Many of the Northeast’s chief appeals—as a location for headquarters, for access to capital, for access to technological innovators and as a gateway to export markets—have diminished in recent years. Other regions have caught up and, in some cases, edged ahead. Yet, technology companies continue to move their headquarters to New York, Boston and Philadelphia, observes Dennis Donovan, head of worldwide site selection services at Wadley-Donovan-Gutshaw Consulting in Bridgewater, New Jersey. “The Northeast is one of the few areas in the country that offer companies a global platform for conducting business,” Donovan says. “Given supply-chain demographics, there are more and more regional suppliers” for whom a Northeast location can mean meaningful reductions in fulfillment times.” He adds, however, that, “unless you are serving a regional market, and have a compelling reason to be here, it’s very tough to compete here.”
The region’s historically high tax burden, once justified by superior infrastructure, arguably better educational systems and more expansive government services, have become increasingly archaic and onerous. The Tax Foundation’s annual State Business Tax Climate Index names New York and New Jersey the worst and second-worst states, respectively, in the country ranked by business tax. Of its 10 lowest-ranked states, no fewer than six are in this quadrant.
“The Northeast is the most competitive marketplace in the world, bar none,” says Thomas Stringer, a New York-based site selection consultant and principal at Ryan, a tax advisory firm. “This is testament to our history as an economic powerhouse. We’ve always had the talent and the capital and we’ve done well. We’ve done very well. As a result, perhaps we’re a little more complacent, a little less scrappy.”
Often criticized for handicapping their own employers by dint of heavy taxation burdens, sluggish permitting processes, and overly zealous bureaucratic processes, state governments across New England and the Middle Atlantic states increasingly market themselves, without irony, as business friendly. All of the Northeast states have developed economic revitalization plans over the last several years, intended to help startups get off the ground and to deter established businesses from entertaining the offers of roving economic development teams from other states and, increasingly, other countries.
Karl Seidman, president emeritus of the Northeast Economic Developers Association and a senior lecturer on urban planning at M.I.T., contends that the region’s governors have become increasingly solicitous to business. “There has been quite a lot of attention over the last few years on retention of existing business and attraction of new businesses,” he says.
“The Northeast has a lot of assets including its skilled work force, its university and public school systems and the opportunity to live car-free lives in walkable urban centers,” he continues. “Governors in every state know their political fortunes are tied to how well the state does in terms of business retention and job creation. They want to get it done, and they want to get it done right.”