2016 Thumbtack Small Business Friendliness Survey: Methodology & Analysis Lucas Puente * Economist, Thumbtack.com [email protected]June 15, 2016 Abstract The 2016 Thumbtack.com Small Business Friendliness Survey polled over 12,000 small business owner-operators from across the country on their policy preferences and evaluations of their state and local governments. With this survey data, we provide three novel contributions. First, we grade 35 states and 78 metropolitan areas on 11 dimensions, ranging from overall business friendliness to more specific measures, such as the friendliness of an area’s labor regulations. Second, we use econometric procedure known as dominance analysis to determine what small businesses want most from their state and local governments. This exercise revealed that licensing requirements and tax regulations are single biggest determinants of small businesses’s evaluations of their local and state governments, respectively. Finally, we use regression analysis to determine how improving along different policy measures affects perceptions of overall friendliness. These results indicate that, among other things, requiring a service provider to hold a license is only negatively correlated with friendliness evaluations if that license is also seen as being difficult to comply with. With these results, we look forward to working with state and local officials to help improve policy conditions for small businesses across America. * Jon Lieber, former chief economist at Thumbtack, provided insight and expertise that greatly assisted the development of this study.
Transcript
2016 Thumbtack Small Business Friendliness Survey:Methodology & Analysis
The 2016 Thumbtack.com Small Business Friendliness Survey polled over 12,000small business owner-operators from across the country on their policy preferences andevaluations of their state and local governments. With this survey data, we providethree novel contributions. First, we grade 35 states and 78 metropolitan areas on 11dimensions, ranging from overall business friendliness to more specific measures, suchas the friendliness of an area’s labor regulations. Second, we use econometric procedureknown as dominance analysis to determine what small businesses want most from theirstate and local governments. This exercise revealed that licensing requirements and taxregulations are single biggest determinants of small businesses’s evaluations of their localand state governments, respectively. Finally, we use regression analysis to determinehow improving along different policy measures affects perceptions of overall friendliness.These results indicate that, among other things, requiring a service provider to hold alicense is only negatively correlated with friendliness evaluations if that license is alsoseen as being difficult to comply with. With these results, we look forward to workingwith state and local officials to help improve policy conditions for small businesses acrossAmerica.
∗Jon Lieber, former chief economist at Thumbtack, provided insight and expertise that greatly assisted thedevelopment of this study.
1 Introduction
The Thumbtack Small Business Friendliness Survey is an annual, nationwide survey thatasks owner-operators of small businesses about the policy environment where they operate.The survey aims to learn what governments can do to create a healthy, vibrant local businessenvironment by asking the owner-operators of small businesses themselves about these issues.This year we use the survey data to grade 35 states and 78 metropolitan regions accordingto their performance along 11 metrics. This is the largest survey of its kind; so far as weknow, Thumbtack is the only organization in the United States that has had the necessaryaccess and motivation to produce such a large-scale survey of small businesses themselvesover the course of years.
This is the fifth annual release of the survey, which was originally developed with expertsfrom the Ewing Marion Kauffman Foundation.
Although the businesses that are surveyed by Thumbtack are small in size (90 percent have 5or fewer employees), the perceptions of the local business environment by these entrepreneursmatters for three reasons:
1. The United States is a service economy – 80 percent of all workers today workin service industries.1 The view of service providers, even very small ones, is criticalto understanding the environment for job creation as employment in manufacturingcontinues its historical decline.
2. Entrepreneurship is a critical avenue for displaced workers – research fromthe Kauffman Foundation shows that entrepreneurial activity tends to increase whenthe economy slows (Fairlee, 2014). The easier it is for an individual to start and runa business, the faster he or she can get back to work. As more American middle classjobs face the threat of automation and competition from overseas, self-employmentcould become a viable path to make a living for millions of Americans.
3. Entrepreneurship is on the decline – government statistics show a general declineover the last 20 years in rates of self-employment and the rate of new business start-ups (Hathaway and Litan, 2014). This is happening across industries and across thecountry. Understanding how policy choices affect very small, new businesses is criticalto understanding how to turn the tide on this crisis of small business ownership.
Policies that are friendly towards self-employed entrepreneurs may act as a proxy for theregulatory climate for businesses generally – states that did well in our survey have also seenhigher real output growth going back three years. As Figure 3 in Appendix D shows, stateswith higher friendliness scores have substantially higher growth rates than their less friendlycounterparts. The bivariate regression displayed in that figure also indicates that a one unitincrease in a state’s friendliness rating is associated with a jump in real economic growthper year of 1.92 percentage points. That’s far from trivial since over 75% of states achievedannual growth of under 2.55% in 2015.
1The Department of Labor projects that 81 percent of workers will be in service industries by 2022(Henderson, 2013).
1
There are many rankings and indices that designed to evaluate a particular city or state’sappeal to business. The Thumbtack.com Small Business Friendliness Survey differs fromother such rankings in several meaningful ways:
1. The Thumbtack survey asks small business owners directly about their per-ceptions of their government – many other studies of the same issue rely on theperceptions of the researcher to determine which factors make a political environmentfavorable or unfavorable.2 By prioritizing these other indices, policymakers may dolittle to improve conditions on the ground, at least in the eyes of small businesses(Motoyama and Hui, 2015).
2. The scale of the survey is nearly unprecedented – this year we received over12,000 responses from small business owners in every state. Not only do few otheroutlets have the capability of asking that many entrepreneurs the same set of questionson a regular basis, few other outlets are able to break down the results of survey in aconsistent fashion across state and metro areas. In addition to the large sample, thescope of the survey, grading cities and states along 11 dimensions using a consistent setof questions over multiple years, captures some nuance that may otherwise be lost fromsimply looking at a handful of metrics and declaring an area friendly or unfriendly.
3. The survey is conducted with no preexisting agenda – the purpose of the surveyis to present, without ideological bias, the views of the small business owners who useThumbtack. We are not pushing any particular agenda or advocating for any politicaloutcomes. Our goals are simply to understand what makes government work betterfor small businesses, according to their own beliefs.
2 Survey Design & Methodology
The data were collected over a period of three weeks in the spring of 2016.3 A link askingbusiness owners or operators to take the survey was provided to business users of Thumb-tack.com after they had used the website to solicit business from potential consumers. Eachof the business owners using the site during this time period was shown the prompt at leastonce, leading to 12,169 completed responses. Responses that completed less than half of thesurvey were thrown out.
The full text of the survey appears in Appendix A. Information on the demographic profileof survey respondents, including how they compare to business owners nationally, can befound in Appendix B. And full results for cities and states can be seen in Appendix C.
2For example, the “Best Performing Cities” ranking done by the Milken Institute relies entirely on outputssuch as which city saw the highest job or wage growth. The “State Business Tax Climate Index” (2014) bythe Tax Foundation relies only on the Tax Foundation’s view of what makes a friendly tax code and not onthe view of local businesses. These rankings, while interesting to review, show little correlation to each otherand may end up revealing very little about the actual experience of businesses that operate on the groundand the business environment (Fisher, 2005; Kolko et al., 2013).
3The results were gathered from April 13, 2016 to May 6, 2016.
2
Generally, survey questions fall into one of three categories:
1. Questions 1 through 14 ask about a state or locality’s friendliness towards small busi-ness.
(a) Respondents provided subjective evaluations, ranging from “very friendly” to“very unfriendly” on topics including state and local governments’ overall supportof small businesses, regulations that affect their business, and training programsand online resources offered by local and state governments.
