Who's No. 1?

By Dick Hughes  

JULY 30, 2011 10:30 a.m. (0)

In Forbes Magazine’s latest rankings of the 200 best places to do business and have careers, Charleston ranks 40th in the nation, Greenville 60th, Columbia 73rd and Spartanburg 145th.

How can one explain such a wide disparity from city to city in the same state?

A Journal analysis of the metrics used by Forbes indicates the differences are not as great as the rankings suggest, and omissions and distortions in the components used to calculate positioning make such “best” listings misleading at best, meaningless at worst.

These rankings give a general, though incomplete, picture of the environment for, as in this instance, doing business and having careers. They are useful only to the top tier as beauty-contest bragging rights in promotion.

The experts who make hard decisions on where or where not to locate businesses likely dismiss them as irrelevant, which is not to diminish the attractiveness of Raleigh, N.C., Forbes’ No. 1 place for business and careers. It is to question whether there is a credible way to say one is first, another is last and all others are fixed at places in between.

Forbes uses 12 measures “relating to job growth (past and present), costs (business and living), income growth, educational attainment and projected economic growth.”

In addition, Forbes says it “factors in quality of life issues like crime rates, cultural and recreational opportunities and net migration patterns” and the number of “highly ranked” colleges from its own annual college rankings.

It is important to understand the data used is not limited to the identified “principal” cities but rather to wider areas identified as metropolitan statistical areas (MSA), which federal agencies, including the census bureau, use for statistical purposes.

The MSA for Greenville includes Greenville, Pickens and Laurens counties. Charleston is Berkeley, Charleston and Dorchester counties.  The Columbia MSA, the state’s largest MSA, is Calhoun, Fairfield, Kershaw, Lexington, Richland and Saluda counties.  Spartanburg’s MSA is just that county.

That can lead to the appearances of sharp differences between the places used to identify rankings, as between the cross state rivals of Charleston and Greenville.

As a case in point, a factor in Charleston’s higher position in the Forbes list is its median household income of $47,787 compared to Greenville’s $42,798.

Without Dorchester and Berkeley counties, which both have higher median income than Charleston County, Charleston’s median household income was $46,145 in 2009, according to the Census Bureau.

If Pickens and Laurens counties, both of which have lower median income than Greenville County, are removed, Greenville would show median household income of $45,917, only slightly less than Charleston County’s.

To illustrate how using sharp lines of MSA borders to make judgments of the strength of one place in comparison to another, take the case of the clear and close community of interest of Spartanburg and Greenville counties.  The arbitrary and artificial lines distort the real-world truth of a region’s economy.

One of the measures Forbes uses to evaluate the “best places” for business and careers is job growth.  In this instance, the contribution of BMW would be included in Spartanburg’s MSA but not Greenville’s, though the distance is inconsequential, and Michelin would be included in Greenville’s but not Spartanburg’s, though again the geographic line is meaningless.

As an example of an omission, Forbes credits Greenville as home of Furman, Bob Jones University and the Clemson Graduate Business School but not Clemson University, which is within its MSA but not within its borders.

Forbes gives Spartanburg points for having Wofford and Converse but does not mention the University of South Carolina Upstate or the Upstate’s George Dean Johnson School of Business downtown.

MSA designations make digging into area statistics easy because they are so effortlessly available from government databases and are so widely used in popular media.  But using MSAs for scoring one city over another in some sort of national ranking is simplistic and invalid.

So back to the beginning:

Without dispute, Charleston has a lot going for it as a place to do business and build careers, but is it 20 places better than Greenville and is Greenville 85 places better than Spartanburg, its close Upstate neighbor?