The Best (and Worst) States for Business

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46. New Mexico
> Real GDP growth, 2013-2014:
1.8% (25th highest)
> Average wages and salaries, 2014: $42,959 (14th lowest)
> Pct. of adults with bachelor’s degree, 2014: 26.4% (13th lowest)
> Patents issued to residents, 2014: 423 (13th lowest)
> Projected working-age population growth, 2010-2020: 6.4% (15th highest)

New Mexico’s business climate is not very inviting. Between a sluggish economy and relatively low-skilled workforce, the state likely struggles more than most to attract businesses. More than 21% of state residents live below the poverty line, the second highest poverty rate in the country after only Mississippi. Additionally, 6.5% of the state’s workforce is out of a job, a slightly higher share than the 6.2% of the American workforce that is unemployed. One factor that likely contributes to high poverty and unemployment in the state is the relatively low adult educational attainment. Only 26.4% of adults in New Mexico have at least a bachelor’s degree, a smaller share than the 30.1% of American adults with similar educational attainment.

It is perhaps no surprise, then, that private industry is hurting in New Mexico. The number of private businesses in the state declined by 0.3% from 2012 to 2013 — New Mexico is one of 14 states with such a decline. To compare, the number of businesses nationwide increased by 0.8% over the same period.

47. Mississippi
> Real GDP growth, 2013-2014:
0.0% (3rd lowest)
> Average wages and salaries, 2014: $38,032 (the lowest)
> Pct. of adults with bachelor’s degree, 2014: 21.1% (2nd lowest)
> Patents issued to residents, 2014: 153 (8th lowest)
> Projected working-age population growth, 2010-2020: -0.6% (13th lowest)

While a high unemployment rate is the hallmark of an unhealthy economy, it can also mean that employers have an overabundance of candidates. In Mississippi, the 7.8% unemployment rate is the highest in the country. Employers in the state also benefit financially from paying the lowest average salary of any state in the country. The typical worker earns only $38,032, far less than the $51,552 the average American worker earns annually. High unemployment and low incomes are a double edged sword for business, however, as they each limit the buying power of state residents who are effectively their potential clients or customers. It is perhaps no surprise that 21.5% of Mississippi residents live in poverty, a larger share than anywhere else in the country.

Many jobs require at least a high school diploma, yet a relatively large share of adults in Mississippi have not graduated high school. Less than 83% of adults in the state have a least a high school diploma, one of the lowest educational attainment rates in the country.

48. Kentucky
> Real GDP growth, 2013-2014:
1.2% (13th lowest)
> Average wages and salaries, 2014: $41,778 (9th lowest)
> Pct. of adults with bachelor’s degree, 2014: 22.2% (4th lowest)
> Patents issued to residents, 2014: 646 (19th lowest)
> Projected working-age population growth, 2010-2020: 2.3% (23rd lowest)

There are few advantages to running a business in Kentucky than in the rest of the country. The state has one of the least healthy economies, with 19.1% of residents living in poverty — the fifth highest poverty rate of any state. Kentucky’s GDP grew by a sluggish 1.2% between 2013 and 2014, a slower rate than most of the nation. Between 2010 and 2020, Kentucky’s working-age population is expected to grow by 2.3%, just half the national projected growth rate of 4.6%.

The pool of available workers is fairly weak in Kentucky. Just 22.2% of residents have at least a bachelor’s degree, the fourth lowest share nationwide. Compared to other states, Kentucky’s entrepreneurial climate has been relatively inactive. In 2014, innovators in the state registered slightly less than 15 patents per 100,000 residents, about one-third of the 45 patents per 100,000 citizens issued nationwide.

49. Louisiana
> Real GDP growth, 2013-2014:
1.5% (21st lowest)
> Average wages and salaries, 2014: $46,136 (24th lowest)
> Pct. of adults with bachelor’s degree, 2014: 22.9% (5th lowest)
> Patents issued to residents, 2014: 434 (14th lowest)
> Projected working-age population growth, 2010-2020: -3.2% (7th lowest)

Louisiana’s population is shrinking. Between 2010 and 2020, the number of people who call the Bayou State home is projected to have declined by 0.5%. Worse still for state businesses, the working-age population is projected to decline by an even steeper 3.2% over the same period. Additionally, workers in Louisiana are less likely than the average American to have a specialized education. Only 7.8% of adults in Louisiana have graduate or professional degree, a smaller share than the 11.4% national share. A waning working-age population, coupled with relatively low educational attainment, may make it difficult for employers in the state to fill positions with qualified candidates.

Like most of the worst states for business, Louisiana’s economy is relatively weak. Only it and one other state — Maine — have experienced an annualized GDP decline over the most recent five years. Nearly 20% of the state’s population lives below the poverty line, and 6.4% of workers in the state are out of a job, each a worse rate than the corresponding national figure.

50. West Virginia
> Real GDP growth, 2013-2014:
4.4% (5th highest)
> Average wages and salaries, 2014: $40,588 (6th lowest)
> Pct. of adults with bachelor’s degree, 2014: 19.2% (the lowest)
> Patents issued to residents, 2014: 134 (6th lowest)
> Projected working-age population growth, 2010-2020: -4.1% (4th lowest)

West Virginia ranks as the worst state for business in the country — the obstacles businesses in the state face extend across nearly every major category. The pool of job applicants businesses are able to draw on for employees is among the worst in the nation. Just 19.2% of state adults have a bachelor’s degree and 7.4% have a graduate or professional degree, each the lowest such rate of any state. The workforce is also expected to become even more limited, with the working-age population of the state projected to have declined by 4.1% from 2010 through 2020 compared to a 4.6% projected national growth over that time.

West Virginia’s economy is struggling — the number of businesses in the state declined between 2012 and 2013, and the state’s residents do not have much in the way of disposable income. The typical West Virginia household earns only about $41,000 annually, more than $12,000 less than the typical American household. Additionally, 18.3% of state residents live in poverty, a considerably larger share than the 15.5% national poverty rate.