Missouri bargain for business, study shows

Study: Show Me State has wage costs, tax burdens below national average.

Scott Rhodes doesn't need a study to tell him that it's cheaper to do business in Missouri. He also does business in Illinois.

"It's considerably costlier to run a business over there," said Rhodes, vice president of Cape Girardeau-based Plaza Tire, which employs 300 people companywide. "The unemployment taxes are higher, worker's comp is higher, property taxes are higher. It's across the board."

So Rhodes was far from shocked to learn that Missouri is among the least expensive places to do business in the country, according to a study conducted by the Milken Institute, a not-for-profit economic think tank based in San Diego.

Missouri was ranked 36 -- with No. 1 ranked Hawaii being the most expensive state to do business -- the same ranking as last year. According to the study, the cost of doing business in Missouri is about 13 percent below the national average index, based on wage costs, tax burdens, electricity costs and industrial and office rent costs.

According to the study, Missouri's average wage is $33,284 with a national average of $37,154 and the tax burden is 15.6 percent less than the national average. Missouri's electricity costs are cheaper, at 5.14 cents per kilowatt hour as opposed to the national average of 6.56 cents.

Office rents are also less costly at an average of $18.70 per square foot, per month, versus the national average of $19. Industrial office rents, according to the study, are also cheaper in Missouri, which charges $4.10 per square foot with the average national cost at $4.80.

'One of the better states'

"So Missouri is obviously one of the better states in all categories," said Armen Bedroussian, a senior resource analysts at Milken and one of the study's authors. "It's relevant for economic development officials, but also for businesses that are looking at your state to see where you stack up."

Local economic development officials were glad to hear of the ranking, and said that they would no doubt use it to attract new businesses to the state. But the study only tells part of the story, they said.

John Mehner, president of the Cape Girardeau Area Chamber of Commerce, for example, takes exception that the study suggests that Missouri made no progress because it earned the same spot in the rankings.

It doesn't take into account tort reform, worker's compensation reform, both which were overhauled by new Gov. Matt Blunt to make Missouri more "business friendly."

"If they're not figured into the formula in any way, you're not going to show improvement," Mehner said. "I'd argue we've made progress."

The ranking may be misleading in other ways, according to Dr. Bruce Domazlicky, director of the Center for Economic and Business Research at Southeast Missouri State University. He said the rankings must be kept into perspective to what other states are doing to improve their business climate.

"Because even if Missouri is doing good things, other states probably are, too," he said. "That may be why we haven't seen a change in the ranking."

Missouri always has been a good state to do business anyway, says Buz Sutherland, executive director of the Small Business Development Center on the campus of Southeast.

"Over the years, Missouri has had a solid and positive business environment," he said. "Of course we have weaknesses. But we're making strides."

smoyers@semissourian.com

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