As much as shoppers love a sale, businesses love tax breaks, easy-going regulations and other incentives that Tennessee often offers in return for new investment and job creation.

State economic development officials see incentives as just one of many tools they use to compete with other states for business investments. Their efforts were recognized recently when Chief Executive magazine named Tennessee one of the top states for business in its annual survey called “Best and Worst States for Business.”

Others wonder whether, like a retailer selling goods below cost, Tennessee is giving away the store.

“You have to look at the flip side,” says Mary Mancini, executive director of Tennessee Citizen Action, a nonprofit public interest and consumer rights organization.

“It’s always good to encourage business. But there has to be a way to do that that is not at the expense of working people.”

The way economic development officials see it, just like Kohl’s competes with Dillard’s and Kroger competes with Publix, Tennessee competes with other states and other countries for jobs and investments.

“The business of economic development is often a global competition. We aren’t only competing with bordering states, but with countries around the world. That’s why it is important to do everything we can to ensure a business-friendly environment and an educated work force,” says Clint Brewer, assistant commissioner for the state Department of Economic and Community Development.

In the recent Chief Executive magazine ranking, Tennessee was the fourth-best state for business. The three states that ranked higher – Texas, Florida and North Carolina – also are in the South. To compete with them, Tennessee emphasizes all of its advantages, with incentives being just one.

“To become the No. 1 state in the Southeast for high-quality jobs, we must continually set the bar high and work hard to support our existing businesses while also recruiting new companies to the state,” says Brewer. “Additionally, incentives are only one piece of the puzzle. A company’s decision to expand or relocate is based on a number of factors.”

Some of the attributes Tennessee advertises to sell itself to businesses aren’t controversial. They include:

• Availability of a high-quality work force
• Tennessee’s central location, which is within a day’s drive of more than three-quarters of the major U.S. markets
• A transportation network offering immediate access to eight interstates
• Several major river ports
• International and regional airports
• Extensive railways

Other attributes used to sell the state are either a strength or a weakness, depending on your point of view. They are:

• Tennessee’s status as a right-to-work state. No one can be required to join a union in order to get or keep a job. Unions say that gives management the upper hand in setting wages and workplace policies and weakens worker protections. On the other hand, Tennessee’s right-to-work status has helped it recruit major businesses such as Nissan. Workers at the company’s Tennessee facilities are not members of the United Auto Workers union, although the union has tried to recruit them.
• Low costs of doing business and a business-friendly environment, which are positive unless they are code for low wages and lax regulation.

Meanwhile, Tennessee is struggling with pockets of high unemployment, crumbling infrastructure and troubled schools even as it offers “corporate tax loopholes” that result in “trying to balance the budget on the backs of working people,” says Mancini. “Tennessee tends to do that at the expense of our most valuable resource – our people.”

In the Chief Executive magazine survey, 650 CEOs rated all 50 states in three categories: taxation and regulation, quality of workforce and living environment.

Top executives told the magazine they especially like right-to-work states like Tennessee.

“It may be no accident that most of the states in the top 20 are also right-to-work states, as labor force flexibility is highly sought after when a business seeks a location. Several economists, most notably Ohio State’s Richard Vedder and Harvard’s Robert Barro, have found that the economies in R-to-W areas grow faster than other states, have higher employment and attract more inward migration,” the magazine stated when it announced its Best and Worst for Business.

The magazine shared comments from two CEOs.

“Recently moved from New York State to Tennessee. Differences in ambience/climate/cost of living/attitude of government towards business are outstanding.”

“Good states have quality work force, affordable housing, good infrastructure and business-friendly regulations with low income taxes. None of these apply to Illinois or California but do so in Tennessee and Texas.”

The states at the bottom of Chief Executive magazine’s ranking are:

46. New Jersey

47. Massachusetts

48. Illinois

49. New York

50. California

Chief Executive magazine is not the only business publication lauding Tennessee’s economic development successes. Trade & Industry Development magazine awarded its 2012 Corporate Investment & Community Impact (CiCi) Awards to several business expansions in the state, including:

• Amazon.com in Lebanon and Murfreesboro
• General Motors in Spring Hill
• Quaprotek USA in Ripley
• MANN+HUMMEL USA in Dunlap

The Tennessee Department of Economic and Community Development also received the award.

In addition, Tennessee was ninth in Site Selection magazine’s annual Governor’s Cup for economic development and was ranked in the top 10 states for best business climates. The magazine also recognized Amazon.com’s expansion in Tennessee as one of the Top Deals of 2011.

“When a state consistently receives high rankings such as these, it speaks to the business climate the state has cultivated,” Brewer says. “The better a state’s business climate, the more confidence companies have in expanding and locating in the state. Tennessee is consistently at the top of the list, and we take great pride when our hard work receives recognition.”

Mancini wonders whether Tennessee officials always have their priorities straight.

“I’m at the state Legislature, and the first question asked is, ‘is it good for business,’ Mancini laments. “We need to start asking, ‘is legislation good for the people of the state?’”