Yet Another Report Shows Washington’s Small Business Climate Needs Improving
On the heels of two recent reports by the American Legislative Exchange Council and the Washington Roundtable concluding Washington’s business climate is in serious need of improvement comes a third report with the same conclusion.
The Kaufman Foundation, a non-profit devoted to researching and promoting policies to advance entrepreneurship, partnered with Thumbtack.com, an online business directory service, to survey more than 6,000 small businesses across the nation. The Thumbtack.com Small Business Survey asked small business owners who list their services on Thumbtack.com to rank state and city friendliness to their business across 15 categories, such as the cost of hiring a new employee, tax burden, regulations, and licensing requirements. The survey also asked small business owners to rank their business’s current economic health and growth rate.
In this survey of small business owners, Washington State earned a lackluster C- for the state’s overall friendliness towards small businesses. Our neighbor to the east, Idaho, earned a glowing A+ for overall friendliness, along with top-performers Texas, Oklahoma and Utah. Not surprisingly, these same four states are among the most favorably ranked in the ALEC report.
Out of the 15 categories, small business owners in Washington awarded the state a grade above C in only two categories—ease of starting a new business (B-) and training programs (A-). Were it not for these two saving graces, the state’s overall grade would have been a solid D.
Washington scored mostly Ds in the other categories, ranking among the top ten most costly states nationwide for hiring a new employee (D+) and boasting the 10th least friendly business regulations nationwide (D+) and the 5th least-friendly business tax code (D) in the entire country. The report noted these rankings reflect the economic rankings—Washington's small businesses were the 3rd least healthy nationwide and the 4th slowest growing.
One interesting note revealed in the survey is that small business owners value more than just low tax rates. Small businesses identified licensing requirements as being nearly twice as important as tax rates in determining overall business-friendliness, and the small businesses subject to special regulatory requirements (such as occupational licenses) said the ease of complying with those regulations was by far the most important factor. Coincidentally, a study released this week by the Institute for Justice ranked Washington as the 19th most broadly and onerously licensed state, which probably accounts for why Washington small business owners gave the state a D+ for licensing friendliness in the survey.
Many studies and reports evaluate states based on business climate, but the Kauffman Foundation/Thumbtack.com survey provides unique and valuable insight because the data comes directly from thousands of small business owners. While other reports provide rankings based on existing and widely used statistical data (such as unemployment rates and taxes), this survey reflects the input of more than 6,000 small business owners operating in the real world.
Every one of the survey categories in which small businesses graded Washington poorly reflect policy reform recommendations from WPC, which isn’t a surprise given many of these recommendations come from the small business owners who have attended our Statewide Small Business Conferences and Small Business Forums over the past ten years. Small business owners have been identifying the problems for a long time. Now we just need our state’s policymakers to listen.