Economy

America's 10 Worst States for Business

43. Oklahoma
> Real GDP growth, 2013-2014: 2.9% (8th highest)
> Average wages and salaries, 2014: $44,447 (18th lowest)

> Pct. of adults with bachelor’s degree, 2014: 24.2% (8th lowest)
> Patents issued to residents, 2014: 572 (17th lowest)
> Projected working-age population growth, 2010-2020: 5.5% (19th highest)

The promise of an enjoyable and healthy life can often help businesses attract and maintain employees. Oklahoma, unfortunately, has among the worst quality of life in the country. According to the United Health Foundation, the state has one of the least healthy populations of any state, and one of the worst rates of health insurance coverage as well. Oklahoma also has just 27.2 arts, entertainment, and recreation establishments per 100,000 people, the fifth-lowest share in the country.

Oklahoma’s businesses also draw from a relatively low-skilled workforce. Just 24.2% of the state’s adults have at least a bachelor’s degree and only 8.1% have a graduate or professional degree, compared to more than 30% and 11.4% of American adults, respectively.

44. Hawaii
> Real GDP growth, 2013-2014: 0.4% (6th lowest)
> Average wages and salaries, 2014: $46,650 (25th highest)
> Pct. of adults with bachelor’s degree, 2014: 31.0% (16th highest)
> Patents issued to residents, 2014: 136 (7th lowest)
> Projected working-age population growth, 2010-2020: 5.7% (17th highest)

In few states is the cost of doing business higher than in Hawaii. Electricity in the state costs 34 cents per kWh, close to double the next most expensive state. Hawaii real estate is also by far the most expensive of any state, and the cost of property ownership is among the highest in the country relative to the typical household income. Goods and services are more expensive in Hawaii than in any other state. The state’s infrastructure is also relatively poor. More than 40% of Hawaii’s bridges are structurally deficient or functionally obsolete, and 28.7% of the state’s roadways are in poor condition. Of course, transporting goods between the state and the mainland is much more expensive than shipping within the contiguous United States.

One mitigating factor for businesses in the state is the very high quality of life residents enjoy. Violent crime is relatively low, and residents are among the healthiest in the country.


45. Alabama
> Real GDP growth, 2013-2014: 1.5% (21st lowest)
> Average wages and salaries, 2014: $42,594 (12th lowest)
> Pct. of adults with bachelor’s degree, 2014: 23.5% (7th lowest)
> Patents issued to residents, 2014: 500 (16th lowest)
> Projected working-age population growth, 2010-2020: 2.6% (25th highest)

Alabama’s private sector economy is struggling. The number of non-government businesses in the state declined between 2012 and 2013, one of just 14 states where this occurred. To compare, the number of businesses nationwide expanded by 0.8% over the same period.

Businesses in Alabama may face a shortage of eligible workers in the coming years. While the national working-age population is projected to have grown by 4.6% over the decade ending in 2020, the corresponding growth rate in Alabama is only 2.6%. Currently, workers with high educational attainment are relatively scarce in the state. Only 23.5% of adults have a bachelor’s degree and only 8.8% of adults have a graduate or professional degree, each some of the smallest shares of any state in the country.

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.

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