CNBC’s Scott Cohn talks with Opportunist’s Managing Editor Leslie Stone about his annual America’s Top States for Business list and what it reveals about the U.S. economic outlook, and shares highlights from his 25 years with the network.
Scott Cohn is a founding member of the CNBC team. As the network’s senior correspondent and lead investigative reporter, he also appears on “NBC Nightly News with Brian Williams,” “The Today Show” and MSNBC. A three-time Emmy nominee—all for investigative reporting—and a two-time CableACE nominee, he also leads CNBC’s coverage of white collar crime and legal affairs, and his work on the Bernard Madoff scandal earned him a 2010 Loeb Award for breaking news coverage. Cohn also covered the Enron and WorldCom scandals, including the landmark trials of the companies’ chief executives.
In 2007 Cohn developed the popular CNBC and CNBC.com annual series America’s Top States for Business, which ranks all 50 states on 56 different measures of competitiveness in 10 categories: cost of doing business, economy, infrastructure, workforce, quality of life, technology and innovation, business friendliness, education, cost of living and access to capital. According to Cohn, the study uses publicly available data and is not an opinion survey. “We rely as much as possible on tangible numbers to gauge each state’s performance. We developed our initial metrics with input in 2007 from the National Association of Manufacturers and the Council on Competitiveness and regularly refine them in consultation with a wide variety of business and economic development organizations, the states themselves and the CNBC Global CFO Council.”
Cohn and his colleagues have fun with the study and try to engage the audience through social media and CNBC.com. In the weeks and days leading up to the final countdown, he tweeted clues about which states ranked in the Top 5 and did on-air segments about those states. “We certainly got lots of attention this year; it was very well received,” he says. “People like home state pride but the hope is there is some real substance here in terms of ‘what is your state doing to attract business?’ I am not one to count up my social media followers—Twitter wasn’t even in existence when we first started this study—but every year I sure do pick up a lot. [Laughs] It’s fun to hear from people. CNBC has a smart audience who wants to talk about stuff like this in an intelligent way, so we bring them into the tent and get them talking about it. I like the idea of being able to look into the issue of state competitiveness and I like to see what the real story is in terms of that. I think even the states that don’t do well tend to look at it as something they can become involved with and see it as sort of a benchmark.”
Georgia took the top spot this year, rising from eighth place in 2013.The winner was broadcast live last Tuesday on “Closing Bell.” Texas, Utah, Nebraska and North Carolina rounded out the Top 5.
Opportunist: Are you surprised by this year’s outcome?
Scott Cohn: We have been crunching numbers over the space of a couple of months, but it’s always interesting to see how it plays out every year. Georgia has always done relatively well. What is so interesting is that Georgia has recovered from the housing crisis and its economy is rebounding and jobs are coming back to the state. This may speak to the growing trend that things are starting to look up for the rest of the country.
Opportunist: What can you tell us about the other states in the Top 5?
Scott Cohn: Texas always does well. It came in at the top of the list in 2008, 2010 and 2012, and has never finished below second place in the eight years we have been doing this study.
Much of what Texas is doing is inherent to Texas. It’s a big state with a diverse economy and infrastructure and a great deal of resources, so it’s in good financial health as a result. It’s hard to discount Texas in any ranking of state competitiveness. It also has a low tax structure, but in terms of business costs it’s not the least expensive state by a long shot. Utah is always a very solid state in terms of work force, a stable economy and influx of investment and business capital. Nebraska is a low-cost state, but not the lowest by any means. It has a friendly legal and regulatory climate where businesses feel they may be given a fair shake. North Carolina climbed from 12th place last year to fifth this year—after coming in third in 2011.
Texas, Utah, North Carolina and even this year’s top-ranked Georgia have education issues. They are underfunded and perhaps as a result of that performance lagged behind. That is an issue they must address if they are to remain competitive.
Opportunist: We understand this year’s technology and innovation category included agricultural research. Why did that become a factor this year?
Scott Cohn: We were told that agriculture has become very cutting edge. In the past we always looked at patents and broadband and health and science research grants. Those tend to favor states like California and Massachusetts that are cutting edge that way. I don’t know that it changed our results much because one of the states with the most research funding for agriculture is California, although Wisconsin gets a great deal of federal grant money for agricultural research. It definitely created a better picture of what exists. The federal government pays out some $7 billion in research grants each year and while the farm may not come to mind when you think about cutting edge research and technology, the fact is that farming is very cutting edge these days.
Opportunist: Your economy category looked more closely at job creation this year. What did that reveal about the job market?
Scott Cohn: That’s one of the things that certainly helped states like Georgia and Nevada and other states coming out of the downturn that are now adding jobs. We wanted to take a look at the whole picture, not just a snapshot of the unemployment rate. Georgia added 50,000 jobs, which pales in comparison to Texas with its several hundred thousand jobs added last year, but on a percentage basis that is important and speaks to where the economy is headed.
Opportunist: Were you able to determine which industry sectors are hiring more than others?
Scott Cohn: We don’t look at it in such a granular level, but I can tell you that in both Georgia and Nevada, for example, construction and housing are coming back. Hospitality, obviously a big industry in Nevada, is improving as well. If anything, that indicates a bit of growth, especially in areas that are more economically sensitive than others—and especially since the U.S. economy actually contracted pretty badly last quarter.
There is a flip side to all of this, and that is which states are the top states for workers? I hope we will do that study sometime. I suspect the results will be a whole lot different.
