TRANSCRIPT
Dick Pryor: This is Capitol Insider - taking you inside politics, policy and government in Oklahoma. I'm Dick Pryor with Quorum Call publisher Shawn Ashley. Our guest is Dr. Robert Dauffenbach, Professor Emeritus at the Price College of Business at the University of Oklahoma. Bob, it's always good to have you with us.
Dr. Robert Dauffenbach: Well, it's always good to be back. Thank you.
Shawn Ashley: Dr. Dauffenbach, CNBC recently came out with its annual report, America's Top States for Business. Oklahoma was ranked 39th while Ohio took the top spot and Texas ranked fourth. What are CNBC's methods behind the rankings and what accounts for Oklahoma's low comparative ranking?
Dr. Robert Dauffenbach: CNBC looks at a whole mix of things: infrastructure, the economy, the local workforce, quality of life, business costs, and how business-friendly a state is. They put the most weight on infrastructure, and in that, Oklahoma did pretty well. We scored 21st, which is quite good, and they put the least weight on business friendliness. And we crushed it on business cost and friendliness, ranking third and 18th, which is pretty good. But we took a beating on workforce, quality of life, and the overall economy, where we landed in the low 40s. And given less weight was put on a lot of the sectors we didn't do well in, we scored low overhaul. So, it's a high-profile study. It's very closely watched. But its weighting system is pretty arbitrary, pretty subjective. And bottom line, certainly with this 39th ranking that they have for us overhaul, CNBC didn't do us any favors.
Dick Pryor: So, is there a consensus in the economic development literature on what makes for differential growth among the states?
Dr. Robert Dauffenbach: Well, among economists, they really have come to a consensus. The academic literature is very deep. But there's general agreement on the main drivers. Number one by a mile is human capital. It's all about the size and skill of your talent pool. Number two is infrastructure and access - interstate highways, direct flights, rail and trucking service, cheap utilities, and fast broadband. Things like regulations, tax rates, and quality of life are still on the list, but they sit well behind talent and infrastructure in the economic literature.
Shawn Ashley: Are there other state rankings reports that better capture what the economic literature espouses? And how does Oklahoma rank in such reports?
Dr. Robert Dauffenbach: Absolutely. In my review, in my work, I found the Site Selection magazine's 2026 report. And in it, they survey over 600 corporate site selection pros, the people who actually decide where companies expand. They look at practical stuff - tax competitiveness, higher education funding, career readiness certificates, power costs, and state fiscal health. They don't give a single number of ranking for the states, but I took their data and experimented around with average of all the factors they list, the scores on all the factors they list, and used various weighting schemes. And Oklahoma came out 19th with this rating. Ohio scored at the 24th level, Texas 13th, and Kansas 25th. So according to the experts who move real jobs, Oklahoma isn't 39th. We’re right in the top half.
Dick Pryor: These rankings are quite complicated. The weighting schemes that are applied to variables seem to be potentially arbitrary as well. So why not just look at economic growth over time and compare states on that basis?
Dr. Robert Dauffenbach: Well, that's exactly right. The purest metric in my mind is real inflation-adjusted total personal income. And looking at growth versus some baseline for that, such as a particular year. So, such a measure cuts through the fluff because it measures actual outcomes by combining population growth with per capita income growth. No arbitrary weights, just real economic results from the U.S. Bureau of Economic Analysis. The calculation is simple. You take the base year value of total personal income, adjusted for inflation again, and divide that into the 2024 value, which is the most recent year we have this data for. Thus, if you had a value of 200, that would indicate from the base-year that you've doubled your personal income growth, again corrected for inflation, or 100% growth.
So, if you look all the way back to 1980, which I've done, and use that as the base, Oklahoma ranks only 41st in real personal income growth, and we were up 129%. But remember the 1980s were wrecked by a massive energy boom-bust cycle in Oklahoma. If you start 1990 after the oil bust settled down, Oklahoma jumps to 25th. And start the clock with the year 2000 and we rise to 19th. So, when you track real dollar and cents growth, and that's what I've done here, Oklahoma consistently lands right in the middle to low top 20s. By the way, using the same 1990 baseline, top-ranked Ohio as ranked by CNBC, sits way down at 47th. So that's an interesting fact.
Shawn Ashley: So, based on your systematic look at real personal income growth, how do neighboring states fare and what can Oklahoma do to improve its standing?
Dr. Robert Dauffenbach: Well, Texas and Colorado consistently are in the top 10 powerhouses. Sometimes their rates of growth even double our own. Meanwhile, states like Kansas, Arkansas, and New Mexico are usually lagging behind us. Here's the reality. We can't expect to replicate Texas's sheer scale, massive population centers, or international airline hubs. And we can't duplicate Colorado Rocky Mountains to serve its highly technical workforce that loves winter sports. But here's the good news. Our identity as a low tax business friendly state is fully established. Now, there's no reason to keep beating on that horse. Pushing harder on tax cuts won't yield big gains anymore because companies already know we're affordable.
Where we're falling behind, and falling behind dramatically, is education and human capital. Back in 1990, Oklahoma's K through 12 education was ranked 24th nationally, pretty good. Today we're down to 47th, and we've had a rather linear decline since 1990. Quality education is an economic amenity. No company wants to locate executives and their employees to a state with struggling schools, and no parent wants that for their kids. This isn't a knock on our hardworking, dedicated teachers. It is a call to fix the system.
Look at Mississippi. They've been recently in the news. They reformed their reading and math programs and moved from 49th to 29th. We need to study them. And we can do that, too. We produce a good number of STEM graduates. That's science, technology, engineering, and math graduates. But state support for higher education has fallen dramatically in recent years in real dollars. So, we need to realign our colleges, universities, career techs directly with economic development goals. Do much more on the education fronts. Measure extensively and compare, and don't leave any child, teen or young adult behind. That’s my advice.
Dick Pryor: Thank you very much for your research and your perspective.
Dr. Robert Dauffenbach: You're quite welcome.
Dick Pryor: That's Dr. Robert Dauffenbach, professor emeritus at the Price College of Business at the University of Oklahoma. Audio and transcripts are at kgou.org and look for Capitol Insider where you get podcasts. Until next time, with Shawn Ashley, I'm Dick Pryor.
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