As today is April 1st, I was asked to find economist jokes. However, as the economic conditions have not been upbeat lately, I will skip the April 1st joke, and hope next year will be much better, so I can include a cheesy joke regarding the behavior of an economist. There is, however, some good news out there, and this time it is for Baltimore City.
I am always looking for news on Maryland to support my research for RESI’s projects that address local conditions. As I was browsing the Baltimore Business Journal for a useful fact, I found an article by KPMG LLP, a consulting firm, listing Baltimore City as one of the most affordable cities in which to do business in the Unites States. That piqued my interest. KPMG studied the cost of doing business throughout North America, Europe and Asia Pacific and provided rankings by nation and city. Baltimore City was ranked as the fourth most affordable city in which to run a business in the United States. Tampa, Atlanta and Miami all ranked higher than Baltimore City. Even better news though; the city was the least expensive among large northeastern and Canadian cities. KPMG calculated a cost index of 97.1 for Baltimore City, and among cities near Baltimore City, KPMG calculated a cost index of 98.3 for Philadelphia and 99.0 for the metro DC area.
What does this mean?
The cost index was estimated by looking at 26 cost components, such as labor and utility costs, which affect the cost of doing business. A cost index of less than 100 means that it is less expensive to do business than in the four largest cities (New York City, Los Angeles, Dallas and Chicago); these four largest cities represented the baseline of the study. In other words, the lower cost index for Baltimore City means that the city has a cost advantage of 2.9% relative to the four largest U.S. cities.
Baltimore—a great place to do business!
Having to pay less in business costs is always attractive to businesses as they are always on the lookout for ways to decrease their overhead costs. Lower business costs can also help jurisdictions as employment can increase and unemployment can decrease. A multiplier effect can also occur in the area. Due to the migration of new jobs, local personal income increases which leads to the creation of more new jobs. For example, if a business moves its factory to a new location, workers are going to spend money on local groceries, clothing and restaurants. The result will be an increase in local service jobs due to factory workers. Of course, this example is pretty simplistic; however, KPMG findings are good news for people who are looking to attract new businesses in Baltimore City and Maryland to increase employment levels.