Special Report

The Best (and Worst) States for Business

Bethlehem, Pennsylvania
Source: Thinkstock

46. Pennsylvania
> 1-yr. real GDP change: 2.8% (9th highest)
> Avg. salary: $51,044 (17th highest)
> Adults w/ bachelor’s degree: 29.7% (24th highest)
> Patents issued: 3,825 (11th highest)
> Working-age population chg. 2010-2020: -0.9% (10th lowest)

One of the largest impediments to business in Pennsylvania is the state’s poor infrastructure. An estimated 40% of the state’s bridges are structurally deficient or functionally obsolete, the fourth largest share in the country. In 2016, truckers lost $2.2 trillion in operational costs to congestion on Pennsylvania roads. At $14,629 lost per interstate mile, Pennsylvania has some of the least business-friendly roads in the country.

Population loss in Pennsylvania has likely slowed economic growth in the state. In the decade between 2010 and 2020, Pennsylvania’s working-age population is projected to decline by 0.9%, while the corresponding national population is projected to grow 4.6%. In 2015, just 179 building permits were issued per 100,000 residents, less than half the national figure, another indication of sluggish commercial activity.

Portland Fishing Harbour at Sunset, Maine
Source: Thinkstock

47. Maine
> 1-yr. real GDP change: 1.1% (14th lowest)
> Avg. salary: $42,931 (7th lowest)
> Adults w/ bachelor’s degree: 30.1% (22nd highest)
> Patents issued: 201 (9th lowest)
> Working-age population chg. 2010-2020: -4.1% (3rd lowest)

Maine is the worst state for business in New England, and one of the worst states for business in the country. The state does not appear to foster high levels of innovation, which can be important to business development and versatility. There were only 15 patents issued for every 100,000 Maine residents in 2014, well below the national rate of 44 patents per 100,000 people.

Businesses in Maine face strain from a heavy tax burden — corporate taxes are higher in Maine than in the vast majority of states. Companies in the state may also experience a labor shortage in the coming years. The state’s working-age population is on pace to decline by 4.1% between 2010 and 2020, nearly the largest projected drop of any state.

West Virginia Coal Company Terminal, Mining
Source: Thinkstock

48. West Virginia
> 1-yr. real GDP change: 1.4% (21st lowest)
> Avg. salary: $41,172 (5th lowest)
> Adults w/ bachelor’s degree: 19.6% (the lowest)
> Patents issued: 127 (6th lowest)
> Working-age population chg. 2010-2020: -4.1% (4th lowest)

In West Virginia, population loss and outbound migration have led to slowed economic growth. In the decade between 2010 and 2020, the state’s working-age population is projected to decline by 4.1%, while nationwide the comparable population is projected to grow by 4.6%. More businesses closed than opened in West Virginia in 2013, with the total number falling by 0.6% — the largest decline of any state.

West Virginia has one of the least active entrepreneurial environments nationwide. There was just one venture capital deal in 2014, and just seven patents were issued per 100,000 residents, compared to 44 per 100,000 Americans nationwide. Also, just 3.3% of workers are employed in STEM jobs in the state, the fourth smallest share in the country.

Biloxi Beach at Sunset, Mississippi
Source: Thinkstock

49. Mississippi
> 1-yr. real GDP change: 0.5% (6th lowest)
> Avg. salary: $38,603 (the lowest)
> Adults w/ bachelor’s degree: 20.8% (2nd lowest)
> Patents issued: 138 (7th lowest)
> Working-age population chg. 2010-2020: -0.6% (13th lowest)

While Mississippi has a relatively low cost of living and cheap business startup expenses, the state’s stagnant economy is likely a drag on commercial activity statewide. Mississippi’s GDP is unchanged from five years ago, and the state’s 22% poverty rate is the highest in the country. An estimated 6.5% of Mississippi’s workforce is unemployed, significantly higher than the national 5.3% unemployment rate.

Mississippi’s talent pool is relatively shallow in comparison to the rest of the country. Just 20.8% of adults have a bachelor’s degree, and just 7.9% have a graduate or professional degree — two of the smallest such shares of any state. Many of the most advanced, high-paying jobs require higher education. Mississippi’s low educational attainment is likely one reason for the 2.8% of workers employed in STEM fields, the lowest share nationwide.

New Orleans, Louisiana, USA CBD skyline at night.
Source: Thinkstock

50. Louisiana
> 1-yr. real GDP change: 1.0% (12th lowest)
> Avg. salary: $46,784 (22nd lowest)
> Adults w/ bachelor’s degree: 23.2% (4th lowest)
> Patents issued: 399 (14th lowest)
> Working-age population chg. 2010-2020: -3.2% (7th lowest)

No state is worse for business than Louisiana. Working-age Louisianans are less likely than the vast majority of state residents to have the qualifications many businesses look for in job applicants — just 23.2% of adults in the state have a bachelor’s degree, nearly the lowest percentage of all states. The presence of science, technology, engineering, and mathematics-related occupations usually reflects a business-friendly environment where companies can grow. In Louisiana, just 3.2% of occupations are STEM jobs, the third lowest share of all states. Unlike most states, Louisiana’s working-age population is also shrinking.

According to Louisiana’s department of economic development, 80% of the nation’s offshore oil rigs are in waters off the Louisiana coast. This suggests that while Louisiana is not especially business friendly, some types of businesses do better in the state than others.