The Best (and Worst) States for Business

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The Best States for Business

10. Minnesota
> Real GDP growth, 2012-2013: 2.8% (13th highest)
> Average wages and salaries, 2013: $49,222 (14th highest)
> Pct. of adults with bachelor’s degree, 2013: 33.5% (10th highest)
> Patents issued to residents, 2013: 4,292 (9th highest)
> Projected working-age population growth, 2010-2020: 1.7% (9th highest)

Based on eight categories, including 47 measures, Minnesota is the 10th best state for business in the country. Informing the state’s high quality of life rank, just 8.2% of Minnesotans did not have health insurance in 2013, the fifth lowest rate nationwide. Also, the state was one of the safest, with a violent crime rate of 223.2 reported incidents per 100,000 people, among the lowest rates in the nation.

The state also received one of the highest scores for Infrastructure. Compared with other states, Minnesota businesses can also expect relatively well functioning transportation system. For example, just 11.5% of the state’s bridges were deemed structurally deficient or functionally obsolete, the lowest rate nationwide and less than half the national percentage of 24.3%. Businesses in the state also have the benefit of a relatively well-educated workforce. More than one-third of adults had at least a bachelor’s degree versus less than 30% of Americans. And 92.4% of state adults had completed at least high school as of 2013, the fourth highest rate in the country.

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9. North Dakota
> Real GDP growth, 2012-2013: 9.7% (the highest)
> Average wages and salaries, 2013: $46,775 (20th highest)
> Pct. of adults with bachelor’s degree, 2013: 27.1% (20th lowest)
> Patents issued to residents, 2013: 111 (2nd lowest)
> Projected working-age population growth, 2010-2020: 0.4% (2nd lowest)

North Dakota’s oil boom has spurred strong growth throughout the state’s industries, in residents’ personal incomes, and in employment. Less than 3% of the workforce was unemployed in 2013, the lowest in the country. As a consequence of the high levels of investment and spending in the state, North Dakota’s GDP grew nearly 10% in 2013. While this was by far the highest growth rate nationwide and more than five times the national growth rate of 1.8%, growth may slow considerably if oil prices continue to fall.

In addition to high wages and job opportunities, residents benefit from a relatively low cost of living. In 2013, the cost of housing required 26% of a typical household income, the second-lowest median annual affordability ratio nationwide. As in other states with a low cost of living, North Dakota also had a healthy infrastructure. Partly as a result, workers in the state benefited from an average commute time of less than 18 minutes, versus the national figure of nearly 26 minutes. It was the third lowest commute time in the country.

8. Virginia
> Real GDP growth, 2012-2013: 0.1% (3rd lowest)
> Average wages and salaries, 2013: $53,267 (10th highest)
> Pct. of adults with bachelor’s degree, 2013: 36.1% (6th highest)
> Patents issued to residents, 2013: 1,886 (21st highest)
> Projected working-age population growth, 2010-2020: 7.5% (21st highest)

Virginia’s large capacity for innovation, and high quality labor force helped make it the eighth best state for business. The Old Dominion State scored in the top 10 of states for the percentage of STEM jobs — jobs related to science, technology, engineering, or mathematics. More than 36% of adults in the state had completed at least a bachelor’s degree, which helped strengthen the labor force. The state also fared very well for its business-friendly regulatory environment, its relatively low poverty rate, and its comparatively low energy costs.

What held Virginia back from an even higher overall ranking was its weak infrastructure, which was ranked lowest among the states. Residents had one of the longest average commuting times of 27.7 minutes, and the state spent among the least per mile on road repair. Virginia also struggled with weak real GDP growth, 0.1% in 2013, third lowest in the country.

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7. Colorado
> Real GDP growth, 2012-2013: 3.8% (6th highest)
> Average wages and salaries, 2013: $51,537 (11th highest)
> Pct. of adults with bachelor’s degree, 2013: 37.8% (2nd highest)
> Patents issued to residents, 2013: 2,793 (14th highest)
> Projected working-age population growth, 2010-2020: 8.6% (14th highest)

Colorado’s business climate is among the best in the country largely due to a strong labor market and an especially strong and innovative technology sector. These features are interwoven as a highly educated workforce is essential for innovation. Nearly 38% of adults in Colorado had at least a bachelor’s degree as of 2013, the second highest rate nationwide. As of that year, 14% of adults had completed a graduate or professional degree, a higher percentage than in all but a handful of states. The state’s population is projected to grow by 13.4% from 2010 through 2020 versus an estimated national growth rate of 7.1%, which also contributes to a strong labor market. Nearly 22% of all jobs in Colorado were STEM positions, the seventh highest proportion in the country.

6. Texas
> Real GDP growth, 2012-2013: 3.7% (8th highest)
> Average wages and salaries, 2013: $50,643 (13th highest)
> Pct. of adults with bachelor’s degree, 2013: 27.5% (23rd lowest)
> Patents issued to residents, 2013: 9,222 (2nd highest)
> Projected working-age population growth, 2010-2020: 16.1% (2nd highest)

Like a majority of the best states for business, Moody’s and Standard & Poor’s rated Texas’ credit among the best in the nation. The Lone Star State also led the states in the value of exported goods, which totalled nearly $1.9 trillion in 2012. There were also 386 public use airports, the most in the nation. Curiously, while Texas had the third most post-secondary schools in the nation at 420 in 2013, it actually had the second lowest percentage of adults who had completed at least high school, at 81.9%. Texas benefits considerably from its abundant natural resources. For example, the mining industry accounted for 11.1% of the state’s GDP in 2013, the sixth highest such contribution in the country. Other kinds of businesses do not do particularly well in Texas. The information, finance-insurance-real-estate, professional and business service industries contributed relatively little to the state’s GDP.