Criticizing North Carolina’s recognition as CNBC’s best state for business takes some gumption, given the bipartisan support for the recognition.
Gov. Josh Stein was featured in Wilmington on the cable network when the rating was announced in July, marking the third year in the past four in which North Carolina came out on top. The state’s Republican leadership credits their low-tax, business-friendly agenda for the ranking success. The state’s key business promotion group heralds the rating.
But Winston-Salem tech company owner Sam Grote is a critic, saying the rating is more about politics than real business performance.
Earlier this year, he started the nonprofit N.C. Business Impact Forum to research and offer public policy recommendations that he says are tied to improving the lives of Tar Heel residents.
He wrote a recent column criticizing CNBC’s methodology for not putting enough weight on issues such as household income, child poverty and homeownership rates. North Carolina isn’t close to No. 1 in those measures.
CNBC’s study scores the states on 135 metrics across 10 categories of competitiveness. The methodology is based on factors that companies consider when making site selection decisions.
Because the network analyzes each state’s economic development marketing pitches to see what is emphasized, Grote says it is making up different rules for different states. “You aren’t comparing states when every state is graded with a different formula,” he notes.
North Carolina had a well-rounded performance in the study, finishing in the top five in Economy, Workforce, and Business Friendliness, and ranking sixth in Education. The state was ranked 29th for Quality of Life, which CNBC said stems from a lack of basic worker protections. The state is among the least unionized states.
CNBC’s highest-weighted categories are economic strength (17.8%), infrastructure (16.2%), workforce (13.4%), cost of doing business (11.8%) and business friendliness (10.8%).
Grote says he is a registered Democrat who almost exclusively votes for and donates to Democratic candidates. Still, he says his research and website are focused on facts and outcomes, not partisan politics.
While more progressive activist groups have criticized North Carolina on similar grounds, Grote brings business credentials to the debate. He’s a Winston-Salem native who earned a bachelor’s degree at UNC Chapel Hill and has worked for Global Endowment Management and the Old Well Partners hedge fund in Charlotte. He now lives in Winston-Salem, where he founded and leads Centerpiece Software, which serves the food-equipment industry. He’s working on another startup, he says.
His basic point is that North Carolina’s business recruitment efforts highlighted by CNBC favor the interests of larger companies over small businesses and the public.
“A lot of economic development is about trying to promote large organizations to set up operations in North Carolina,” he says. “While that can be a good thing, we need to be more thoughtful about economic performance more broadly.”
State leaders, whatever their party affiliation, need to more critically examine how economic development efforts lead to improved results in education, healthcare and income, he says. His goal is to gain more backing for his nonprofit and provide more research on the topic. For now, it’s pretty much a one-man show, he says.
North Carolina’s strong economy has produced obvious gains, but Grote contends the bigger story is how the state remains a laggard. “We’re below average on every quality of life ranking.”
Here is Grote’s column critical of CNBC. He hasn’t received a response from the network.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.