(b) Questions 15 through 18 are open-ended, “free response” questions that providebusiness owners with the opportunity to provide additional qualitative feedbackon their interactions with their governments and their current policy concerns andpriorities. 6,468 respondents answered at least one of these questions.4
2. Questions 20 and 21 ask the respondents to identify their top policy priorities for theirlocal and state governments.
3. Questions 22 through 33 as about demographic information connected to each respon-dent and his/her business.
To quantify the answers to the questions in this section, we converted the categorical re-sponses we received for each question into numerical scores and averaged those scores ineach category for each city or state. For the questions that are answered on a five-pointscale, we assign a score of 1 for answers that were very negative, 2 for answers that weresomewhat negative, 3 for neutral answers, 4 for answers that were somewhat positive, and 5for answers that were very positive.
We also compute grades for three categories with nested questions. When asking about one’sexperiences with local training programs, government websites, and licensing requirements,we start by identifying whether or not the business has used this resource or is required tohold a license by the relevant authority (the city or county for city grades or state for stategrades) and then proceed to ask them about the helpfulness of that resource or the easeof complying with that license. Table 1 describe in detail how the scores for these specificgrades are calculated.
While these two approaches enable us to calculate scores for the 11 metrics that we observedirectly, we also compute two composite scores – one is our Overall Small Business Friendli-ness Score and another is for a composite score of the regulatory environment. The formeris the function of an evenly weighted average of the scores of three related questions, all ofwhich are measured on a 5-point scale (see questions 1–4 in Appendix A):
• States : In general, how would you rate your state government’s support of small busi-ness owners?
• Cities : In general, how would you rate your local (county, city, or town) government’ssupport of small business owners?
4Question 19 solicits contact information for those that would like to have their answers to the questionsin this section shared with the media.
3
Table 1: Grading Rubric for Categories with Nested Questions
ScoreTrainingExperience
WebsiteExperience
LicensingExperience
1Unaware of trainingprograms
Never used agovernmentwebsite
Not required to holda license or permitby a local / stateauthority
2Aware of trainingprograms, but has notparticipated in one
Used a governmentwebsite, but found it“very difficult” to use
Required to holda license or permit;found compliance“very difficult”
3
Participated in atraining program,but found it “veryunhelpful”
Used a governmentwebsite, but found it“somewhat difficult”to use
Required to holda license or permit;found compliance“somewhat difficult”
4
Participated in atraining program, butfound it “somewhatunhelpful”
Used a governmentwebsite; found it“neither easy nordifficult’ to use
Required to holda license or permit;found compliance“neither easy nor difficult”
5
Participated in atraining program;found it “neither helpfulnor unhelpful”
Used a governmentwebsite; found it“somewhat easy”to use
Required to holda license or permit;found compliance“somewhat easy”
6
Participated in atraining program;found it “somewhathelpful”
Used a governmentwebsite; found it“very easy” to use
Required to holda license or permit;found compliance“very easy”
7Participated in atraining program;found it “very helpful”
– –
• Would you discourage or encourage someone from starting a new business where youlive?
• How difficult or easy is it to start a business where you live?
Similarly, the regulatory composite score is computed by averaging the state or city’s perfor-mance on the 6 regulation-related questions in the survey (i.e. those from the multi-facetedLikert scale in question 8).
In all, we develop grades and ranks for cities and states for these 13 metrics:
1. Overall small business friendliness
2. Ease of starting a small business
4
3. Ease of hiring a new employee
4. Overall regulatory friendliness
5. Friendliness of health and safety regulations
6. Friendliness of employment, labor, and hiring regulations
7. Friendliness of tax code and tax regulations
8. Friendliness of licensing requirements
9. Friendliness of environmental rules
10. Friendliness of zoning regulations
11. Availability of helpful training or networking programs
12. Availability of easy-to-use government websites
13. Experiences with occupational licensing
Grades were assigned based on a modified curve, with their performance depending on howfar they were from the average score along each metric. Any state more than 20 basis pointsabove the average was granted an A+, while any state less than 20 basis points below theaverage was given an F. Each grade in between represents a 4 basis points band betweenthese upper and lower bounds.
To avoid assigning grades where we did not have a sufficient number of respondents, we onlygraded cities where we received 30 or more responses, while states had to receive at least50 responses to receive a grade. We chose to use a higher threshold for states since thosewith fewer than 50 responses were typically coming from a single metropolitan area (e.g.Providence, RI). Thus, we chose to rank those cities rather than the states they are in.
3 Grading Results
For the fifth straight year, there is substantial geographic variation in the perceptions ofsmall business owners regarding the friendliness of their state and local governments. Onone end of the spectrum, survey respondents in Texas were the most likely to refer to theirstate government as supportive, report that starting a business there is easy, or recommendstarting a new business. Those in Utah and Tennessee were also quite likely to express suchpositive attitudes, earning these states the other two A+ grades we awarded this year. At theopposite end, small business owners in Connecticut expressed the most negative attitudesabout their state’s policy environment. Small businesses in Illinois and California to feelrelatively unsupported by their state governments as well, leading these four states to alsoreceive a F grade.
On the city level, Texas was also quite successful, with four of the top ten coming from theLone Star State: San Antonio took the overall top spot, while Fort Worth came in fourth,
5
Houston fifth, and Dallas sixth. Tennessee’s two largest cities, Nashville and Memphis, alsoearned high marks and came in second and third overall, respectively. Other cities in thetop ten included: Akron, OH (#7), Virginia Beach, VA (#8), Jacksonville, FL (#9), andAtlanta, GA (#10). On the bottom were Syracuse, NY, Oxnard, CA, and San Francisco,CA, all of which received an F grade. The state-level results are displayed in Figure 1 aswell as in Table 6, while the city grades and ranks can be found in Table 7 (see AppendixC). Additionally, an interactive visualization of all the ratings is available at https://
www.thumbtack.com/survey, while searchable and sortable tables are posted at https:
//www.thumbtack.com/blog/2016-results/.
Figure 1: Choropleth of Small Business Friendliness Ratings
4 Analytical Methodology
While these grades provide insights into where skilled professionals feel most supportedby their local and state governments, they do not accomplish the second objective of oursurvey: determining which policy factors are most important to this community. To do this,we examined which policy measures are most responsible for the primary outcome of interest:respondents’ perceptions of how supportive their state and local governments are to the smallbusiness community (i.e., their answers to questions 1 and 2) using an econometric procedure
known as dominance analysis.5 The methodology behind this step is relatively straight-forward: using the domin package in Stata (Luchman, 2014a), a multivariate regression isrun for each possible combination of independent variables to determine the proportionatecontribution each policy measure makes in explaining variation in the outcomes of interest:respondents’ evaluations of the friendliness levels of their states and cities.6
Importantly, in each regression model, we account for potential confounding variables thatare both respondent-specific, such as an individual’s race, gender, age of business, and ifthey are aligned with the dominant political party in their state or city, as well as otherslike the strength of the economy in the respondent’s state or metro area at the time of thesurvey (as measured by the unemployment rate and GDP change in the last quarter). Sinceour dependent variables (friendliness evaluations) are perception-based, we also control forthe overall level of happiness in each state and city.7 By including this full set of controlvariables, we are able to calculate the unique contribution of the 11 distinct policy measureswe ask about:
• Health Regulations
• Labor Regulations
• Tax Regulations
• Licensing Requirements
• Environmental Rules
• Zoning Regulations
• Tax Complexity
• Tax Rates
• Government Website
• Licensing Compliance
• Training Opportunities
With the full sample of over 12,000 responses, we performed dominance analyses on boththe city and the state level to determine which policy measures matter most in those twodifferent jurisdictions.8 In addition, we ran dominance analyses for as many cities and states
5For more background on this methodology, see Budescu and Azen (2004) and Johnson and LeBreton(2004).
6Since the dependent variable is measured on a five-point scale, we relied upon an ordinal logistic regressionas our workhorse econometric model. See Luchman (2014b) for a discussion of how to best use dominanceanalysis in the presence of multi-category dependent variables.
