Special Report

The Best (and Worst) States for Business

Source: Thinkstock

46. Kentucky
> 1-yr. real GDP change: +1.2% (19th smallest growth)
> Avg. salary: $43,957 (10th lowest)
> Adults w/ bachelor’s degree: 23.4 (tied — 5th lowest)
> Patents issued: 14.9 (11th fewest)
> Working-age population chg. 2010-2020: +1.1% (5th smallest growth)

Southern U.S. states typically have low cost of goods and services, affordable real estate, and relatively low tax burdens. Such favorable measures certainly help make states like Kentucky more business friendly.

Beyond these advantages, however, Kentucky rates poorly in a number of measures of doing business. Generally, an educated workforce helps companies flourish. In Kentucky, though, just 24.3% of adults have a bachelor’s degree, nearly the lowest such percentage of all states. Educational attainment tracks closely with measures of innovation in a state, which are also indicative of a favorable business environment. In Kentucky, venture capital deals, patents awarded per capita, and the share of STEM jobs are all relatively low compared to other states.

47. West Virginia
> 1-yr. real GDP change: -1.1% (5th largest decrease)
> Avg. salary: $41,241 (5th lowest)
> Adults w/ bachelor’s degree: 20.8 (the lowest)
> Patents issued: 6.9 (3rd fewest)
> Working-age population chg. 2010-2020: -4.2% (4th largest decrease)

In West Virginia, population loss and outbound migration have led to slowed economic growth. The state’s working-age population is projected to decline by 1.0% in the decade between 2020 and 2030, even as the comparable population nationwide 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. Nationwide there were 44 patents issued per 100,000 Americans. Also, just 3.4% of workers are employed in STEM jobs in the state, the fourth smallest share in the country.

Source: Thinkstock

48. New Mexico
> 1-yr. real GDP change: +0.2% (3rd smallest growth)
> Avg. salary: $43,661 (7th lowest)
> Adults w/ bachelor’s degree: 27.2 (tied — 13th lowest)
> Patents issued: 20.5 (20th fewest)
> Working-age population chg. 2010-2020: +1.6% (6th smallest growth)

A less affluent population with little disposable income are less than ideal consumers. In New Mexico, nearly 20% of the population lives in poverty, compared to the national poverty rate of 14.0%. The typical household income is just $46,748 annually, about $10,000 less than the national median household income.

Due to the high crime rate in the state, New Mexico is potentially a less attractive place to live, which can impact businesses’ ability to attract employees. New Mexico had the second highest violent crime rate in the country in 2016, at over 700 incidents per 100,000 residents, compared to the national rate of 386 incidents per 100,000 Americans.

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49. Mississippi
> 1-yr. real GDP change: +1.2% (20th smallest growth)
> Avg. salary: $39,071 (the lowest)
> Adults w/ bachelor’s degree: 21.8 (2nd lowest)
> Patents issued: 4.6 (the fewest)
> Working-age population chg. 2010-2020: -2.4% (9th largest decrease)

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 5.8% of Mississippi’s workforce is unemployed, higher than the national unemployment rate of 4.9%. Mississippi’s talent pool is relatively shallow in comparison to the rest of the country.

Just 21.8% of adults have a bachelor’s degree, and just 8.2% 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.

Source: Thinkstock

50. Louisiana
> 1-yr. real GDP change: +0.2% (4th smallest growth)
> Avg. salary: $46,643 (20th lowest)
> Adults w/ bachelor’s degree: 23.4 (tied — 5th lowest)
> Patents issued: 8.5 (5th fewest)
> Working-age population chg. 2010-2020: +0.3% (the smallest growth)

No state is worse for business than Louisiana. Working-age Louisianans are less likely than working-age Americans to have the qualifications for higher-skilled, higher-paying jobs. Just 23.4% 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. Also, unlike most states, Louisiana’s working-age population is also declining. In the Census’ American Survey of Entrepreneurs, 46% of state businesses reported unpredictable conditions having a negative impact on their business, and 48% reported slow business or lost sales, each among the highest shares in the country.