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Economy / Business Climate

Report: Saint Louis, Kansas City *Not* Among Most Cost-Friendly Cities for Business

By Joseph Miller on Mar 31, 2016

Recently, the Post-Dispatch prominently published an article claiming that, “St. Louis is among the top 10 most cost-friendly cities to do business in the country.” The article’s source was a study by KPMG, which ranks more 70 cities by business costs (lower index being better). The only problem is that, if one follows the links in the Post-Dispatch article, they’ll find that Saint Louis is certainly not one of the most cost-friendly cities for business.

Far from it. Of the 77 U.S. cities that KPMG ranked (which was not exhaustive of all major metros), Saint Louis ranked 45th and Kansas City ranked 46th. Among the cities cheaper than Saint Louis (and Kansas City) are regional competitors like Nashville, Omaha, Cincinnati, Memphis, Indianapolis, Cleveland, and Oklahoma City, to name a few. Worse yet, Saint Louis was more expensive than all 18 Southeastern cities KPMG looked at, from Atlanta to New Orleans.

 

Rank

Metro Area

Region

Cost Index

1

Charlottetown, PE

New England

83.9

2

Shreveport, LA

Southeast

91.7

3

Youngstown, OH

Northeast

92.5

4

Baton Rouge, LA

Southeast

92.8

5

Savannah, GA

Southeast

93.1

6

New Orleans, LA

Southeast

93.1

7

Lexington, KY

Northeast

93.2

8

Little Rock, AR

Southeast

93.3

9

Gulfport-Biloxi, MS

Southeast

93.3

10

Jackson, MS

Southeast

93.3

11

Montgomery, AL

Southeast

93.4

12

Mobile, AL

Southeast

93.7

13

Charleston, WV

Northeast

93.8

14

Nashville, TN

Southeast

93.8

15

Cedar Rapids, IA

Midwest

93.8

16

Omaha, NE

Midwest

93.9

17

Cincinnati, OH

Northeast

94

18

Sioux Falls, SD

Midwest

94.1

19

Fargo, ND

Midwest

94.3

20

Boise, ID

Pacific

94.3

21

Memphis, TN

Southeast

94.4

22

Orlando, FL

Southeast

94.4

23

Albuquerque, NM

Midwest

94.4

24

Billings, MT

Midwest

94.4

25

Spartanburg, SC

Southeast

94.5

26

Indianapolis

Northeast

94.6

27

Cleveland, OH

Northeast

94.6

28

Tampa, FL

Southeast

94.6

29

Cheyenne, WY

Midwest

94.6

30

Saginaw, MI

Northeast

94.7

31

San Antonio, TX

Midwest

94.7

32

Wichita, KS

Midwest

94.7

33

Oklahoma City, OK

Midwest

94.7

34

Bangor, ME

New England

94.8

35

Champaign-Urbana, IL

Midwest

94.8

36

Beaumont, TX

Midwest

94.9

37

Salt Lake City, UT

Midwest

95

38

Raleigh, NC

Southeast

95.1

39

Atlanta, GA

Southeast

95.1

40

Charlotte, NC

Southeast

95.2

41

Miami, FL

Southeast

95.4

42

Richmond, VA

Northeast

95.5

43

Madison, WI

Midwest

95.7

44

Spokane, WA

Pacific

96

45

St. Louis, MO

Midwest

96.1

46

Kansas City, MO

Midwest

96.2

47

Phoenix, AZ

Midwest

96.2

48

Austin, TX

Midwest

96.2

49

Dallas-Fort Worth, TX

Midwest

96.2

50

Baltimore, MD

Northeast

96.5

51

Providence, RI

New England

96.7

52

Detroit, MI

Northeast

96.8

53

Minneapolis, MN

Midwest

96.8

54

Burlington, VT

New England

96.9

55

Pittsburgh

Northeast

97

56

Manchester, NH

New England

97.2

57

Houston, TX

Midwest

97.6

58

Portland, OR

Pacific

97.6

59

Wilmington, DE

Northeast

97.7

60

Denver, CO

Midwest

97.8

61

Las Vegas, NV

Pacific

98

62

Hartford, CT

New England

98.2

63

Rochester, NY

Northeast

98.3

64

Chicago, IL

Midwest

98.3

65

Sacramento, CA

Pacific

98.5

66

Riverside-San Bernardino, CA

Pacific

98.5

67

Metro DC

Northeast

99.4

68

Philadelphia

Northeast

99.8

69

San Diego, CA

Pacific

99.9

70

Seattle, WA

Pacific

100.8

71

Los Angeles, CA

Pacific

100.8

72

Boston, MA

New England

101.2

73

Trenton, NJ

Northeast

101.8

74

Honolulu, HI

Pacific

103.9

75

San Francisco, CA

Pacific

104.5

76

New York City, NY

Northeast

104.7

77

Anchorage, AK

Pacific

108.1

So where did the Post-Dispatch get a top ten ranking for Saint Louis? If we only consider regions with populations greater than two million (of which KPMG ranked 31), Saint Louis is the 9th cheapest. I will leave it to the readers of this blog to decide if Saint Louis should pat itself on back for being cheaper than New York, Los Angeles, and Chicago, when it has higher costs for businesses than Nashville, Memphis, and just about every other regional competitor. But if we do decide to use population as criteria, it seems more justified to look at metros with populations similar to those of Saint Louis and Kansas City (between two and three million residents). When we do that, Saint Louis is 7th and Kansas City is 8th out of 14 such cities. That seems awfully middling.

That’s probably why, if one reads the study that the Post-Dispatch reports on, they’ll find that it does not claim that Saint Louis is among the most competitive cities in the country. KPMG didn’t even break down cities by population in the study, choosing instead to do so by region.  The Post-Dispatch story (while citing the study) is actually based on an ancillary KPMG press release, which lauds Cincinnati, and is careful to note context.

Titling an article “St. Louis among most cost-competitive cities for business, report says” when the report in question says no such thing is a questionable decision for a newspaper of record. But this is not just a problem with the headline. The article itself is equally misleading, and it was not a headline writer who placed this story front and center on the Post-Dispatch’s website less than a week before a vote on multiple tax issues (where the city’s business climate is an issue). 

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Joseph Miller

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