Connecticut’s Red Flag

Three weeks ago, Connecticut Governor Dan Malloy acknowledged that Aetna would likely move its headquarters out of his state. The 43rd largest company in the United States would thus follow GE, the 13th largest firm, which left last year.

GE’s corporate headquarters had resided in the Constitution State for more than forty years before moving to Boston. And Aetna has been a Connecticut native since its ancestral founding as a fire insurance firm in 1819. It is reportedly focusing on New York City.

What was Malloy’s response to the news of Aetna’s likely departure? In essence, he waved a red flag, saying:

While we have not been notified by the company of their intention to change their footprint in Connecticut … some amount of change is coming, and … it will likely include a change in their headquarter designation …

… this has more to do with their desire to have executive leadership operate in a larger, more vibrant urban center than Connecticut can currently offer.

We all know that employers – especially large employers – are attracted to city centers. We know that now, more than ever, we are in competition across all industries – not just with Massachusetts or New York state, but more specifically with Boston and New York City …

Let’s be clear: Hartford is not ever going to be New York or Boston.

But is the Governor correct? Are small cities like Hartford relatively unattractive to large corporations? Let’s consider the facts.

In reality, half of the cities that are home to the ten largest American firms are even smaller than Hartford. Walmart, the largest company in America, is based in Bentonville AR. Third ranked Apple resides in Cupertino CA. And UnitedHealth, CVS Health, and Ford are also in the Top Ten. They are based in Minnetonka MN, Woonsocket RI, and Dearborn MI, respectively.

What about the eleventh through the twentieth largest firms in the United States? Five of them are also based in cities that are smaller than Hartford. They are Amerisource in Chesterbrook PA, Cardinal Health in Dublin OH, Costco in Issaquah WA, Walgreens in Deerfield MI, and Chevron in San Ramon CA.

So when Governor Malloy claims that large employers are naturally attracted to metropolises like Boston and New York, places that offer larger urban centers than Hartford, he fails to describe half of the cities that host America’s Top Twenty companies.

That uncomfortable fact raises an equally uncomfortable question. If the ninth largest firm in the nation can be comfortable in little Woonsocket, Rhode Island, why can’t the 43rd largest firm be comfortable in Hartford?

To be sure, there may be all sorts of reasons why Connecticut is no longer attractive to large employers. And some of those reasons may fall outside of the Governor’s control or influence.

But the claim that small cities are naturally non-competitive with larger ones in the market for corporate headquarters? That’s simply not supported by the facts, and one can only wonder why the Governor of the nation’s fifth wealthiest state is waving a red flag and accepting the departure of Aetna’s headquarters with such a statement.