7State and city-specific happiness scores come from Mitchell et al. (2013).8Since our survey did not require answers to all questions, some respondents left some questions blank.
Since diagnostics deemed the data to be “missing at random,” we were reluctant to rely solely on completeresponses as doing so may have delivered biased results. Instead, we employed multiple imputation 25 timesto generate a more comprehensive dataset. More a review of this crucial pre-analysis step in applied surveyresearch, see Rubin (2004).
7
as possible so we could learn what makes each of these cities and states unique from a policyprioritization perspective.
To complement this set of analyses, we also conducted a series of ordinal logistic regressions.The dependent variable was either the state or local friendliness rating for each individualresponse, scored on a level from 1 (“very unfriendly”) to 5 (“very friendly”). In the “baseline”equation we settled on (using various diagnostic techniques), the variables are the same asin the dominance analyses: the 11 policy measures, plus the full set of control variables. Toaccount for possible intra-state correlation that isn’t accounted for by the variables in theregression, we cluster the standard errors by state.9
5 Analytical Results
Thumbtack’s survey has consistently shown that the most important factors to small busi-nesses are training and networking opportunities offered by a local government, and thefriendliness of complying with regulatory burdens, including, most importantly, the taxrules and licensing laws. This year, the dominance and regression analyses offered simpleconclusions on the national level. Highlighting this, we found that regulations are the mostimportant determinant of friendliness evaluations on both the state and local level. Specifi-cally, for both states and cities, regulatory burdens, led by those surrounding licensing andemployment, were among the most important drivers of friendliness ratings.
In addition, the dominance and regression analyses produced the following results:
• What matters at the city level differs from the state level – although for bothcities and states, regulators burdens matter more than other policy measures, localsupport evaluations are more influenced by licensing requirements, while state supportis most driven by tax regulations.
• Tax rates are less important than regulatory complexity – for both cities andstates, tax rates still matter far less than either tax-related regulations or the burdenof complying with tax-based regulations.
• Licensing is not black and white – respondents who weren’t required to have alicense judged their cities and states in a more favorable light. Put differently, thoserequired to hold a license that was seen as being difficult to comply with were far lesslikely to evaluate their state and local governments favorably. However, respondentswho said complying with licensing rules was “very” or “somewhat easy” to comply withwere just as favorable towards their governments as respondents who weren’t requiredto have a license at all.
• When the job market heats up, ease of hiring matters more – labor ruleshave become more important as the economy has rebounded and the unemploymentrate has dropped. This is true on both the state and local level, as business owners
9This relaxes the standard requirement that all observations in a given state are independent.
8
become much less likely to evaluate their governments as “very supportive” when theyalso report that labor and employment regulations are either “somewhat” or “veryunfriendly.”
9
Appendix A: Thumbtack Business Friendliness Survey
Questions
2016 Thumbtack Business Friendliness Survey
Thanks for participating in Thumbtacks Small Business Friendliness Survey!
This survey should take 5-8 minutes to complete. It asks questions about how friendly yourstate and local government is toward skilled professionals like you.
Thumbtack will use the results of this survey to provide policymakers and researchers withvaluable information on how best to support skilled professionals like you.
Your responses are confidential unless you give permission to share comments anonymouslywith the media. All publicly released analysis will reflect aggregate (overall) results.
Thanks for your participation.
-The Thumbtack Team
1. In general, how would you rate your state governments support of small businessowners?
◦ Very supportive
◦ Somewhat supportive
◦ Neither supportive nor unsupportive
◦ Somewhat unsupportive
◦ Very unsupportive
2. In general, how would you rate your local (county, city, or town) government’s supportof small business owners?
◦ Very supportive
◦ Somewhat supportive
◦ Neither supportive nor unsupportive
◦ Somewhat unsupportive
◦ Very unsupportive
3. Would you discourage or encourage someone from starting a new business where youlive?
◦ Highly encourage
◦ Somewhat encourage
◦ Neither encourage nor discourage
10
◦ Somewhat discourage
◦ Highly discourage
4. How difficult or easy is it to start a business where you live?
◦ Very easy
◦ Somewhat easy
◦ Neither easy nor difficult
◦ Somewhat difficult
◦ Very difficult
4a. Only show if respondent’s answer to Q4 is “Neither easy nor difficult”, “Somewhatdifficult” or “Very difficult”:What were the biggest roadblocks to starting your business? Select all that apply.
◦ Access to credit
◦ Access to customers
◦ Complying with licensing requirements
◦ Complying with tax requirements
◦ Paying government fees to start my business
◦ Understanding and navigating government rules for registering a new business
◦ Other:
4b. Only show if respondent’s answer to Q4 is “Somewhat easy” or “Very easy”:How specifically did your local (city or county) government help you in starting yourbusiness? Select all that apply.
◦ Making it possible to comply with startup regulations online
◦ Providing helpful how to guides and information for complying with startup reg-ulations
◦ Providing helpful people to talk to (online / in person / on phone)
◦ Somewhat difficult
◦ Other:
5. How difficult or easy is it to obtain and keep health insurance at your business?
◦ Very easy
◦ Somewhat easy
◦ Neither easy nor difficult
◦ Somewhat difficult
11
◦ Very difficult
6. How difficult or easy is it to hire a new employee at your business?
◦ Very easy
◦ Somewhat easy
◦ Neither easy nor difficult
◦ Somewhat difficult
◦ Very difficult
7. What is the biggest obstacles to hiring a new employee at your business?
◦ Can’t find qualified workers
◦ Potential employees aren’t willing to work at the wage I would like to pay
◦ Government rules make hiring new workers too difficult
◦ I face no obstacles to hiring new employees
◦ Other:
8. How unfriendly or friendly is your state or local government with regard to the followingtypes of regulations:
Veryfriendly
Somewhatfriendly
Neitherfriendly norunfriendly
Somewhatunfriendly
Veryunfriendly
Does notapply to
my businessHealth andsafetyregulations
◦ ◦ ◦ ◦ ◦ ◦
Employment,labor andhiringregulations
◦ ◦ ◦ ◦ ◦ ◦
Tax code andtax-relatedregulations
◦ ◦ ◦ ◦ ◦ ◦
Licensingforms,requirementsand fees
◦ ◦ ◦ ◦ ◦ ◦
Environmentalregulations
◦ ◦ ◦ ◦ ◦ ◦
Zoningor land useregulations
◦ ◦ ◦ ◦ ◦ ◦
12
9. Does your profession require that you hold any of the following to do your job? Selectall that apply.
◦ License
◦ Certification
◦ Permit
◦ Im not required to have any of these to do my job
9a. Only show if respondent’s answer to Q9 is “License”, “Certification”, and / or “Per-mit”:How difficult or easy is it to comply with the licensing, certification, or permittingrequirements of your profession?
◦ Very easy
◦ Somewhat easy
◦ Neither easy nor difficult
◦ Somewhat difficult
◦ Very difficult
9b. Only show if respondent’s answer to Q9 is “License”, “Certification”, and / or “Per-mit”:Which of the following types of agencies require that you have a license, certification,or permit to do your job?
None One More than oneCity, town, or other municipal agency ◦ ◦ ◦County agency ◦ ◦ ◦State agency ◦ ◦ ◦Federal agency ◦ ◦ ◦An industry licensing board ◦ ◦ ◦
9c. Only show if respondent’s answer to Q9 is “License”, “Certification”, and / or “Per-mit”:How poorly or well enforced are the licensing, certification, or permitting requirementsof your profession?
◦ Very well enforced
◦ Somewhat well enforced
◦ Neither well enforced nor poorly enforced
◦ Somewhat poorly enforced
13
◦ Very poorly enforced
10. How difficult or easy is it to understand and file your business’s taxes?
◦ Very easy
◦ Somewhat easy
◦ Neither easy nor difficult
◦ Somewhat difficult
◦ Very difficult
11. Which of the following describes your tax rate?
◦ Its about right
◦ Its too low
◦ Its too high
12. Are you aware of any helpful training, skill development, or networking programs forbusiness owners offered in your community?
