The Best (and Worst) States for Business

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31. Indiana
> Real GDP growth, 2013-2014:
1.2% (13th lowest)
> Average wages and salaries, 2014: $43,296 (15th lowest)
> Pct. of adults with bachelor’s degree, 2014: 24.7% (9th lowest)
> Patents issued to residents, 2014: 2,049 (21st highest)
> Projected working-age population growth, 2010-2020: 1.3% (19th lowest)

According to several authorities, Indiana has one of the most business-friendly regulatory climates. The Mercatus Center, a market research organization within George Mason University, ranks the state as having the best overall liability system, property rights, health insurance, and labor market regulation in the country. The cost of goods and services is also below the U.S. benchmark, and home ownership costs are lower than in all but two other states.

By many other measures, however, business conditions in the state are far less favorable. Employers in the state, for example, have one of the least-skilled workforces in the country to draw from, as less than one in four state adults have a bachelor’s degree compared to more than 30% of U.S. adults. The number of non-government businesses in the state has declined by 0.3% between 2013 and 2014, the fifth largest decline in the country over that time.

32. South Carolina
> Real GDP growth, 2013-2014:
2.1% (22nd highest)
> Average wages and salaries, 2014: $42,054 (10th lowest)
> Pct. of adults with bachelor’s degree, 2014: 26.3% (12th lowest)
> Patents issued to residents, 2014: 907 (22nd lowest)
> Projected working-age population growth, 2010-2020: 8.2% (12th highest)

South Carolina’s economy is not especially robust. The five-year average unemployment rate in the Palmetto State of 9.0% is one of the highest in the country. Additionally, the 18% of South Carolinians who live below the poverty line is a considerably larger share than the 15.5% of Americans who live in poverty.

Not all conditions in South Carolina are bad for business, however. A relatively low cost of living in the state may help attract new businesses and residents. Goods and services in South Carolina cost about 91 cents on the dollar, compared to the national price benchmark. South Carolinians also have one of the lowest tax burdens in the country. Over the decade ending 2020, the state’s working age population is expected to increase by 8.2%, considerably more than the 4.6% national projected growth rate.

33. Wisconsin
> Real GDP growth, 2013-2014:
1.2% (13th lowest)
> Average wages and salaries, 2014: $44,470 (19th lowest)
> Pct. of adults with bachelor’s degree, 2014: 28.4% (25th lowest)
> Patents issued to residents, 2014: 2,107 (19th highest)
> Projected working-age population growth, 2010-2020: 0.5% (16th lowest)

According to the Tax Foundation’s Tax Climate Index, Wisconsin corporations are subject to one of the heaviest tax burdens in the country. Private citizens in the state are also heavily taxed, and the typical resident pays 11.0% of their income on state and local taxes, the fifth largest portion of any state. High taxes may partially contribute to the state’s healthy infrastructure, which can in turn augment business activity. Wisconsin has more airports, shorter commute times, and fewer bridges in disrepair than most states in the country.

In other measures of business climate, Wisconsin is slightly behind the rest of the country. Only 9.5% of adults have a graduate or professional degree, less than the 11.4% national average. While the U.S. working-age population is projected to grow by 4.6% between 2010 and 2020, in Wisconsin it is projected to increase by just 0.5%. This may restrict the size of the talent pool Wisconsin businesses will be able to draw from in the near future.

34. Oregon
> Real GDP growth, 2013-2014:
2.4% (16th highest)
> Average wages and salaries, 2014: $47,233 (23rd highest)
> Pct. of adults with bachelor’s degree, 2014: 30.8% (17th highest)
> Patents issued to residents, 2014: 2,391 (17th highest)
> Projected working-age population growth, 2010-2020: 3.7% (23rd highest)

While it ranks worse than the majority of states, there are some positive qualities to Oregon’s business environment. According to the Tax Foundation, the state’s tax climate is the 11th most favorable for enterprises. The state’s economy also appears to favor innovation more than most. More than 60 patents are issued per 100,000 residents in the state annually compared to the 45.4 issued on a national level.

At least one area is likely more challenging for state businesses. Oregon has one of the highest levels of unionization in the country, with 15.6% of all nonfarm workers in the state in a labor organization. Also, housing is very expensive in the state. Homeownership costs amount to more than 35% of a typical Oregon household’s income, higher than in all but a handful of states.

35. Ohio
> Real GDP growth, 2013-2014:
1.4% (16th lowest)
> Average wages and salaries, 2014: $46,835 (24th highest)
> Pct. of adults with bachelor’s degree, 2014: 26.6% (15th lowest)
> Patents issued to residents, 2014: 3,755 (12th highest)
> Projected working-age population growth, 2010-2020: -4.1% (5th lowest)

Ohio’s population in shrinking. Between 2010 and 2020, the number of people who call Ohio home is projected to have declined by 0.7%. The working-age population is expected to have declined by an even steeper 4.1% over the same time period. Additionally, workers in Ohio are less likely than the average American to have a college education. Only 26.6% of adults in Ohio have at least a bachelor’s degree, a smaller share than the 30.1% college attainment rate among all adults in the country. 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.

Ohio has some advantages for business, however. Companies in the state do not pay much for office space. Iowa and Michigan are the only two states with cheaper commercial real estate than Ohio.