Opportunist: Rhode Island came in dead last, dropping from 49th place in 2013. How are they handling the news?
Scott Cohn: I just finished an interview with Rhode Island Governor Lincoln Chafee earlier today. In the state of Rhode Island they do realize they have problems. They have made some bad choices previously and, as a result, their business infrastructure is not doing well. But they’ve really taken rankings like ours and the whole issue of competitiveness to heart and have passed a whole package of legislature in the past year to reform business and accentuate the positive.
Hawaii [No. 49] and Connecticut [No. 46] are both expensive places to live and that is typically going to hurt business. California ranked in the bottom five in 2013 but moved up to 32nd place this year after getting things in order. California’s finances have come a long way since the devastating recession a few years ago.
Opportunist: Do you believe your study makes states strive to become more competitive?
Scott Cohn: We certainly don’t want to take credit—or blame—for that one way or the other. We try to present an accurate picture about what states are doing to compete. We aren’t the only ranking out there, and companies look at factors way beyond our rather broad rankings. If anything, we are offering a reality check and showing how states compete against each other. If we are helping states focus on this aspect, then we are hopefully doing them a service. We are seeing personal visits by governors of one state to another state. Gov. Rick Perry and his efforts to basically try and woo jobs to Texas comes to mind. But we will leave it to people to judge for themselves as to whether our study is productive or not. It is interesting to see how states try to compete and to see that this has become so front and center. We aren’t making pronouncements on their policies. When I am asked how they can do better I say, ‘I’m a reporter, so I will leave the policymaking to the policymakers.’
Opportunist: Based on this year’s study, how do you feel about the U.S. economic outlook?
Scott Cohn: I think our study speaks to the fact that something positive is going on, particularly in these states that were hit so hard by the recession. Excesses that led to the financial crisis are finally being worked out and the economy is getting back on its feet. We are now starting to see this percolate into our numbers.
Opportunist: What does this say about the so-called American Dream? Is it still a realistic pursuit?
Scott Cohn: I think it is—absolutely—but the question is how attainable and who it is attainable for? We know there is an issue with income inequality in this country and around the world. The big challenge and test for our society is to make sure the American Dream is as attainable as possible for as many as possible and that the playing field is level.
Opportunist: As a CNBC original, what are some of your favorite stories from 25-plus years with the network?
Scott Cohn: My favorite thing is not a story—it’s actually my proudest achievement in my career, which spans more than 30 years. I’ve been at CNBC from the start and I played a part in putting it on the air. It was never a given that this was going to work when we launched in 1989, even though NBC was backing us. We put something together that over time became an important part of the information landscape. That is something I will always be proud of. As far as individual stories and things, America’s Top States for Business study is something that I am proud of because it sort of began as a casual conversation in the newsroom about why companies locate where they do. Everything flowed from there and who knew what it would turn into?
I’ve been proud of the investigative work we’ve done. We did a documentary in 2010 called ‘Remington Under Fire’ that looked at allegations of a 60-year cover-up in a safety flaw in the world’s most popular bolt-action rifle. We created awareness, if nothing else, among people who used these products. Remington denied there was a flaw even though we presented a pattern of some 60 years’ worth of documents in which they discussed issues with this gun. The company is still trying to come to terms with it, and the story isn’t over yet. Also back in 2010, before people were talking about the student loan crisis, we did a documentary called ‘The Price of Admission’ that looked at all the problems people get into with student loans and how for-profit colleges actually play a role in it. My time with CNBC has been very gratifying.
Opportunist: In your research and reporting about the Bernard Madoff and Enron scandals, did you discover any similarities between the two cases?
Scott Cohn: I think it’s important first to discuss the differences because they are profound. Madoff was a flat-out fraud. He and his associates fabricated trades and told investors they were investing in the stock market. When it all fell apart it really fell apart. Enron was a very real company with very real assets. Enron certainly pushed the envelope in a lot of areas, but I am not sure the full Enron story has been told yet. The Enron collapse was in the wake of 9/11 and the crisis of the U.S. economy in the early 2000s. The company was vulnerable but it was very cutting edge. Yes the people involved pled guilty and went to jail for fraud and conspiracy, but it certainly is different on its face from the Madoff scandal.
The similarities lie in the fact that there is a common thread in every corporate crime and that is ego. Enron founder Ken Lay is probably guilty of not wanting his company to fail. There are a number of executives who, like Lay, are tremendously smart but become so caught up in their company that it becomes their identity and they let it go to their head. To compare Enron and Madoff—granted they were both huge scandals—is pointless because there are so many differences in terms of what they were and what they were not.
Former WorldCom CEO Bernard Ebbers wanted to ensure the company was a success. He didn’t want it to fail. WorldCom cooked the books and was clearly an accounting fraud—much more so than Enron.
Opportunist: What can investors learn from the Enron, Madoff and WorldCom scandals?
Scott Cohn: One aspect that plays into each of these scandals but that rarely gets any attention is the level of greed among the people who invest. There is such a thing as healthy greed. It makes the financial markets work because people want to make a profit. Back in the days of the tech bubble people expected certain returns, and if the company didn’t deliver it would be punished in the marketplace. The heads of each of these companies did not want to be punished in the marketplace. I believe there needs to be some looking inward on the part of the investing public. People need to look at their expectations and ask whether they are realistic before they vilify these companies.
Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance, real estate and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in Florida. Follow her on Twitter at @lescstone.
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