◦ Yes, and I have used them in the past
◦ Yes, but I havent used them
◦ No
12a. Only show if respondent’s answer to Q12 is “Yes, and I have used them in the past”:What type of program(s) have you participated in?
◦ Business development (e.g. marketing, accounting, etc.)
◦ Skill development (i.e. honing your craft)
◦ Networking with other people in my field
◦ Other:
12b. Only show if respondent’s answer to Q12 is “Yes, and I have used them in the past”:How helpful do you believe the training or networking programs offered by your stateor local government are?
◦ Very helpful
◦ Somewhat helpful
◦ Neither helpful or unhelpful
◦ Somewhat unhelpful
◦ Very unhelpful
14
12c. Only show if respondent’s answer to Q12 is “Yes, but I havent used them” or “No”:What type of trainings or events could local organizations offer to appeal to you? Selectall that apply.
◦ Business development (e.g. marketing, accounting, etc.)
◦ Skill development (i.e. honing your craft)
◦ Networking with other people in my field
◦ Other:
13. Which organization would you turn to first if you wanted to learn more about runningyour business? Select all that apply.
◦ Local chapter of SCORE or the Small Business Administration’s Small BusinessDevelopment Centers
◦ Local Chamber of Commerce or another business association
◦ A local government entity
◦ A state government entity
◦ Other:
14. Have you used a state or local government website to comply with regulations on yourbusiness or to learn information about operating a business in your community?
◦ Yes
◦ No
14a. Only show if respondent’s answer to Q14 is “Yes”:What did you use these websites to do?
◦ File taxes
◦ Obtain a business license
◦ Obtain an occupational license
◦ Register my business (when starting)
◦ Learn information about running a business in my community
◦ Other:
14b. Only show if respondent’s answer to Q14 is “Yes”:How difficult or easy was it to use the website(s)?
◦ Very easy
◦ Somewhat easy
◦ Neither easy nor difficult
15
◦ Somewhat difficult
◦ Very difficult
14c. Only show if respondent’s answer to Q14 is “No”:Would you become more likely to use government websites if there were new featureson them?
◦ Yes, I dont use them today because they lack the features I need.
◦ No, Im not interested in using government websites.
14d. Only show if respondent’s answer to Q14c is “Yes, I dont use them today because theylack the features I need”:What features would you like your local and state government websites to offer? Selectall that apply.
◦ File taxes
◦ Obtain a business license
◦ Obtain an occupational license
◦ Register my business (when starting)
◦ Learn information about running a business in my community
◦ Other:
15. Please let us know any experiences or thoughts you have regarding the ease of doingbusiness where you live.
16. How have your local (city or county) governments policies and programs helped or hurtyour business?
17. How have your state governments policies and programs helped or hurt your business?
18. What policy changes are currently being debated in your local community that concernyou and your business?
19. Would you be willing to be quoted in the press about your views on doing businesswhere you live?
◦ Yes
◦ No
16
19a. Only show if respondent’s answer to Q19 is “Yes”:Great - what’s your name?
19b. Only show if respondent’s answer to Q19 is “Yes”:And your email address?
19c. Only show if respondent’s answer to Q19 is “Yes”:And your profession?
20. How can local policymakers most effectively support local businesses like yours?
◦ Expand training and educational programs
◦ Expand web-based resources
◦ Lower or simplify taxes
◦ Reduce regulatory requirements
◦ Improve local transportation & infrastructure
◦ Help local business acquire credit
◦ Expand access to health care and benefits
20a. Only show if respondent’s answer to Q20 is “Lower or simplify taxes”:On taxes, what should your local government prioritize?
◦ Simplifying taxes
◦ Lowering tax rates
21. How can state policymakers most effectively support local businesses like yours?
◦ Expand training and educational programs
◦ Expand web-based resources
◦ Lower or simplify taxes
◦ Reduce regulatory requirements
◦ Improve local transportation & infrastructure
◦ Help local business acquire credit
◦ Expand access to health care and benefits
21a. Only show if respondent’s answer to Q21 is “Lower or simplify taxes”:On taxes, what should your state government prioritize?
◦ Simplifying taxes
◦ Lowering tax rates
22. How long has your business been operating?
◦ Less than 1 year
17
◦ 1-2 years
◦ 3-4 years
◦ 5 or more years
23. Is this business your primary employment, or is it a side job?
◦ Primary employment
◦ Side job, hobby, or secondary income
24. How many people does your business employ?
◦ 1 – I work alone at my business
◦ 2-5
◦ 6-10
◦ 11-20
◦ 21-50
◦ 51-100
◦ 101 or more
25. What type of company is your business?
◦ Unincorporated or sole proprietorship
◦ Limited liability company (LLC)
◦ Partnership (LP, LLP, GP)
◦ S-Corporation
◦ C-Corporation
◦ I don’t know
26. Have you ever been an entrepreneur prior to your current company?
◦ Yes
◦ No
27. What is your gender?
◦ Female
◦ Male
28. What is your age?
◦ Under 25
◦ 25-34
18
◦ 35-44
◦ 45-54
◦ 55-64
◦ 65 or above
29. Where would you place yourself on this scale, or haven’t you thought much about this?
LiberalModerate,Middle ofthe Road
ConservativeDon’t Know /
Haven’tThought
Political Views ◦ ◦ ◦ ◦
30. What is the highest level of formal education you have reached?
◦ No high school
◦ High school or GED
◦ Associates degree
◦ Undergraduate degree
◦ Masters degree
◦ Doctoral degree
31. What is your race or origin?
◦ White (Caucasian)
◦ Hispanic, Latino, or Spanish
◦ Black or African American
◦ Asian
◦ Other
32a. Only show if respondent’s answer to Q24 is “1 – I work alone at my business”:Which of the following benefits do you have access to? Select all that apply.
◦ Health insurance
◦ Vision insurance
◦ Dental insurance
◦ Retirement savings
◦ None of the above
32b. Only show if respondent’s answer to Q24 is “1 – I work alone at my business”:How did you acquire health insurance?
19
◦ Through a plan I purchased for myself
◦ Through my spouse or another family member
◦ Through a government-provided plan (e.g. Medicare / Medicaid)
32c. Only show if respondent’s answer to Q24 is “2-5”, “6-10”, “11-20”, “21-50”, “51-100”,or “101 or more”:Which of the following benefits do you provide to your employees? Select all thatapply.
◦ Health insurance
◦ Vision insurance
◦ Dental insurance
◦ Paid time off
◦ Paid sick days
◦ Paid paternity / maternity leave
◦ Retirement savings
◦ None of the above
33. Are you currently serving or have you ever served on active duty in the US ArmedForces, military Reserves, or National Guard?
◦ Yes, I am an active duty member of the US Armed forces
◦ Yes, I currently serve in the military Reserves or the National Guard
◦ Yes, I previously served on active duty in the US Armed Forces, military Reserves,or National Guard but I am now a civilian
◦ No, I have never served on active duty in the US Armed Forces, military Reserves,or National Guard
20
Appendix B: Survey Population
The sample of businesses included in this survey is concentrated in the professional andnonprofessional services sector, as is the general population of businesses that use Thumbtackto acquire new customers. This segment of the economy is substantial and expected togrow. According to the Bureau of Labor Statistics, 80.1 percent of all workers today work inservice industries and 94.6 percent of all the jobs expected to be added in the next ten yearsare projected to be in this part of the economy.10 Table 5 documents the representationof different industries in our survey and compares this to the industry distribution of thenational population of businesses.11
In terms of the demographic characteristics of the small business owner-operators that weheard from, our sample represents a wide range of diversity across geography, race andethnicity, gender, age, and educational attainment. As Table 2 shows, our sample is youngerand more diverse with respect to race and gender than the national population of businessowners. We believe the survey can therefore provide very useful data for states and localitiestrying to determine what they can do better to make themselves friendlier to small servicebusinesses from a variety of backgrounds.
