Fortune 500 Companies Boost Quality of Life
Each year, Fortune magazine compiles and publishes a listing of the top 500 American public corporations. The Cincinnati region is host to 10 Fortune 500 firms — more than Boston, St. Louis, and Seattle. Even more impressive, Cincinnati, which has almost 5 companies per million residents, ranks, on a per capita basis, third in the nation with respect to the number of Fortune 500 companies. This is higher than Chicago at 3.04 per million, New York at 4.48 per million and Los Angeles at 1.68 per million. The Fortune 500 Companies are measured by their gross revenue.
Other than bragging rights and perhaps some prestige, why is the presence of Fortune 500 companies really important to a region? If, for example, we lost all of these companies and replaced them with enough smaller companies to equal the gross revenues of the major companies, what would be the impact on our community?
The Economics Center for Education & Research was asked by the University of Cincinnati to determine the answer. Although factors such as number of jobs, payroll and taxes paid are important measures of benefits to a community, large numbers of small companies could give similar results to those of a fewer number of large companies. Thus, these factors were not considered in the analysis. Instead, the Economics Center measured the impact of these large companies on the “quality of life” of residents of our region. The analysis was based on an index used in the book Cities Ranked & Rated. Authors Bert Sperling and Peter Sander include variables such as percentage of home ownership, ratings of cultural organizations, quality of health and education organizations, transportation, and availability of sports and leisure activities.
Sperling and Sander calculated a national average for each of the items in their index. The Economics Center's study shows that many of the items on the quality of life index were positively correlated with the number of Fortune 500 companies. For example, on average there are 2.78 library books per capita in the United States. The positive correlation between the number of Fortune 500 companies and the quality of life index implies that there would be more library books per person if there were more Fortune 500 firms in the region.
Cincinnati's index is 183. This is much higher than cities with few or no Fortune 500 companies and suggests that Cincinnati's quality of life ranking would be much lower in the absence of these companies. The Cincinnati region ranked especially high in the quality of life areas of classical music options, botanical gardens and arboretum, zoos, aquarium, professional theater, arts radio and amusement parks.
Cities with higher concentrations of Fortune 500 companies often benefit from various philanthropic activities and moneys raised for student scholarships. Large companies also help raise awareness on health-related issues and help attract a quality workforce to the area.
Compared to all 373 metropolitan areas ranked, Cincinnati came in as the 38th best place to live, barely missing the top 10 percent. It was ranked even higher in the healthcare field at 24th and in the cost of living at 35th. Cincinnati and its 10 Fortune 500 companies are clearly in a mutually beneficial relationship.
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