Every year, the National Association of Manufacturers (NAM) and the Association of Washington Business publish their “Redbook” which ranks the business climate of states based on 50 different criteria. It is always interesting to see how Louisiana fares in the survey. The following is a brief look at some pluses and minuses for the Bayou State in the rankings. (Note: the data presented is the latest available for the different categories.)
On the positive side, Louisiana ranked 5th in non-agricultural employment growth during the May 2007-May 2008 period. We led the nation with a 9.2 percent increase in per capita personal income in 2007. Also in 2007, Louisiana ranked 8th in gross state product growth.
In the category of exports per capita, Louisiana ranked 10th in the survey. In 2006, Louisiana’s manufacturing workers had the second highest average wages in the nation ($21.23 per hour) and the highest productivity (measured by value-added to a product per hour worked).
In that year, Louisiana also ranked first in average annual investment in manufacturing equipment per employee and 11th in total investment in machinery and equipment. The unionization rate in Louisiana is low (37th in the nation), which is a plus from a business climate standpoint.
The Bayou State is in the middle of the pack in other measurements in the “Redbook.” In the category of workers compensation benefits paid, Louisiana was 25th. In the number of science and engineering doctorates awarded, we ranked 27th. Unfortunately, there are numerous categories in NAM’s rankings where Louisiana does not fare well when compared to other states.
It should come as no surprise that Louisiana leaves a lot on the table in business climate comparisons when the issue of business taxation is analyzed. Louisiana ranks 15th in the category of the total amount of state and local business taxes paid (2007 data).
That isn’t good, but it gets worse. When the amount of state and local business taxes as a percentage of all taxes collected is measured, Louisiana comes out 5th highest in the nation. The fact that 60.8 percent of all state and local taxes collected in Louisiana comes from business is not a favorable factor for our state. High tax states such as Michigan (43.7 percent), New York (42.4 percent) and California (41.4 percent) have a much lower percentage of business taxes as a percentage of total taxes than Louisiana.
Louisiana also ranks considerably higher than average (12th) in the level of state and local government employees.
Another indicator of high governmental cost to businesses (who pay most of the taxes) in Louisiana is the category of state and local government hospital and health care spending. We rank 6th nationally in this area, due primarily to our nearly unique system of state-run indigent health care. Louisiana’s National Assessment of Educational Progress scores rank 45th-but has improved since the implementation of stronger curriculum and accountability standards.
The “Redbook”-like all other similar surveys-is not a perfect instrument for measuring the business climate of the states, but it does give some insights into where we stack up with our competitors. Louisiana’s strong manufacturing industry provides an incredible underpinning to our economy. All across America today, manufacturing is undergoing tremendous stress and change. The ability of Louisiana to maintain the manufacturing base that we have will go a long way in determining how successful we will be in providing jobs and necessary services for our citizens in the future.
The “Redbook” gives some insights in to where we are succeeding and where changes need to be made if manufacturing is to remain viable in Louisiana.
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