So many of my liberal colleagues like to point to our states “image” or green ranking when they are talking about big businesses leaving Wisconsin. They seem to think if we just spend tons of state money on light rail, green energy, emissions control and socialized un-”Healthy Wisconsin” healthcare we will somehow attract more talent and more businesses.
As it turns out, it’s a question of simple economics that becomes more and more evident as time passes:
“The Lone Star State passed New York as home to the most big companies in the latest list compiled by Fortune magazine.
Texas now boasts 58 headquarters, three more than New York, the previous No. 1, and California, with 52.
Business experts say it’s a matter of simple economics – Texas attracts companies with its low taxes, affordable land and large labor force.
“Cost is overwhelmingly the No. 1 driver,” said Albert W. Niemi Jr., dean of the business school at Southern Methodist University, who wrote his doctoral thesis about companies leaving the Northeast for the Sun Belt 30 years ago.”
And to preempt those who will say “oh, it’s just oil companies”:
“Other Texas companies on the magazine’s list include technology, such as Dell Inc., three of the nation’s biggest airlines, two of the biggest homebuilders, an insurer, a hospital company and the largest garbage hauler around.”
Hmm, I seem to remember some CEOs in Milwaukee blatantly stating this point:
Last 5 posts by Brandon“They said Milwaukee’s taxes are too high, and the region doesn’t know how to market itself, suffers from a lack of leadership, has wasteful government spending and doesn’t provide enough tax incentives to attract and keep businesses and create jobs.
And when they were done criticizing the region as a terrible place to do business, they piled on and did it again. And again.”
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“And to preempt those who will say “oh, it’s just oil companies”:
“Other Texas companies on the magazine’s list include technology, such as Dell Inc., three of the nation’s biggest airlines, two of the biggest homebuilders, an insurer, a hospital company and the largest garbage hauler around.”
I don’t dispute that Texas has many other great industries; however, its increase of Fortune 500 companies, is not drivien by new companies starting or moving Texas. Rather its growth of pre-existing companies in Texas, which is largely cyclical.
Remember, Fortune 500 companies are measured by revenues. No Industry has realized more growth in market caps than energy. Hence, Exxon, Cheveron, and Conoco Philips are now all in the top 5.
That said, Milwaukee needs to offer something more than other midwest cities for it to obtain businesses. They won’t come for the weather.
Cheers
Super Id,
I don’t get it. Are you saying that “Exxon, Cheveron, and Conoco Philips” only recently became Fortune 500 companies?
The story notes that the growth includes transfers:
In recent years, Fortune 500 companies such as Tenet Healthcare Corp. and – just last year – engineering and construction company Fluor Corp. moved in from California.
The reverse Gold Rush from California to Texas has concerned West Coast officials for years. In 2004, consultant Bain & Co. surveyed big companies for a California business group and found that half planned to shift jobs out of state or at least stop expanding in California because of high costs, including taxes. Of that group, 27 percent said they would go to Texas, more than any other state.
My point is that you can’t discount the affect that rising energy costs have had on companies revenues. Most of these companies are in Texas and thus, more Texas companies will crack the Fortune 500 rankings.
XOM, CHV, and COP have long been F 500 Companies; howver, they have all moved up into the rankings. CHV and COP were not even in the top 10 a few years ago. Companies such as Valero and Marathon Oil are more recent additions to the F 500.
I’m guessing that it is easier for a company to move up from 501 to 500 than from California to Texas
Sadly about half of Wisconsin voters just don’t understand how business works. It wasn’t always that way. In the 1870s Milwaukee leaders decided to go for it. They put out a nationwide call for manufacturing companies to come to Milwaukee. They offered whatever incentives it took to land numerous new companies. The visionary leaders of the day knew that growing private business was the key to a thriving economy. Private business was king.
And thrive Milwaukee did, for many decades. Then one day, probably in the late 50s or early 60s the politicians and unions decided businesses were not sharing the wealth with their workers and the government. The unions demanded pay that was considerably higher than pay rates in other states. Politicians raised taxes on business and spent it on an ever expanding bloated government. Benefits paid to government workers were much higher than private business could afford. I guess the politicians thought they could “legislate prosperity”. They thought wrong. Now here we are in 2008 watching private businesses leave Wisconsin. Watching wealthy retirees leave Wisconsin. Not to worry though. Our governor and legilature in Madison are on top of the problem. They’re going to raise taxes.
So what’s the solution?? It’s the voters. They’ve got to wake up. They have got to make private business king again. Voters can do that by electing pro business leaders in Madison, counties, and municipalities. The voters must elect leaders that are commited to shrinking government and lowering taxes. Until Wisconsin voters do that, wealth and businesses will continue leave Wisconsin.
This post is an oversimplification of the issue. There are a lot more factors than just a tax on businesses. In fact Wisconsin has a lower corporate tax than Texas does.
[...] One of the heaviest overall state tax burdens in the [...]