and population growth, tax burdens, household income, cost of living, crime rates and education. Considering these statistics, Mt. Juliet takes the top spot as this year’s Most Business-Friendly City. 

The Wilson County city has consistently scored high in the rankings. Due to its low tax burden (it lacks a city property tax), its low cost of living, better-than-average job performance and a recent spike in population, it finished first in business in 2010. 

Overall, nine of the Top 10 cities are in Middle Tennessee. Lower taxes, low crime, decent education performance and modest job loss boosted these Middle Tennessee cities into the upper echelon. 

This bodes well for the region and shows that competition has a positive impact on business growth. Just as it works in business, competition boosts a community’s performance, benefiting local residents, who are the city’s “consumers.”

As cities relatively close in proximity compete for residents and business, they will inevitably move toward a more business-friendly atmosphere. This is the case with Mt. Juliet, Brentwood, Spring Hill, Franklin, La Vergne, Hendersonville, Goodlettsville, Lebanon and Columbia, which all finished in the Top 10. 

Further, Nashville’s suburbs took advantage of its relative friendliness to business. Of the “big four” cities — Nashville, Memphis, Knoxville and Chattanooga — only Nashville finished higher than 41. This is a testament to a property tax lower than the other three, a low cost of living and average job performance numbers. As Nashville goes, so do its suburban counterparts. 

On the flipside, Memphis finished dead last. The Bluff City has consistently failed to address its education woes and has an abhorrently high crime rate. It also imposes a property tax that is nearly 16 percent higher than that of any other city in the state. 

Overall, West Tennessee finished poorly compared with the two other Grand Divisions. Part of the problem is that the region lags behind East and Middle Tennessee in its economic base. Agriculture and manufacturing make up a significant portion of its production, and the manufacturing sector in particular has lagged over the past few years. As a result, many West Tennessee cities have faced higher-than-normal job loss during the economic downturn. 

East Tennessee fared somewhat poorly as well. The only exception is Farragut, a small suburb of Knoxville and the 2006 Most Business-Friendly City, which finished second this year. No other East Tennessee city managed to make the Top 10, while nine of the 15 least business-friendly cities are situated in the eastern third of the state. Poor job numbers and stagnant population growth were the main culprits for most East Tennessee cities.

Cities that want to attract new business development while also nourishing existing enterprise should follow the lead of Mt. Juliet by limiting their tax burdens, addressing crime and maintaining a quality education system. This will attract new residents and thereby business growth regardless of the overall economic outlook. As Mt. Juliet has proven, a city can be business-friendly even during periods of economic calamity. 

Justin Owen is the president of the Tennessee Center for Policy Research, the state’s free market think tank. Visit TCPR online at www.tennesseepolicy.org

 

15 Comments on this post:

By: Captain Nemo on 12/13/10 at 7:49

Good morning
http://gallery.photo.net/photo/5702425-lg.jpg

By: Captain Nemo on 12/13/10 at 7:50

Tennessee also lacks strong regulation on environment protection and the law it has goes unanswered by State regulators. The state does not go very far in protecting its work force from unscrupulous business and corporation. So yes it is very friendly toward business.

By: Kosh III on 12/13/10 at 8:41

Regarding West Tn: "the manufacturing sector in particular has lagged over the past few years."

Of course, the manufacturing jobs are now in China, Bangladesh and other places where employee pay, safety and health are ignored in the quest for more bonuses for the bosses.

By: yogiman on 12/13/10 at 9:47

Kosh III,

I agree on this money factor. My policy is; if I don't actually need it and can't find one make in the USA, I don't buy it. And yes, I'm saving a lot of money.

By: Captain Nemo on 12/13/10 at 9:59

Republican manufactures have sent American jobs to foreign countries, while send American worker to the unemployment line.

By: AmyLiorate on 12/13/10 at 10:00

I think Kosh brings up a very good point.

We can encourage business here and there is a very good chance that environmental and human safety will be observed. If they aren't then there are several layers of agencies one can go to and start a thorough investigation.

If too many demands are made then it's better for business to just contract the work over seas. The Walmart shopper and other great Americans do not care a bit where something was made or what quality it really is. They just want cheap goods.

