The Best (and Worst) States for Business

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16. Idaho
> Real GDP growth, 2013-2014:
2.7% (11th highest)
> Average wages and salaries, 2014: $38,893 (3rd lowest)
> Pct. of adults with bachelor’s degree, 2014: 25.0% (10th lowest)
> Patents issued to residents, 2014: 1,012 (25th lowest)
> Projected working-age population growth, 2010-2020: 15.0% (5th highest)

Businesses considering starting up in Idaho or relocating to the state have some pros and cons to consider. On the one hand, the cost of doing business in the state is by many measures the lowest in the country. Nowhere is the average cost of electricity less expensive, workers in the state are paid an average of just $38,893 a year, third lowest in the country. However, the low average wages may be due to a lack of high skilled labor. The state has among the lowest shares of adults with a bachelor’s degree and of those with a professional degree. Idaho’s economy is also relatively tepid compared with most states. The state’s GDP has grown slower than the U.S. economy over the last five years. The state’s population, on the other hand, is projected to grow by 15% over the 10 years through 2020, the fifth fastest growth rate and approximately three times faster than the nationwide estimate.

17. Alaska
> Real GDP growth, 2013-2014:
-1.4% (the lowest)
> Average wages and salaries, 2014: $56,313 (7th highest)
> Pct. of adults with bachelor’s degree, 2014: 28.0% (24th lowest)
> Patents issued to residents, 2014: 49 (the lowest)
> Projected working-age population growth, 2010-2020: 5.6% (18th highest)

Alaska businesses benefit from a relatively well-educated workforce, as 93% of state adults have a high school diploma, the largest share of any other state in the country. Alaska is also the only state in the nation where businesses are completely exempt from state-levied taxes on business-to-business transactions. Partially as a result, Alaska has the third best Tax Climate of any state, according to the Tax Foundation.

While Alaskan businesses benefit from some tax breaks, other costs in the state are especially high. The average price of commercial electricity in Alaska is 17 cents per kwh, significantly more than the average price of 11 cents per kwh across the country. The cost of office space adds to the cost of doing business in Alaska. Commercial real estate in Alaska is more expensive than in all but five other states. Workers’ salaries are also among the highest in the country, nearly $5,000 higher than the average American’s salary.

18. Maryland
> Real GDP growth, 2013-2014:
1.2% (13th lowest)
> Average wages and salaries, 2014: $56,830 (6th highest)
> Pct. of adults with bachelor’s degree, 2014: 38.2% (3rd highest)
> Patents issued to residents, 2014: 1,851 (22nd highest)
> Projected working-age population growth, 2010-2020: 3.6% (24th highest)

A relatively friendly environment to technology and innovation makes Maryland one of the better states for business. There were a total of 88 venture capital deals issued in Maryland in 2014. By comparison, a combined total of just 74 venture capital deals that year in Missouri and Wisconsin — states with similar population sizes.

Americans working in scientific and technological fields, due largely to the higher degree of specialization required, tend to have higher wages than workers in other jobs. Of all jobs in Massachusetts, 23.6% are in STEM fields, the third highest share in the country. And while companies in these fields are among the nation’s most innovative, the cost of labor for employers is much higher as a consequence. The typical Maryland household makes $73,971 a year, the highest nationwide.

19. Iowa
> Real GDP growth, 2013-2014:
1.6% (24th lowest)
> Average wages and salaries, 2014: $41,750 (8th lowest)
> Pct. of adults with bachelor’s degree, 2014: 27.7% (21st lowest)
> Patents issued to residents, 2014: 1,000 (24th lowest)
> Projected working-age population growth, 2010-2020: 0.1% (14th lowest)

Doing business in Iowa is relatively inexpensive. No state in the country has cheaper commercial real estate than Iowa, and at an average cost of 8 cents per kWh, electricity is also far cheaper in Iowa than it is in all but a handful of other states. Additionally, partially due to the state’s relatively low cost of living, employers in the Hawkeye State spend relatively little on payroll. The typical Iowan salary is nearly $10,000 less than the typical American salary.

A healthy workforce is important for any business’s productivity, and Iowans are more likely to receive regular preventative medical care than most Americans. Only 6.2% of state residents are without health insurance, a considerably smaller share than the 11.7% of Americans who are uninsured.

20. Connecticut
> Real GDP growth, 2013-2014:
1.0% (9th lowest)
> Average wages and salaries, 2014: $62,871 (2nd highest)
> Pct. of adults with bachelor’s degree, 2014: 38.0% (4th highest)
> Patents issued to residents, 2014: 2,309 (18th highest)
> Projected working-age population growth, 2010-2020: 1.1% (18th lowest)

After only New York, Connecticut workers are the highest paid in the country. The average salary in Connecticut of $62,871 a year is considerably higher than the $51,552 the average American worker annually. While relatively high salaries may make the Nutmeg State less appealing to businesses, the pool of prospective employees is highly educated. Nearly 17% of adults in the state have a professional or graduate degree, a larger share than in all but two other states. Connecticut is also a hotbed of innovation. Roughly 64 patents are issued a year for every 100,000 residents, more than in all but a handful of other states.