Economic illiteracy: The McKee Administration celebrates clickbait over reality

In a nutshell, state rankings are bullshit, and it would be stupid to enact policy to improve our standing in them.

Rhode Island Governor Daniel McKee has his eye on the ball, unfortunately, it’s the wrong ball. The Governor issued a press release celebrating an improved ranking in U.S. News & World Report’s “Best States for 2025.” In this ranking, Rhode Island moved from #34 in 2021, to #32 in 2023, and #26 in 2024.

“My administration has always been focused on the economy of our state and the health and wellbeing of our residents,” said Governor McKee. “We still have more progress to make, but by following our RI2030 plan and making strategic, long-term investments, we expect our rankings to continue to climb.”

To which I say, “Good Lord, I hope not.”

The Rhode Island economy is not in good shape. Doctors are fleeing due to low reimbursement rates. Housing and rental costs are out of control, and by some measures, the worst in the country. Homelessness has exploded, from under 100 pre-COVID to over 1000 today, when a record number of people live in “places unfit for human habitation.” Hasbro plans to leave Rhode Island, potentially, not for lower taxes but for access to reliable public transportation and talent pools, even as the Governor’s proposed budget cuts RIPTA funding. While Massachusetts and Washington state enjoy a large influx of cash due to wealth taxes, Rhode Island’s political leadership fumbles.

Instead of doing anything substantive about these issues, the Governor celebrates a U.S. News & World Report ranking that says nothing about our economy. In a nutshell, state rankings are bullshit, and it would be stupid to enact policy to improve our standing in them.

According to U.S. News & World Report, the top state is… Utah? To improve our rankings, Rhode Island should be more like Utah. Not California, New York, or Massachusetts, all of which have better economies than Rhode Island, but Utah. To be fair, Massachusetts is ranked #9, but Florida is ranked #6!¹ New York and California aren’t even in the top 10.

Grading the States is a website built by economist Peter Fisher to demonstrate how meaningless state rankings are. Here’s a small sample:

The possibilities for mischief and misdirection in the construction of a business climate index are almost unlimited. There are several steps to the creation of an index, and it is possible to rely on the best available research technique at each step of the way. But the indexes critiqued on this site tend to ignore research and simply choose measures on the basis of ideological bias, convenience, or popular mythology. Due to this, the results are meaningless at best and misleading at worst.

We can all intuit the problem here: A numerical rating that sums up everything about a state is impossible to determine. More than that, these numbers tell you nothing about the states themselves.

Alan Krinsky, Director of Research & Fiscal Policy at the Economic Progress Institute, wrote a terrific piece about state rankings last year. He wrote about the Tax Foundation rankings, not the one from U.S. News and World Report, but they all suffer from the same flaws. Krinsky outlined ten reasons these rankings are useless:

1. The main purpose of business climate rankings is as clickbait to push for low tax policies that benefit the wealthy.

2. The Tax Foundation’s Business Tax Climate Index and other rankings offer virtually no evidence that the rankings predict actual business activity, such as business starts or employment growth.

3. Many tax policies highlighted in the rankings have little or no impact on small business owners.

4. There is no good evidence that business climate rankings are tied to out-of-state migration.

5. Some measures are arbitrary or even involve a bait-and-switch.

6. Comparing Rhode Island to the states of Texas or California is not useful.

7. Various business climate rankings do not agree with each other.

8. Business needs vary by sector.

9. Business climate rankings mostly do not include many things that matter to businesses yet are beyond anyone’s control – including the actual climate.

10. Business climate rankings provide a narrow view of the economy, and better ways exist to measure this.

These points are expanded in Krinsky’s piece, and more can be gleaned from the Grading the States website, but the upshot is this:

State rankings are bullshit, and celebrating a rise or bemoaning a fall in these rankings mean nothing. The Governor’s economic priorities are the same failed trickle-down gibberish that has destroyed our economy for 50 years. As Krinsky wrote last year (and read his piece, please), “Instead of paying attention to the clickbait of business climate rankings, we should devote our time and energy to designing and implementing policies that help Rhode Island businesses – especially micro businesses – thrive, while also promoting greater racial, gender, and economic equity and narrowing income and wealth gaps.”

Don’t bet on Governor McKee doing that.

1. Let me touch on another aspect of state rankings that these single-digit rankings seem unable to account for: political and personal freedom. Transgender people are fleeing states like Florida because that state has enacted bigoted and dangerous policies that have resulted in a loss of their rights, if not their lives. A wealthy, cis, white, hetero man might live comfortably in any of the 50 states. Many people don’t have that option.