Table 2: Demographic Representation
GenderBusinessesNationally
ThumbtackBusinesses
Female 39.96% 40.32%Male 60.04% 59.68%
Age of Business OwnerUnder 25 2.44% 5.44%25–34 11.10% 25.36%35-44 18.97% 27.22%45-54 26.49% 24.83%55-64 25.42% 14.02%65 or above 15.57% 3.13%
Race or OriginAsian 6.91% 2.26%Black of African American 9.06% 14.44%Hispanic, Latino, or Spanish 12.11% 9.90%Other 1.28% 6.63%White 70.64% 66.77%
We also compared the age and size of the businesses in our survey with those of the general
10For more, see http://www.bls.gov/news.release/ecopro.nr0.htm.11All of the data we acquired about the characteristics of American businesses and their owners come
from the Census Bureau’s 2012 Survey of Business Owners. See http://www.census.gov/library/
business population (see Tables 3 & 4). On both dimensions, the Thumbtack survey samplehas a similar distribution to the broader American business community. In terms of businessage, our sample includes slightly more newer firms than average, though, just like the overallpopulation of businesses, a plurality of our respondents has been in business for at least 5years. On the employment size dimension, our sample is more compact than the broaderpopulation, with both fewer non-employer firms and fewer businesses with over 20 employees.
Table 3: Representation by Business Age
BusinessAge
BusinessesNationally
ThumbtackBusinesses
Less than 1 year 13.94% 23.08%1–2 years 15.81% 23.28%3–4 years 10.54% 15.38%5 or more years 59.70% 37.82%
Table 4: Representation by Number of Employees
Number of EmployeesBusinessesNationally
ThumbtackBusinesses
None 82.57% 59.99%1–4 9.90% 31.14%5–9 3.36% 4.71%10–19 2.05% 2.38%20–49 1.33% 1.07%50 or more 0.79% 0.70%
The responses to our survey also closely paralleled the geographic distribution of small,service-based businesses in the country.12 The response rates of only four states varied fromtheir expected response rates by more than 1%, and New York was the only state to varyby more than 2%.13 California, the state that has the most businesses of this type in thecountry (13.09 percent of the total), was also the most represented in our survey, with 12.33of our respondents based there. Texas and Florida, the second and third most populousstates for small, service-based businesses, were also well-represented in our survey; both arehome to more than 9 percent of our survey respondents. On the other end of the spectrum,we had only 0.03 percent of our sample from North Dakota, though this is only just belowthe state’s overall share of small, service-based businesses of 0.23 percent. The choroplethin Figure 2 displays this data, with the color of each state corresponding to the share itcontributed to our sample.
12We define small businesses as firms with no more than 20 employees.13New York was under-sampled in this year’s survey by 2.39 percentage points, given its share of small,
service-based businesses according to the Census numbers. This pattern is consistent with previous SmallBusiness Friendliness surveys.
22
Figure 2: Percent of Responses by State
23
Table 5: Industry Representation
NAICSCode
NAICS CateogoryBusinessesNationally
ServiceBusinessesNationally
ThumbtackBusinesses
11Agriculture, Forestry,Fishing and Hunting
0.93% – –
21Mining, quarrying,and Oil and Gas Extraction
0.47% – –
22 Utilities 0.09% – –23 Construction 10.64% 11.33% 17.62%
Administrative andSupport and WasteManagement andRemediation Services
8.37% 8.91% 21.54%
61 Educational Services 2.45% 2.61% 5.15%
62Health care andSocial Assistance
9.28% 9.88% 3.64%
71Arts, Entertainment,and Recreation
4.81% 5.12% 5.47%
72Accommodation andFood Services
3.02% 3.21% 4.17%
81Other Services(Except PublicAdministration)
13.17% 14.02% 17.19%
99Industries NotClassified
0.03% – –
24
Appendix C: Ranks & GradesTable 6: States
StateOverallFriendliness
Ease ofStartinga Business
Ease ofHiring
OverallRegulat-ions
Health&Safety
Employment,Labor &HiringRegulations
TaxRegulat-ions
LicensingRequire-ments
Environ-mentalRules
ZoningTrainingOpport-unities
GovernmentWebsites
LicensingCompliance
TaxComplexity
TaxRates
