Guest Commentary: What can Delaware learn from Top State’s business rankings?

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Rod Ward is the CEO of Corporation Service Co. and chair of Rodel, an education nonprofit. Paul Herdman is the CEO of Rodel and chair of strategic planning for the Delaware Workforce Development Board.

National rankings from a news organization that involve 88 metrics and a fair amount of subjective judgment always need to be taken with a pretty big grain of salt, but CNBC’s America’s Top States for Business sends signals to leaders both inside and outside the state, nationally and abroad, so we need to pay attention. In so doing, we need to build on what’s working, own and fix what’s not, and correct the record where they get it wrong.

Each state was ranked across 10 categories based on a methodology CNBC developed. Delaware scored:

  • In the top third of states in the quality of our workforce (5) and our access to capital (13).
  • In the middle of the pack in regards to our infrastructure (20); economy (22); life, health and inclusion (24); technology and innovation (32); and business friendliness (26).
  • We were among the bottom third of states in cost of doing business (37), education (42) and cost of living (36).

Delaware’s aggregate, combined ranking came in at 28th — in the middle of the pack among our regional neighbors Maryland (27th), Pennsylvania (17th) and New Jersey (42nd).

Where can we build on what’s working? Given the global competition for talent, it was great to see Delaware ranked among the top five in the nation in terms of the quality of our workforce. This reflects well on our higher-education institutions and our K-12 schools that helped students get there. It supports the work our state officials have done to improve scholarship opportunities for training and college. It also suggests that our work on career pathways, seen by some as the best in the nation, is worth expanding.

What do we need to own and work to improve? We collectively have a lot of room for growth in that we were only in the top third of states in two of CNBC’s 10 categories, but two that stand out are improving our cost of doing business (37) and education (42).

Efforts like Ready in 6, led by the Delaware State Chamber of Commerce to make the permitting process faster (in no less than six months), are important, so that new and existing companies can launch here quickly and easily. This is one of many efforts we need to expand if we want to be competitive in our region and nationally.

On our public education system, where Rodel focuses, we have work to do, but we’re not in the bottom third of states. We strive to be among the best in the nation, so we would have been disappointed with a rank in the 20s, but we are definitely not in the 40s. When we looked at the methodology of these rankings, we believe a few factors may have negatively skewed Delaware’s ranking.

  • High participation rates on the SAT mean low average scores. While the test is the same across states, how it’s administered varies dramatically. See here for a more detailed explanation, but Delaware has the highest percentage of students taking the SAT in the nation — 96% of seniors — and as a result, we have the lowest average score by some 75 points below the national average. In comparison, only about 5% of seniors in some states, often the most well prepared, take the SAT. So depending on how much this played into the rankings, this could have negatively skewed our results dramatically.
  • Smaller states tend to have fewer higher-ed institutions. CNBC’s rankings awarded points based on the number of higher-education institutions in the state. Due to our size, we don’t have many compared to other states. In fact, Delaware has the least, with only eight, tied with Alaska. Given the fact we have a good mix of colleges and universities in our state and a robust selection regionally, we don’t see this changing.
  • Our spending is strong but could be stronger. Another CNBC criterion was education spending. And while we do spend less per pupil than Maryland, Pennsylvania and New Jersey, our spending is still ranked 13th. So this should not have brought down our ranking.

That said, we’re not claiming we deserve to be in the top tier of states yet. Our National Assessment of Educational Progress scores are about the national average, and like most states, our gaps based on race and income are unacceptable. Our high school graduation rates are also at about the national average, at 90%. Maryland, Pennsylvania and New Jersey are roughly the same.

The point is that our education shouldn’t have been ranked among the bottom third of states. If our K-12 system was systematically not preparing our young people on the front end, those issues would present themselves on the back end. Instead, the same analysis also ranked us in the top five nationally in workforce readiness.

This is motivation to keep building on what’s working and actively pushing to get better. In Delaware, we know how to work together to get things done. For example:

  • The Delaware Prosperity Partnership, a relatively new, public-private partnership to expand economic development, has attracted or retained thousands of jobs in the last three years.
  • Our career pathways effort has grown from 27 students in 2015 to over 23,000, or more than half of our high schoolers, today. Giving our young people meaningful work experiences and substantial credit towards college or certification before they turn 18 is a game-changer.
  • In 2020, we launched the Delaware IT Industry Council to help the state build an inclusive tech talent pipeline and to contribute to our becoming a national hub for tech and innovation.

National rankings are never an exact science. Where they get it wrong, we need to address it, so that inaccurate perceptions don’t get amplified as fact. But they also give us a chance to look in the mirror; to reflect on where we are making headway and where we can do better. So let’s get to it.

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