> 1-yr. real GDP change: +1.5% (21st largest growth)
> Avg. salary: $65,971 (2nd highest)
> Adults w/ bachelor’s degree: 42.7 (the highest)
> Patents issued: 99.5 (2nd most)
> Working-age population chg. 2010-2020: +2.7% (9th smallest growth)
A well-educated population can be a boon for state businesses. Such a population presents a more flexible and skilled talent pool for employers. Also, people with college educations tend to have higher incomes, which means they have more disposable income to spend. A nation-leading 42.7% of Massachusetts adults have a bachelor’s degree, compared to 31.3% of adults nationwide. The typical state household earns $75,297 a year, the fourth highest median income of any state and over $17,000 greater than the national median.
Businesses can often benefit from clustering — the close proximity of research institutions and businesses in STEM fields. Clustering results in greater access to the latest technology and other tech innovators as well as, often, high patent output. The greater Boston area is the site of such clustering, as can be seen in the statewide figures. Massachusetts enterprises were awarded more than 6,700 patents in 2015, or almost 100 patents per 100,000 state residents, the second most patents per capita in the country.
2. South Dakota
> 1-yr. real GDP change: +0.7% (11th smallest growth)
> Avg. salary: $40,724 (3rd lowest)
> Adults w/ bachelor’s degree: 28.9 (tied — 22nd lowest)
> Patents issued: 13.1 (8th fewest)
> Working-age population chg. 2010-2020: +10.3% (8th largest growth)
Of the eight best states for business, all but one have a median household incomes of at least $65,000 a year. The one exception is South Dakota, where the typical household earns $54,467 a year. The state makes up for its lack of an affluent consumer base in part by being an inexpensive state to do business. With goods and services costing an average of 88.2 cents to the dollar, the state has the fourth lowest cost of living. The state also has a favorable regulatory framework for business. According to the Census’ American Survey of Entrepreneurs, South Dakota businesses are the least likely in the country to be negatively affected by poor access to capital or by the state’s tax structure.
> 1-yr. real GDP change: +3.7% (3rd largest growth)
> Avg. salary: $46,178 (19th lowest)
> Adults w/ bachelor’s degree: 32.6 (17th highest)
> Patents issued: 46.0 (13th most)
> Working-age population chg. 2010-2020: +15.1% (3rd largest growth)
One sign of a state’s favorability to business is the projected growth of its potential labor force. More potential workers is both a sign of good economic growth, as well as a benefit to employers, who will be able to draw from a larger talent pool. Based on current growth rates, the working-age population in Utah will grow by an estimated 15.1% between 2020 and 2030, the third largest growth during that period of any state. Much of the state’s population growth is likely also the result of growth in STEM jobs in the greater Salt Lake City region. An estimated 6% of Utah’s jobs are in STEM fields, one of the higher shares of any state. State GDP has grown by 3.7% in the last year alone, more than double national GDP growth rate and the third largest of any state.
4. North Dakota
> 1-yr. real GDP change: -5.0% (2nd largest decrease)
> Avg. salary: $48,151 (24th lowest)
> Adults w/ bachelor’s degree: 29.6 (tied — 25th lowest)
> Patents issued: 15.6 (14th fewest)
> Working-age population chg. 2010-2020: +33.2% (the largest growth)
North Dakota ranks as one of the least least expensive place to operate a business. Goods and services in the state are less expensive compared to the national average, and property ownership is among the most affordable in the country. In the American Survey of Entrepreneurs, state businesses are among the least likely of their kind to report a negative impact from a lack of access to capital or from the state’s tax structure.
Until the downturn in oil prices in 2014, North Dakota’s oil industry was booming — and taking the entire state economy along with it. Between 2011 and 2016, the state economy grew at a nation-leading annualized rate of 4.4% per year. Over that period, unemployment averaged just 2.8%, by far the lowest of any state. However, with the recent slowdown, North Dakota’s position on this ranking is in serious jeopardy. The state economy contracted by 5% in 2016, the second worst of any state.
> 1-yr. real GDP change: +1.1% (18th smallest growth)
> Avg. salary: $55,449 (11th highest)
> Adults w/ bachelor’s degree: 39.9 (2nd highest)
> Patents issued: 55.0 (10th most)
> Working-age population chg. 2010-2020: +10.5% (7th largest growth)
In Colorado, 7.4% of all jobs are in science, technology, engineering, or mathematics, the fourth highest share of any state. A high concentration of STEM workers in a state can point to favorable conditions for businesses in several ways. STEM workers tend to have higher incomes, which means they have more disposable income to spend locally. The median household income in Colorado of $65,685 a year is over $8,000 higher than the typical American household income.
A high concentration of STEM jobs can also mean there is a greater potential for innovation and growth in a region, which can create new business and benefit existing companies. Colorado had 255 venture capital deals — a sign of business innovation and growth — in 2016, the sixth most of any state.