Alabama D+ 31 F 35 A- 7 A- 4 B+ 4 A- 5 A 5 B+ 11 B+ 10 A- 9 C 22 B- 17 C- 32 B- 12 B- 20Arkansas B+ 8 B+ 9 C+ 21 A- 5 B+ 6 A- 7 B+ 11 A- 5 A+ 4 A+ 2 B+ 11 C- 26 B+ 11 B- 9 C+ 29Arizona C+ 20 B 16 B- 14 C 27 C 27 C- 28 C 25 B- 20 C- 24 C- 22 A+ 1 B- 18 C+ 22 B- 16 C+ 26California F 33 F 34 C 23 F 34 F 34 F 34 F 33 F 32 F 35 F 33 B- 21 D+ 29 C- 29 C+ 26 B- 19Colorado A 5 A- 7 B- 16 C+ 19 B- 15 C 23 B- 16 B+ 12 C+ 19 C- 26 A+ 4 A+ 5 C+ 20 B- 14 B 8Connecticut F 35 F 32 F 34 F 35 F 35 F 35 F 35 F 34 D+ 32 D+ 29 B 14 F 34 C 27 C+ 27 B 2Florida B- 15 B- 20 B 10 B 13 B- 18 B- 15 B+ 10 B 14 B- 15 B 16 A- 10 A- 7 C 28 A- 4 C 33Georgia A 4 A+ 2 B+ 9 A+ 1 A+ 1 A+ 1 A+ 1 A+ 1 A+ 3 A+ 3 C- 28 B 12 B 15 A 2 C 34Iowa C 26 D 30 F 32 D 32 C+ 19 C- 30 D 31 F 31 C- 30 F 35 A+ 3 C 22 F 33 C+ 25 B 6Illinois F 34 F 33 B- 18 D 33 D 33 F 33 F 34 F 35 C- 29 C- 24 B- 20 D+ 27 B- 17 C 29 B 7Indiana B 12 B 13 B 12 B- 18 B- 14 B- 16 C+ 23 B- 19 B+ 7 B 14 D 30 B 11 A+ 2 A 1 C+ 30Kansas A- 6 A 5 A+ 2 A- 6 B 8 B+ 11 A+ 3 A 3 C+ 16 B+ 13 F 35 C 24 A- 6 B- 17 C+ 31Kentucky C- 29 C- 24 C+ 20 B- 16 B 13 B- 17 C+ 22 B- 18 B 11 B+ 11 F 32 D 31 A+ 1 C- 33 B 3Louisiana C+ 17 C+ 21 A- 6 B 10 C+ 20 B+ 8 C+ 24 B 15 A+ 2 B+ 12 B- 19 B+ 10 B 13 B- 15 B 9Massachusetts C+ 18 C 22 C- 28 C 25 C+ 21 C+ 21 B- 17 D+ 29 D+ 31 C- 27 C- 26 F 33 B- 19 C+ 24 C+ 25Maryland C 23 C- 23 A 5 C 23 C 29 C+ 19 B- 15 C 25 C- 23 B- 17 B 15 C+ 20 C+ 25 C- 34 B- 13Michigan C+ 22 D+ 28 B- 15 B+ 8 A- 3 B+ 9 B 12 A- 6 A- 5 A 4 A- 9 C+ 21 B+ 7 C+ 22 B- 18Minnesota C 24 B- 19 F 33 D+ 29 C 26 D 31 D+ 28 C- 27 D 34 F 32 A- 8 A+ 4 C+ 23 C 31 B+ 1Missouri B- 16 B+ 11 C- 30 C+ 20 C+ 22 C+ 20 C+ 20 B 16 C 22 C+ 19 B 16 A 6 B- 18 B- 19 B 5Mississippi C 25 D+ 29 A+ 1 A+ 2 A 2 A 3 A 6 B 13 A+ 1 A+ 1 F 34 F 35 B+ 8 A 3 D+ 35North Carolina B 14 B- 18 B- 13 B 12 B 9 B+ 10 C+ 18 B+ 7 B 12 B 15 B+ 12 B 14 B 16 B 8 B- 21New Jersey D+ 30 C- 26 C- 25 D 30 D+ 32 C- 27 D 30 D+ 30 C- 27 F 34 C- 25 B- 15 C- 30 C+ 20 B- 15Nevada C+ 21 B- 17 D+ 31 C+ 22 C 25 C 25 A- 9 C 26 C- 26 D 31 F 33 A+ 3 F 35 B- 13 C 32New York D 32 F 31 B 11 D 31 C- 31 D 32 F 32 F 33 C- 28 C- 25 B 17 D 32 B+ 10 C+ 23 B 4Ohio B 13 B 15 B- 17 B- 15 B- 17 B 14 B 13 B+ 9 B- 14 B+ 10 A 6 B+ 9 B+ 12 B- 10 C+ 28Oklahoma B 11 B 14 B+ 8 C+ 21 C 30 C 22 C+ 21 C+ 23 C+ 17 A- 6 C- 24 C 23 A 3 C+ 21 B 10Oregon B+ 9 A+ 3 C- 27 C 24 C+ 23 C- 29 D+ 29 C+ 22 C+ 18 D 30 A+ 2 A+ 1 C+ 24 C 30 B- 11Pennsylvania C- 27 C- 25 B- 19 C- 28 C+ 24 C 24 C- 26 D+ 28 C+ 20 C 21 D+ 29 D+ 28 C+ 21 C 28 B- 14South Carolina B+ 10 B+ 12 C- 26 A- 7 B+ 7 A- 4 A 4 B+ 10 B+ 6 A 5 A 7 B 13 B+ 9 B+ 7 C+ 27Tennessee A+ 3 A- 6 C 22 B+ 9 B 12 B 12 A- 7 A- 4 B+ 8 A- 7 C- 27 C- 25 B 14 B- 18 C+ 23Texas A+ 1 A+ 4 A 4 A 3 B+ 5 A+ 2 A+ 2 A 2 B+ 9 A- 8 B 18 C+ 19 A 4 B+ 5 C+ 24Utah A+ 2 A+ 1 C- 29 B 14 B 10 B 13 A- 8 B+ 8 D+ 33 C- 23 B+ 13 A- 8 C 26 C- 35 B- 12Virginia A- 7 A- 8 A 3 B 11 B 11 A- 6 B- 14 B 17 B 13 B- 18 C- 23 B- 16 C- 31 B- 11 C+ 22Washington C+ 19 B+ 10 C 24 C 26 C 28 C 26 C- 26 C+ 21 C- 25 D+ 28 F 31 A+ 2 F 34 C 32 B- 17Wisconsin C- 28 D+ 27 F 35 B- 17 B- 16 B- 18 C+ 19 C 24 C 21 C+ 20 A+ 5 D 30 A- 5 B+ 6 B- 16
25
Table 7: Cities
StateOverallFriendliness
Ease ofStartinga Business
Ease ofHiring
OverallRegulat-ions
Health&Safety
Employment,Labor &HiringRegulations
TaxRegulat-ions
LicensingRequire-ments
Environ-mentalRules
ZoningTrainingOpport-unities
GovernmentWebsites
LicensingCompliance
TaxComplexity
TaxRates
Akron, OH A 7 A+ 4 F 75 A 8 A- 9 B+ 25 A+ 2 A+ 3 A 7 A+ 4 A+ 9 A+ 3 B+ 22 A 8 C 76Albany, NY D+ 72 C- 62 B- 39 D+ 69 C- 68 C 55 C 55 D+ 69 C- 70 C 60 B 31 C+ 39 C- 60 A- 12 B+ 11Anaheim, CA C 50 C- 59 D 70 D+ 70 C- 64 D 68 D+ 68 C- 57 D+ 71 C- 66 B- 37 D 63 B- 40 C+ 40 B- 44Atlanta, GA A 10 A+ 5 B+ 23 A+ 2 A+ 3 A+ 6 A+ 3 A+ 4 A 6 A 7 C 50 B+ 29 B- 36 A- 11 C 73Austin, TX A- 19 B+ 25 B- 39 B 30 B 32 B+ 23 A- 16 B+ 20 B- 39 C+ 54 A+ 11 D 62 B+ 23 C+ 43 B 19Baltimore, MD C- 60 C 55 B+ 21 D+ 71 D+ 71 C- 65 C- 65 D+ 71 D+ 73 C- 67 C- 56 D+ 57 A 16 C- 67 B+ 4Birmingham, AL C+ 44 D 72 A+ 7 B+ 18 A- 11 A- 12 B- 46 C+ 43 B 28 A 6 B- 35 A- 26 F 77 F 77 B+ 9Boston, MA B 33 B- 43 B- 44 B- 39 B 30 B 29 B 28 C+ 46 C- 64 C 55 D+ 60 D+ 53 B- 39 B- 31 C+ 57Bridgeport, CT D 75 D 71 F 76 D+ 72 D 75 F 77 F 72 C- 58 C 60 C 59 A 16 F 70 D 64 C+ 54 B+ 3Buffalo, NY C- 64 C 51 F 74 C 58 C+ 49 C+ 41 D 69 D 75 B 25 C 56 B+ 26 D 59 B+ 26 B+ 22 B- 32Camden, NJ C- 55 C- 61 D+ 62 C- 60 D+ 72 C- 64 C+ 48 D+ 66 C 63 D+ 72 A- 22 C- 48 A+ 10 B- 34 B 18Cape Coral, FL B- 37 B 29 D+ 60 B 35 C+ 47 B- 33 B 31 B- 38 C+ 41 C+ 43 A+ 6 D+ 55 F 71 A+ 3 C+ 52Charleston, SC A- 12 C+ 45 B+ 28 B 28 A 5 A- 13 B- 43 C+ 40 A- 14 B 27 A+ 13 A+ 15 B- 42 B+ 23 C+ 62Charlotte, NC B+ 23 B 33 A+ 9 B+ 25 B+ 24 A- 16 B+ 23 B+ 29 A 8 B 30 B- 36 B- 38 B 32 B 25 C+ 63Chicago, IL C- 62 C- 60 B 31 D+ 68 C- 62 C- 66 D 70 D+ 70 C 55 C- 63 C+ 39 C- 49 C+ 49 C 59 B 15Cincinnati, OH B 34 B+ 27 B- 39 B 26 C+ 46 C+ 50 B 30 B+ 27 C+ 43 B 29 C 51 C- 47 A+ 7 C+ 52 C+ 