Is Your State Attracting Jobs and Workers?

Mar 31, 2008

By Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce
April 29, 2008

Americans are so focused on competition among nations in the worldwide economy, they often forget that each of the 50 U.S. states are competing with each other for jobs, workers, and resources. Many of the jobs people believe are going overseas are actually going to other U.S. states who have created more positive business environments than their neighbors.

One thing that's certain to drive away business, jobs, and economic development from a state is a poor legal climate. This week the U.S. Chamber's Institute for Legal Reform released its annual State Liability Systems Ranking Study conducted by The Harris Poll. This study is the benchmark against which businesses, elected officials, the media, and other opinion leaders measure their state's legal climate.

What do this year's results tell us? While there continues to be a wide disparity between the states in terms of those that are perceived to be the best and the worst, the overall trend is improving.

We believe a major reason for that improvement is the pressure we and our allies have exerted on states to improve their legal climates. We've been telling some of the worst states for seven years now that they need to improve their legal systems in order to attract new business and grow jobs. We've seen many states in the past few years pass good legal reform packages. But some states are learning that changing the law isn't enough—they also need to make sure their courts apply the law.

Only 40% of the senior attorneys we surveyed at America's largest employers rated the reasonableness and balance of the state courts as "excellent" or "pretty good," while more than half (55%) called the courts "only fair" or "poor." Many states make it far too easy to certify class actions, launch frivolous lawsuits without penalties, shop for the most plaintiff-friendly venue, and sue when none of the alleged victims even live in the state. All of this harms businesses, drives up prices, and saps productivity and innovation.

The fairness of state legal systems not only impacts competition between states, but also the nation's global competitiveness. America's legal climate is only as good as our worst states.

Our survey sends a single clear message to states and the country: If we want healthy state economies and a competitive national economy, we need to clean up our act.

To get more information on how your state compares and how we are getting the message out about our survey results, visit http://www.instituteforlegalreform.org.

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