Business Climate and Economic Conditions
Across a state line, competitive elements often benefit business.
What makes the business climate here so strong? Stability, for one. With no single business sector dominating the employment base, Kansas City is sheltered from wild swings in the business cycle. But there are other reasons why this region is experiencing a better economy than many other parts of the United States. From Texas to Minnesota, a swath of west-central states is seeing surprisingly robust economic growth, and Kansas City is in the middle of that. Because of factors that include energy, agriculture and other areas, these states experienced a less-severe recession and, in several important ways, are rebuilding faster.
Midwest Surge
For years, the South has been the leader in offering low-cost business locations. Non-unionized labor, an extremely business-friendly atmosphere and other factors gave southern states a distinctive edge in key business attraction factors. In plain English, the South was the cheapest place to do business. That’s changed. A recent gauge of costs showed Midwestern states have all but closed most gaps. Measuring labor, energy, taxes and real estate, Moody’s Analytics found the Midwest is barely higher than the South, a fraction of a percent that makes local matchups a deciding factor.
Here again, Greater Kansas City offers decisive advantages. Competitive tax and incentive programs, a productive work force and strong transportation infrastructure are ahead of many areas that would otherwise compete.
Recent support for those arguments was evidenced by a report from the 10th District of the Federal Reserve Bank. Although the district overall includes a much larger area than just Kansas City, the findings were significant: Factory activity in the seven-state district was returning to higher levels. Most plants experienced manufacturing growth, and most producers reported spending plans that would remain stable or even increase.
Home Construction
Among the best local examples is the rebound of home-building activity. The respected Home Builders Association of Greater Kansas City recently reported that 2012 home-permit activity through April was up 50 percent compared with the same period in 2011. April, alone, saw a 32-percent rise in housing plans compared with the same month one year earlier. Analysts noted that home sales closing in May indicated that permit activity would continue through the summer, at least. Significantly, areas throughout the region shared in that activity.
Commercial and, especially, retail development was also beginning to rebound. The most dramatic examples may have been in Johnson County, Kan., where the recession had stalled several large retail centers, along with numerous smaller projects.
Tax Sheltered
Although other media often give too much weight to taxes and incentives as site-selection factors, Kansas and Missouri share a generally favorable ranking in these areas. According to the Tax Foundation’s 2012 State Business Tax Climate Index, Missouri and Kansas were 15th and 25th, respectively, in terms of business taxes.
Other tax-related issues especially relevant here include a heated state-line competition often allowing businesses here to barter for better rates, either through direct tax waivers or incentive programs. Some taxpayers have complained, but overall these or similar bargains remain available. City, county and state governments compete, but always to the benefit of businesses. And both states also rank consistently toward the lower end in terms of personal taxes. 