Promoting pro-job policies this year should be as easy as pushing scones at the Puyallup fair. Unemployment is headed toward 10 percent, state revenues are flat, governments at all levels are running deficits, and even recession-proof industries have discovered that, well, they’re not recession proof. So why have business advocates so often felt like Humvee dealers in a Prius-loving market?

Maybe too many lawmakers have fallen into the trap of believing only the good reviews of the state business climate. For much of this legislative session, lawmakers acted as if they took investment and job creation for granted. How else to explain the push to impose costly new regulation, ambitious climate change policies, and unconstitutional restrictions on workplace communication? Fortunately, most of the bad stuff went away, but from the beginning the legislative agenda skewed against increased economic competitiveness.

Nothing should be taken for granted in this recession. Everything is in motion. In vibrant markets competitors jostle and hustle to secure the pole position. Once the position has been established, the race must be run and won. As they used to say, “past performance is no guarantee of future results.”

Market competition is unrelenting, unforgiving and exhilarating.

A Chance to Compete
From Main Street to the factory outside town, what every business owner wants is the chance to compete unencumbered by excessive regulation and taxation. Competitive states establish a framework that allows all contenders an equal chance at success.

When AWB, the Washington Research Council and Washington Roundtable founded the Washington Alliance for a Competitive Economy (WashACE), we wanted to identify the factors that would allow businesses in Washington to succeed in an era of intense interstate and international competition. Our annual Redbook includes more than 50 tables, benchmarking Washington against every state in the country. Success is determined by many factors, only some of them influenced by public policy. New technologies, shifting consumer preferences, or dwindling access to capital can frustrate even the best-executed business plan.

Public Policy Matters
But public policy plays a critical role. The issues will change from year to year, legislative cycle to legislative cycle. For example:

   • During the housing and tech bubbles, governments were awash with cash and no one talked  about tax hikes. When the bubbles burst, avoiding job-crushing tax hikes becomes a priority.

   • Washington’s green, low-cost hydro energy has long given us a comparative advantage. And
then, the prospect of being a “climate change leader” and home to “green power” (curiously excluding hydro) emerges, threatening to boost costs and blunt our traditional edge.

   • Similarly, paid family leave, workers compensation reforms, unemployment insurance policy, growth management, consumer protection, labor neutrality, education reform, and so on will emerge for a season, then recede until thrust into the forefront by changing conditions.

Costs Impact Competitiveness
All of these things affect a state’s competitiveness, the complex of policies that enhance or encumber economic growth, from energy costs to education, taxes to labor regulation. Their importance varies not only with the season but also from industry to industry. That’s why in the Redbook we don’t create a “best states” index. We let the numbers speak for themselves.

This year the cost of doing business has taken on extraordinary importance for many employers. And it’s expensive to do business here. Forbes ranks us 28th (1st is lowest cost). On the Milken Institute Index, we rank 15th (1st is highest cost), primarily because of our low-cost electricity. Unemployment insurance taxes here are second highest in the nation, more than double the U.S. average. The Council on State Taxation regularly finds that businesses in Washington are among the most highly taxed in the nation.

So avoiding uncompetitive cost increases this legislative session became a top business and WashACE priority. Unhappily, too often, that meant playing defense. Although things could have been considerably worse this year, the abundance of anti-business legislation considered this year should concern every employer. As one business lobbyist commented to me last February, “I don’t understand why it’s always a fight [here] to do the right thing.”

It shouldn’t be. In the coming months, get to know your legislators. Let them know how public policy affects your business. Encourage them to support job creation and investment. It’s our job to make sure that our legislators know what that “right thing” is and how we all benefit from a healthy business climate.