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Doing Business On The Cheap


Economic Trends

DOING BUSINESS ON THE CHEAP

Costs vary widely among U.S. cities

Local governments often try to lure companies with boasts of low taxes, inexpensive energy, cheap labor, or some other advantage. Which ones are really most--and least--attractive when all these factors are tossed into the hopper?

Regional Financial Associates Inc. (RFA) forecasters in West Chester, Pa., have come up with an improved index that tracks relative costs of doing business in American cities. The most important ingredient in the mix is unit labor costs, which make up two-thirds of the index. The remaining one-third comes more or less equally from energy costs, office rents, and state and local taxes.

The most-expensive list contains the usual suspects: Top ranking goes to New York--40% pricier than the national average. Also high in cost are Honolulu, San Francisco, and Washington. These four averaged only 0.3% job growth in the past year.

Less predictable are the 10 cheapest metro areas (table). New Orleans and Syracuse, N.Y., benefit from low labor costs. Boise, Idaho, and Spokane, Wash., have cheap power. Provo, Utah, offers office rents half the national average.

But as RFA notes, "low business costs do not guarantee exceptional economic growth." For example, cheap labor in Buffalo has not helped attract enough factory jobs to replace the ones that were lost. And New Orleans has still not recovered from the shakeout in the energy industry, despite its very low business costs.

Low taxes alone don't assure growth. St. Louis has a state and local tax burden 44% below average. But this does not offset consolidation in defense and health care, two big local industries.By Michael J. MandelReturn to top

TABLE

Bargain Towns

COST-OF-DOING- CHANGE IN

BUSINESS INDEX EMPLOYMENT

OVER PAST YEAR

NEW ORLEANS 83 0.9%

RICHMOND, VA. 85 1.5

SPOKANE, WASH. 86 0.7

LOUISVILLE 87 1.5

TACOMA, WASH. 87 1.7

SYRACUSE, N.Y. 88 -0.3

NORFOLK, VA. 88 0.9

BOISE, IDAHO 89 4.7

BUFFALO 89 -0.3

PROVO, UTAH 90 5.7

NATIONAL AVERAGE 100 1.9

DATA: REGIONAL FINANCIAL ASSOCIATES INC.

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SATISFACTION AT WORK

It depends on your country

At a time of economic turmoil and downsizing, it comes as no surprise that many workers are dissatisfied with the companies they work for. According to International Survey Research Corp. (ISR), dissatisfaction varies from country to country. The Chicago firm does employee surveys for more than 1,500 of the world's largest companies. The studies usually contain a core of identical questions that can be used to make cross-country comparisons.

When asked about their company, Swiss workers turn out to be the most satisfied. The least satisfied employees are found in Singapore, Hong Kong, and Japan. The U.S. falls in the middle range--at about the same level as Germany and Sweden, two countries celebrated for an enlightened approach on the part of employers.

But satisfaction at work does not correlate with workers' perception of how good their opportunities are. ISR also asked employees to assess whether they had a chance for personal development and growth. In Switzerland, Britain, and Germany, the percentage of employees who see opportunity is far less than the percentage who are satisfied.

By contrast, fast-growing Malaysia, Singapore, and Hong Kong rank much better on opportunity than on satisfaction. The country with the biggest gap between opportunity and satisfaction? Japan, where 48% of workers see chances for development and growth but only 31% are satisfied.By Michael J. MandelReturn to top


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