We'll buy flimsy products and demand high wages. It's good for the world market, but leaves lower end jobs vacant here. That probably has a big impact on our income gap between poor and middle class than most people ever think about.

By: Captain Nemo on 12/13/10 at 10:08

The US Auto makers produced less than a good product for years and the America shopper kept buying. While Detroit feeling that nothing would ever take their place, Japan was looking ten years in the future and built a better mouse trap and car.

383,000 on my Honda today.

By: Captain Nemo on 12/13/10 at 10:11

If not any demands are made then the US manufactures will just return to the old ways.

By: AmyLiorate on 12/13/10 at 12:01

Nemo my friend has a Ford truck with 250,000 miles and going. Never any serious mechanical problems. I think he said a fuel pump went out in all those many miles.

By: brrrrk on 12/13/10 at 1:21

Captain Nemo said

"The US Auto makers produced less than a good product for years and the America shopper kept buying. While Detroit feeling that nothing would ever take their place, Japan was looking ten years in the future and built a better mouse trap and car."

Excellent point. As a contractor, I once worked for an "American" producer of industrial electrical equipment... whose parent company was French. On occasion the parent company would send engineers and programmers to the states to work in our facility. I once asked one of these employees what the major difference was between the type of work in both environments. He replied by first saying that he thought that working on projects in the states was much more exciting because they were always working on something new. But he followed this statement up by saying that the reason this was so, was because the American method of engineering had a short term vision. In contrast, the French method had a long term vision and that they always started out assuming that their product would be around much longer and as such spent more time in the design phase. And while the French method was far more boring (from the engineers and programmers perspective), the up side is that they tended to produce a longer lasting, better quality product.

By: AmyLiorate on 12/13/10 at 1:36

D square?

By: judyboodo@yahoo.com on 12/13/10 at 3:09

WoW! Now I've heard it all, a French product being touted within the context of a conversation including automobiles! Pray tell which of the few French automobile manufactures have produced a product that has been widely accepted for ANY length of time by ANY other country than France? With the possible exception of the Renault 2CV. Look it up it's good for a laugh.

By: brrrrk on 12/13/10 at 4:03

judyboodo@yahoo.com said

"WoW! Now I've heard it all, a French product being touted within the context of a conversation including automobiles! Pray tell which of the few French automobile manufactures have produced a product that has been widely accepted for ANY length of time by ANY other country than France? With the possible exception of the Renault 2CV. Look it up it's good for a laugh."

Talk about missing the point................. completely!

By: judyboodo@yahoo.com on 12/13/10 at 8:24

Then I don't understand, a letter about which cities in Tn. are the most business friendly, posts about why and what they have to do to be considered for such an honor and then your comment espousing the french engineer's comment that France designed for the future. I felt implying that American design was only looking for the fast buck. Not that I disagree with the American part of that but to imply that the rest of the world does it better that we do is more that a bit of a stretch. I can't think of much of anything the french do in the world of manufacturing that is better than the rest of the world much less America. And Nemo I've got a delivery truck, a Ford F-150 with 508,000 mi.'s on it. same engine and third transmission. As far as the Japanese are concerned they did very good on the design and production of their cars in the post war era under the direction of an American named W. Edwards Deming. It was Deming who changed the perception of Japan's products from cheap toys to quality products. Where was Deming inspired? Bell Telephone Labs. Here's my point, whether you miss it or not, America has had for the last 150 yrs the best minds and ability's of any country in the world, we get hung up on if we should be the leaders of the world or if everybody else in the world will like us. Kind of like Democrats whom feel guilty about their financial successes. But be careful what you wish for Nemo, all those runaway Toyota's were equipped with components that were required to meet the standards that "we" wanted, I'm looking at you fly-by-wire throttles and "push for stop buttons".

By: govskeptic on 12/15/10 at 6:01

"Friendly to business", Is that the very best item a state can
be ranked by? Does ripoffs by contractors, auto dealerships,
real estate transactions, Insurance companies, and most other
industries of the citizens of the state count for nothing? Seldom
does one ever read or see a press story on how badly the
consumer protection laws are in this state, or how the State
Attorney General or Consumer Protection Agency is so
absolutely powerless to offer any help with this large problem!
Our two political parties certainly agree with making No Changes.