America’s 10 Worst States for Business

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24/7 Wall St. recently examined the business environment in all 50 states. The bottom 10 are particularly difficult for those companies that are based in them, or those that have considered doing so.

As the original article pointed out:

While the factors affecting the success of a region’s businesses are varied, and can seem almost random at times, there are socio-economic conditions, differences in geography, and regional regulations that can make running a successful business easier in one state than in another. To determine which states have the best and worst business climates, 24/7 Wall St. identified and reviewed nearly 50 measures of doing business. These were divided into eight major categories: economic conditions, business costs, state infrastructure, the availability and skill level of the workforce, quality of life, regulations, technology and innovation, and cost of living.

The 10 that ranked lowest of all 50 states:

41. Rhode Island
> Real GDP growth, 2013-2014: 1.6% (24th lowest)
> Average wages and salaries, 2014: $49,866 (16th highest)
> Pct. of adults with bachelor’s degree, 2014: 30.4% (19th highest)
> Patents issued to residents, 2014: 363 (11th lowest)
> Projected working-age population growth, 2010-2020: -3.8% (6th lowest)

There are a variety of factors driving up the cost of doing business in Rhode Island. According to the Tax Foundation, the state has one of the least favorable tax structures in the country for corporations. Electricity is also very expensive in the state, at 13 cents per kwh compared to 10.9 cents across the country. While in the majority of states, less than one in 10 miles of roadway are in poor condition, nearly 40% of Rhode Island’s roadways are in bad shape, by far the worst in the country. This may contribute to the high costs of trucking to businesses due to congestion in the state due to, at roughly $142,000 per mile.

A potential long-term problem for Rhode Island businesses is a projected loss of an employee pool. By 2020, the size of the working-age population is expected to have declined by 3.8% from 2010, one of the worst drops over that period.


42. Arkansas
> Real GDP growth, 2013-2014: 1.5% (21st lowest)
> Average wages and salaries, 2014: $40,560 (5th lowest)
> Pct. of adults with bachelor’s degree, 2014: 21.4% (3rd lowest)
> Patents issued to residents, 2014: 204 (9th lowest)
> Projected working-age population growth, 2010-2020: 5.2% (21st highest)

Compared to the rest of the country, Arkansas is one of the most cost-effective places to run a business. The average salary in the state is just $40,560, the fifth lowest nationwide. Commercial electricity costs just 8 cents per kilowatt hour, cheaper than in any state except for Idaho. Similarly, commercial real estate is the seventh least expensive in the country.

Despite the state’s cheap labor and capital, a subpar applicant pool may deter new businesses. Just 21.4% of adults have at least a bachelor’s degree and 7.5% have a graduate or professional degree, the third and second lowest shares of any state. Of all jobs in Arkansas, only 17.2% are in STEM fields — a smaller share than in any state other than Mississippi and Nevada. Between 2012 and 2013, Arkansas was one of 14 states where the number of private establishments declined — by 0.1%.