GREENSBORO, N.C. (WGHP) – You read last week how Toyota had expanded its investment in the Piedmont Triad into the largest in North Carolina history – which will be $5.9 billion for its EV battery plant at the Greensboro-Randolph Megasite.

You’ve heard how that news, coupled with announcements by Boom Supersonic, Vinfast, Wolfspeed and several companies that build electric vehicle charging stations, have elevated North Carolina’s economic growth by making the state a focal point of EV production.

You’ve heard state leaders – from Gov. Roy Cooper to legislative kingpins to candidates for future office – tout North Carolina’s perch atop America’s Top States for Business, as evaluated by CNBC in 2022, and “Site Selection” magazine’s judging NC  as No. 1 for the third consecutive year.

Now we have yet another measuring stick: WalletHub ranks North Carolina as No. 7 among states with the best economies.

This is the financial advice company that collects and sorts vast amounts of data and spits out evaluations of how we are doing, how we are living and how we might adapt in the future, and WalletHub says this evaluation is important because each state’s economic power fuels the overall strength of the U.S. on the international marketplace.

You likely know that California’s gross national product ($3.6 trillion) is so vast that it is about to surpass Germany as the fourth-largest GDP. What WalletHub’s analysis found – and we will explain how that was done later – is that there are four states with better economic performance than California (although not greater GDP).

Those four were Washington, Utah, Massachusetts and Colorado. After California were No. 6 Idaho, then North Carolina and then the District of Columbia, Texas and Arizona.

The bottom five, going from No. 51 backward, were West Virginia, Louisiana, Alaska, Mississippi and Hawaii.

CNBC had said North Carolina had been “turbocharged by a long track record of innovation” and noted how political leaders put aside their differences to make business expansion happen and said that’s what pushed the state to the top.

Cooper had reacted by saying that “the main reason is our people. … This is a great honor, and we’re going to continue to work with our state legislature, businesses, education leaders and employees to build the talented workforce and resilient infrastructure needed to support the high-paying jobs of the next generation.” 

That’s where Toyota, Boom et al came in, but WalletHub found dug deeply into performance data to create a point index that allowed for its ranking.

How it was done

Whereas CNBC used a scoring system that weighed 88 metrics across 10 “categories of competitiveness,” WalletHub focused on what it called “three key dimensions” – Economic Activity,  Economic Health and Innovation Potential – that included 28 weighted metric points that covered an array of issues.

Economic activity includes elements such as changes in GDP – which the NC Department of Commerce includes for the record in approving incentives to businesses – but also public debt, exports and startup activity. Economic health includes not only median income and unemployment/over-employment but also poverty and foreclosure rates. Innovation potential includes high-tech mobs, STEM employment and industrial R&D among other factors.

The states with the best economies, Dennis L. Hoffman, an economics professor at Arizona State University told WalletHub, “are typically great places to live, work and raise a family. There is also some element of ‘people magnetism’ that draws people in and makes it difficult to leave.”

Said Janet Harrah, senior director of the Center for Economic Development and Business Research at Northern Kentucky University: “There are dozens of potentially useful indicators to evaluate a state’s economy. I typically look at four primary indicators: attraction and retention of people; attraction and retention of jobs; increasing total payroll; and increases in average earnings per job that are keeping up with inflation and the region’s cost of living.”

How NC ranked

In the three key evaluation categories, North Carolina ranked 16th for economic activity, fourth in economic health and 11th in innovation potential, WalletHub found. Utah was No.1 in both economic evaluations, and Massachusetts – think MIT – led in innovation potential.

On an overall points basis, NC was only .75 of a point behind No. 6 Idaho and nearly 10 points behind No. 1 Washington. But if you dig deeper, you will find the state ranks among the top 30 in several calculations:

• 17th for startup activity.
• 9th for percentage of jobs in high-tech industries.
• 29th – its worst performance – for annual median household income, which as of 2021 the Census Bureau reported at $60,516.
• 11th for change in nonfarm payrolls.
• 3rd for government surplus/deficit per capita.
• 28th for unemployment rate, which last month was 3.4%.

The government surplus factor would expand under biennial budget proposals the state Senate and House are trying to hammer into an agreement. They already were planning to stash an additional $1 billion or so in the state’s various “rainy day” accounts to be prepared for recession and calamity. They also both want to lower the rates for personal (to 2.49% by 2030) and corporate (as close to 0.0 as possible) income tax rates.

“[Successful] policymakers understand the role of investment and the importance of investing in education – both k-12 and universities,” Hoffman said, “transportation, energy and local amenities without imposing confiscatory tax and regulatory burdens. But simply low taxes for the sake of low taxes will not suffice.”

Competing for business

North Carolina offers economic subsidies to sell its position against competing states. Boom, for instance, is receiving about $130 million in incentives to build its supersonic transport jet at Piedmont Triad International Airport in Greensboro.

Toyota, Vinfast and Wolfspeed got big money, but just two weeks ago the state gave alpitronic Americas LLC, an Italian manufacturer of high-powered EV battery chargers, $2.9 million to open its U.S. headquarters in Charlotte rather than Greenville, South Carolina, or Phoenix.

“Businesses will always seek incentives and tax breaks,” Hoffman said. “But in the end, they want to locate in regions where they can maximize their return on investment which takes, available productive workers and suppliers, quality energy and transportation infrastructure, proximity to markets both to source from and sell to, low risk of adverse weather or other disruptions, etc.

“Low taxes and regulations are indeed important, but site locators are really considering an array of factors. And savvy economic development professionals focus on all of these when developing the value proposition for their region.”