53Cleveland, OH A- 13 A- 17 B+ 20 B- 41 B- 41 B 31 B- 39 B 34 C+ 46 B+ 22 A+ 7 A+ 16 B- 38 B+ 17 B- 42Colorado Springs, CO B+ 20 A 14 C+ 53 A+ 3 A+ 2 A 9 A 9 A 9 A- 11 A 8 A+ 8 A+ 5 B+ 24 A- 10 B+ 7Columbia, SC D+ 69 B- 36 B+ 26 B 32 A- 12 C- 61 B 33 D+ 62 C 59 A+ 1 F 71 D+ 52 B- 47 B 27 C+ 60Columbus, OH B 29 B- 38 B- 39 B 31 B- 39 B 26 B- 35 A- 14 A- 10 B- 40 D 64 C+ 41 B 30 C 56 C 68Dallas, TX A 6 A 10 A+ 6 A 7 A- 10 A+ 5 A 7 A+ 7 A- 13 A- 17 C 52 C 45 A+ 9 A 9 C 65Denver, CO A- 17 A- 18 C+ 50 B- 43 B- 38 C+ 45 B- 37 B+ 28 C+ 45 C- 61 A- 20 A+ 18 B+ 25 C+ 51 B 13Detroit, MI B- 39 C+ 48 B+ 18 B+ 23 B+ 21 B+ 22 B- 38 B+ 22 A- 17 A- 14 C+ 42 C- 51 A 14 C+ 42 B- 34Fort Collins, CO A 11 B+ 26 A+ 10 A 4 B 29 A+ 3 A+ 6 A+ 2 A+ 5 B+ 24 B+ 29 A+ 6 C- 62 B+ 18 B- 33Fort Lauderdale, FL C+ 46 B 30 A 12 B+ 19 B+ 23 A- 18 A 12 B 31 A- 16 B+ 21 B+ 27 A 19 F 75 A+ 4 C 74Fort Worth, TX A 4 A 16 B 29 A 5 B+ 22 A+ 8 A+ 5 A 8 B+ 21 A- 11 B+ 30 B+ 28 A+ 12 B 24 B- 41Greenville, SC A- 15 B+ 21 C- 56 B+ 16 A+ 4 A- 13 B+ 20 B+ 25 A- 15 B+ 24 A- 25 C+ 40 B 29 D+ 72 C 66Hartford, CT C- 57 C 50 F 77 D 73 D+ 74 F 76 F 73 D+ 65 F 77 F 75 D+ 61 F 66 C+ 50 C 55 B- 36Houston, TX A 5 A 11 A 13 A- 10 B+ 16 A 10 A 8 A 11 B+ 20 A- 16 C 46 B- 37 A 17 B+ 20 B- 46Indianapolis, IN B 27 B 31 B 30 C+ 47 C 57 C+ 47 C 51 B- 36 B 27 C+ 45 C- 55 B+ 30 A+ 4 A+ 6 C 67Jacksonville, FL A 9 A 8 A- 16 B+ 17 B 26 B+ 19 B 27 A 10 B- 37 B 28 A+ 3 A+ 4 B 27 A+ 5 B 21Kansas City, MO B+ 21 A 9 A- 15 A- 12 B 28 A 11 B+ 17 A- 13 B 24 A- 13 C 49 A+ 10 B 33 C+ 41 B- 31Knoxville, TN B- 36 C+ 47 F 73 B+ 22 A 6 B- 35 B+ 25 B 35 C 62 B+ 19 A- 21 A+ 9 B- 45 F 76 B 16Las Vegas, NV C 49 B- 41 C+ 51 B- 42 B- 43 C 54 B+ 19 C+ 39 C 54 C 58 F 73 A+ 13 F 76 B 29 C+ 64Lawrence, MA C 51 C 54 F 78 D 74 F 76 C 58 C- 58 D+ 66 D 75 F 77 F 77 F 78 A+ 3 F 78 C+ 51Los Angeles, CA C- 63 D 69 B+ 25 C- 63 C- 66 C- 63 C- 61 C- 59 C 57 D+ 74 F 70 F 68 C 56 B- 32 B- 45Louisville, KY C 53 C+ 46 D 67 D+ 67 C+ 52 B- 40 F 74 D+ 62 C 53 B- 35 D+ 63 F 74 A+ 1 D 73 B- 39Memphis, TN A+ 3 A+ 2 A+ 1 A- 13 B+ 20 B- 36 A- 14 A+ 6 B- 36 A- 12 A+ 2 A+ 8 B- 41 A+ 1 C 72Miami, FL C- 66 F 74 B+ 22 B 27 B+ 19 B+ 21 B+ 18 B 30 B- 35 B- 36 F 69 A+ 14 D 66 A- 15 C 70Milwaukee, WI C- 55 C- 56 B 34 C 56 C 59 C+ 50 C- 62 D 74 C+ 52 C+ 53 A+ 1 D+ 56 A+ 2 A- 14 B 12Minneapolis, MN B- 41 B- 34 D 68 C 57 B- 42 C 59 C 53 C 50 C 56 C- 68 A 18 A+ 7 A 15 C 62 B+ 5Nashville, TN A+ 2 A+ 7 B 33 A 9 B+ 15 A+ 7 A+ 4 A- 15 A+ 4 A 10 C 45 F 77 A- 19 B- 37 B- 26New Haven, CT C- 61 C 52 A+ 3 A- 11 A- 13 A+ 4 B- 40 A- 18 A+ 1 A+ 3 B 31 F 71 A+ 11 B+ 21 B 14New Orleans, LA B+ 26 B+ 22 B+ 24 B- 40 C 55 C+ 49 C 55 B- 37 A- 12 B+ 23 F 74 B 32 B- 37 C 58 B+ 8New York, NY C+ 47 D+ 65 A+ 4 C+ 45 B 31 B- 39 C+ 47 C 54 B- 33 B- 37 B- 34 D 64 A- 20 B- 38 B- 29Newark, NJ B- 38 B- 37 B 35 C- 61 C- 60 C+ 43 C- 63 C 53 C+ 51 D+ 70 C- 53 A- 22 C+ 53 C+ 53 B- 35Oakland, CA C 52 D 73 B- 46 C- 62 C- 61 D 69 D+ 67 C- 55 C+ 50 D+ 71 A- 23 C 43 F 68 D+ 69 C+ 49
26
Table 7: Cities (continued)
StateOverallFriendliness
Ease ofStartinga Business
Ease ofHiring
OverallRegulat-ions
Health&Safety
Employment,Labor &HiringRegulations
TaxRegulat-ions
LicensingRequire-ments
Environ-mentalRules
ZoningTrainingOpport-unities
GovernmentWebsites
LicensingCompliance
TaxComplexity
TaxRates
Oklahoma City, OK B 35 B- 40 A- 17 B- 44 C- 63 C+ 42 B 34 C+ 42 C+ 40 A 5 F 68 C+ 42 A+ 8 B- 30 B 17Omaha, NE C+ 43 F 76 D+ 63 C 55 C 53 D 70 C- 60 C+ 47 C+ 47 C+ 45 F 76 A+ 11 C+ 50 C 63 B 22Orlando, FL B 31 B- 39 A 11 A- 14 B 25 B+ 20 A- 15 A 12 A 9 A- 18 A- 24 B+ 27 C 58 A 7 C- 77Oxnard, CA F 77 F 78 D+ 64 F 76 C- 65 D 70 F 77 F 76 D 76 C+ 52 A+ 4 F 69 B 34 C+ 48 B+ 2Philadelphia, PA C+ 48 C 49 B+ 19 C+ 48 B- 36 B- 38 B- 45 C+ 44 B 30 C+ 49 C 44 D 60 B- 46 C 60 C+ 48Phoenix, AZ B 30 B+ 24 B- 36 B 34 B 27 B- 34 B- 36 B+ 26 B- 34 B- 33 A+ 10 B 34 B- 44 B- 33 C+ 54Pittsburgh, PA C- 68 C- 58 C- 57 C+ 50 C 53 B- 37 B- 41 C- 60 C- 68 C+ 50 D 66 F 73 A- 18 C- 66 C+ 50Portland, OR A- 18 A+ 6 B- 38 B 29 B+ 17 B 28 C+ 49 B 32 B 29 C+ 42 A+ 15 A+ 2 C+ 52 C+ 46 B- 40Providence, RI C- 58 D+ 64 B 32 B- 37 B- 40 B 27 B 26 C+ 48 B+ 19 B- 32 C 48 F 67 A- 21 B- 39 B- 43Raleigh, NC B+ 25 A- 19 B- 45 B- 36 B- 37 B+ 24 B 31 B 33 C+ 49 B- 38 C+ 41 A- 23 C+ 54 A- 16 B+ 10Richmond, VA A- 14 A 15 A+ 2 A 6 A 8 A+ 2 B+ 21 A+ 5 A+ 2 A- 15 A+ 5 A 21 C+ 48 B 28 C 75Riverside, CA C- 65 D+ 66 C+ 52 C+ 49 C 58 C+ 48 C 50 C 51 C- 69 C+ 48 F 67 C 44 F 69 B- 36 B- 47Rochester, NY D+ 70 C- 63 D+ 64 D+ 66 C+ 45 D 73 F 71 D+ 61 C+ 44 C 57 F 75 F 72 A 13 