The MarketWatch Study—why is Tucson ranked so low?
There has been much written about a recent article in the Wall Street Journal’s Market Watch segment in which Tucson ranked in the bottom 10 cities out of 101 in “best places to do business”.  My first reaction, like many others was of disbelief, followed quickly by disappointment.  Our business community has many hurdles to overcome—there is no question about that—but being ranked at the bottom is hard to understand.

When it was available online, I reviewed the article and the accompanying information on how the study was conducted.  It became clear that the most important component of the study-rankings was how many large companies were already located in each city.  The study made no attempt to capture information on small business growth or loss.  To be fair, acquiring specific and accurate data on businesses that are forced to close their doors—for any reason—is virtually impossible to find.  Nevertheless, the cities in this study weren’t scrutinized for their ability to grow business; they were ranked at the top if, over the last two hundred years or so, large corporations moved into their metro areas and stayed.

My staff and I wanted to know more.  This is an opportunity, I told them.  We can look at the metrics that make up this ranking and build a plan of action around them that can be incorporated into the Chamber’s Business Plan.  What did the author of the study, Russ Britt, take into consideration when he built his rankings?

Our excitement quickly melted away when we discovered what the ratings were really all about.  He did not look at the costs of doing business in the areas studied; he didn’t look at tax or fee loads, or regulatory roadblocks.  He didn’t look at spending for education, or healthcare, social programs, or even prisons. 

We contacted him and asked a myriad of questions.  Here, in a direct quote from Mr. Britt is what the study actually considered:

     It's a result-based study that looks at the concentration of companies in a metro area using various metrics -- number of Fortune 1000 companies, Forbes private firms, S&P 500 listings, Russell 2000 companies and a Census Bureau metric that totals all the businesses, large and small, in a metro area.
     Understood, there may be cities that are home to large numbers of corporate headquarters but are still economically depressed, i.e. Detroit. We try to mitigate that by factoring in unemployment trends, job growth, population growth and real GDP growth. We threw in one metric this year that looked at how well a region retained jobs from 2008 to 2009 in order to measure its ability to handle recession. Since Detroit ended up in the bottom 10, we feel confident that the study's metrics worked. All the cities were rated against each other in all 10 categories; the top city got 101 points, the worst got 1. All the scores are added up and totaled.
     A look at the statistics leads me to believe Tucson was virtually the exact opposite of Detroit, which ranked one spot above. There aren't a lot of businesses located in Tucson, but the region's long-term employment trends and growth ranked high. I know there's a strong military presence there and other, non-corporate job generators. In fact, Tucson ranked just above Augusta, Georgia, another city with a similar economy.
     But as far as potential is concerned, we don't measure that. There are no statistics for it, and I sure don't want to be the one who gauges such things as "quality of life." There's no subjective data included; as I say it's all fact-based and result-based. But we're always on the lookout for reliable data that measures each and every city's performance under a certain metric.

So what did the MarketWatch “Best Cities to do business in” actually study?  In a nutshell, it ranked the cities in which the most corporate headquarters, Fortune 500 businesses and Forbes listed corporations already reside.  His study did consider unemployment rates and he conceded that Tucson was actually in pretty good shape there. 

Understand, very few of those mega companies are likely to relocate their corporate headquarters.  As anyone in business knows, a corporate headquarters’ move is an enormous financial investment and without significant provocation, rarely justifiable to the owners and/or shareholders.  Unless and until those corporations make a decision to relocate, the rankings from this particular study aren’t likely to change, no matter what the cities chose to do to become more “business friendly”.

The Tucson business community has many problems with which to deal, particularly in this time of economic downturn.  The Tucson Chamber has consistently worked to improve the business climate at the local, state and even national level, striving to unburden business of needless and cumbersome regulations and new tax and fee obligations.  When businesses can again make a profit, they can hire employees, who will be able to make a living and improve their lifestyles.  That’s what will make Tucson business friendly.  That’s the real work.  That’s what the Tucson Chamber focuses on every single day.