C 57 B- 30Sacramento, CA D 73 D+ 67 D+ 61 F 78 F 78 F 78 F 78 F 78 F 78 F 78 A+ 12 B- 35 F 78 C+ 44 B- 27Salt Lake City, UT A- 15 A 13 C- 58 B 33 B- 34 B- 32 A- 13 A- 18 C- 65 C- 61 D+ 59 A- 24 D 65 C- 65 C+ 56San Antonio, TX A+ 1 A+ 1 B+ 27 A+ 1 A+ 1 A+ 1 A+ 1 A+ 1 A+ 3 A+ 2 A+ 14 B- 36 A+ 6 A+ 2 C- 78San Diego, CA C 54 D 70 C+ 48 C- 64 D+ 70 D 72 C- 59 C 52 D+ 74 C- 64 C- 54 D+ 54 F 74 C+ 45 B- 37San Francisco, CA F 76 F 75 F 71 F 77 D+ 73 C- 62 F 75 F 77 C- 67 D+ 69 A 19 D 61 F 67 F 75 B 20San Jose, CA C- 67 B- 44 B- 37 C+ 46 B- 33 C+ 50 C 54 D+ 64 C+ 48 B- 39 D 65 F 76 C 57 C+ 50 C+ 59Sarasota, FL B+ 24 A 12 D 68 B- 38 C+ 44 C+ 46 B+ 24 A- 16 B 31 B- 34 A 17 B 31 B 28 C 63 B- 28Seattle, WA B- 40 B 32 C+ 54 C 54 C+ 50 C 56 C- 57 C+ 45 C- 66 D+ 73 D+ 62 A+ 17 F 72 D+ 70 B- 25St. Louis, MO C+ 45 B- 35 C 55 C 52 C- 67 D+ 67 B- 44 C+ 41 C+ 42 C- 65 C+ 38 B 33 B- 43 C+ 49 B 22Syracuse, NY F 78 D 68 C+ 49 C- 65 C- 68 D 75 F 76 D 73 C 58 B- 41 B 33 A+ 12 C- 59 D 74 B+ 5Tacoma, WA B- 42 A- 20 F 72 B+ 24 A 6 C+ 44 B 29 B+ 21 B 22 C+ 47 C 47 A+ 1 F 73 B 26 B- 38Tampa, FL B 28 B 28 B- 47 B+ 21 B- 35 B 30 A 10 B+ 23 A- 18 A 9 C- 57 A 20 C- 61 B+ 19 C 71Tucson, AZ D 74 C- 56 A+ 5 F 75 F 77 D 74 C- 64 D 72 D+ 72 F 76 D+ 58 C- 46 B 34 C 60 C+ 61Tulsa, OK B+ 22 B+ 23 C- 59 C 53 C+ 51 C 57 C- 66 C 49 B- 37 C+ 51 C+ 43 D 65 A+ 5 D+ 71 B 22Virginia Beach, VA A 8 A+ 3 A+ 8 A- 15 A- 14 A- 15 A 11 A- 17 B- 32 B 31 F 72 D+ 58 F 70 A- 13 C 69Washington, DC B 32 B- 42 A- 14 B+ 20 B+ 18 A- 17 B+ 22 B+ 24 B 23 B+ 20 B+ 28 A- 25 B 30 C+ 47 C+ 55West Palm Beach, FL C- 59 C 53 B- 39 C 51 C 56 C 53 B- 42 C- 56 C 61 C+ 43 C+ 40 C- 50 D+ 63 B- 35 C+ 58Worcester, MA D+ 71 F 77 D 66 C 59 C+ 48 C- 60 C 52 D+ 68 B 26 B 26 F 78 F 75 C+ 55 C- 68 B+ 1
27
6 Appendix D: Full Analytical Results
Figure 3: Relationship Between Friendliness Scores & State Growth Rates
Area Unemployment Rate -0.149*** -0.223***(0.035) (0.037)
Area GDP Change 0.003 -0.063(0.013) (0.019)
Political Contiguity 0.012 0.369(0.057) (0.05)
Area Happiness Level -0.589 -0.686(0.895) (0.304)
Business Age -0.052*** -0.059***(0.009) (0.009)
GenderFemale -0.028 -0.086
(0.048) (0.054)
Race(Baseline =White)
Asian -0.237* 0.158*(0.141) (0.116)
Black or African American -0.14** 0.171**(0.066) (0.084)
Hispanic -0.079 0.102(0.071) (0.084)
Other -0.26*** -0.085***(0.072) (0.065)
Constants
Cut 1 -7.248 -7.884(5.454) (1.892)
Cut 2 -5.887 -6.432(5.434) (1.893)
Cut 3 -4.348 -4.872(5.453) (1.895)
Cut 4 -2.232 -2.6(5.457) (1.904)
Observations 8,439 11,500Robust standard errors, clustered by state, in parentheses.*** p<0.01, ** p<0.05, * p<0.1
32
References
Budescu, D. V. and Azen, R. (2004). Beyond global measures of relative importance: someinsights from dominance analysis. Organizational Research Methods, 7(3):341–350.
Fairlee, R. (2014). 2013 kauffman index of entrepreneurial activity.
Fisher, P. S. (2005). Grading Places: What Do the Business Climate Rankings Really TellUs? Economic Policy Institute Washington.
Hathaway, I. and Litan, R. E. (2014). Declining business dynamism in the united states: Alook at states and metros. Brookings Institution.
Henderson, R. (2013). Industry employment and output projections to 2022. Monthly Lab.Rev., 136:1.
Hodge, S. A., Moody, J. S., and Warcholik, W. P. (2014). State business tax climate index.Tax Foundation.
Johnson, J. W. and LeBreton, J. M. (2004). History and use of relative importance indicesin organizational research. Organizational Research Methods, 7(3):238–257.
Kolko, J., Neumark, D., and Mejia, M. C. (2013). What do business climate indexes teachus about state policy and economic growth? Journal of Regional Science, 53(2):220–255.
Luchman, J. N. (2014a). Domin: Stata module to conduct dominance analysis. StatisticalSoftware Components.
Luchman, J. N. (2014b). Relative importance analysis with multicategory dependentvariables an extension and review of best practices. Organizational Research Methods,17(4):452–471.
Mitchell, L., Frank, M. R., Harris, K. D., Dodds, P. S., and Danforth, C. M. (2013). Thegeography of happiness: Connecting twitter sentiment and expression, demographics, andobjective characteristics of place. Plos One.
Motoyama, Y. and Hui, I. (2015). How do business owners perceive the state businessclimate? using hierarchical models to examine the business climate perceptions, staterankings, and tax rates. Economic Development Quarterly, page 0891242415589025.
Rubin, D. B. (2004). Multiple imputation for nonresponse in surveys, volume 81. John Wiley& Sons.
