Special Report

The Best (and Worst) States for Business

Source: Thinkstock

11. Idaho
> 1-yr. real GDP change: +2.7% (7th largest growth)
> Avg. salary: $40,505 (2nd lowest)
> Adults w/ bachelor’s degree: 27.6 (15th lowest)
> Patents issued: 51.4 (12th most)
> Working-age population chg. 2010-2020: +9.6% (10th largest growth)

By several measures, Idaho’s economy is relatively strong. The state reported a 2.7% GDP growth between 2015 and 2016, a stronger growth rate than all but six other states. Additionally, just 3.8% of the state’s labor force were out of work in 2016 compared to 4.9% of the U.S. labor force. Idaho’s low crime is another factor making the state attractive to business. A high violent crime rate can contribute to a stagnant economy and economic drag, and Idaho is a relatively safe state. There were 230 violent crimes for every 100,000 people in Idaho in 2016 compared to the comparable U.S. rate of 386 per 100,000.

Business costs across Idaho are generally low. Commercial electricity per kilowatt hour in Idaho averaged only 7.4 cents per kWh in 2016, well below the national cost of 10.4 cents per kWh. Additionally, the average cost of commercial real estate in Idaho is lower than in most states.

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12. Wyoming
> 1-yr. real GDP change: -1.8% (4th largest decrease)
> Avg. salary: $46,147 (18th lowest)
> Adults w/ bachelor’s degree: 27.1 (11th lowest)
> Patents issued: 18.8 (17th fewest)
> Working-age population chg. 2010-2020: +9.5% (11th largest growth)

One factor that helps make Wyoming one of the most business-friendly states in the country is its strong infrastructure. Just 2.4% of roads in the states are in poor condition according to the Federal Highway Administration, the ninth smallest share nationwide. Quality roads likely help reduce congestion. Trucking plays a relatively large role in Wyoming’s economy, and in 2016, the trucking industry lost less revenue due to congestion per mile than in nearly any other state. Clear roads benefit all workers in the state. Workers spend just 16.9 minutes on average commuting to work — the second shortest commute of any state.

Wyoming also outranks a majority of states in education spending and outcomes. This can help attract advanced industries to the state. Wyoming spent an average of $17,700 per student in public education in 2015 — over $5,000 more than the national average per-student spending. An estimated 93.2% of adults in the state have a high school diploma, the largest share of any state.

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13. Texas
> 1-yr. real GDP change: -0.3% (7th largest decrease)
> Avg. salary: $53,838 (12th highest)
> Adults w/ bachelor’s degree: 28.9 (tied — 22nd lowest)
> Patents issued: 35.7 (18th most)
> Working-age population chg. 2010-2020: +14.9% (4th largest growth)

Like North Dakota and a few other oil-producing states, Texas’ economy has taken a beating from the now over three years long stretch of depressed crude oil prices. However, the state’s economy is more diverse than that of North Dakota, and GDP has contracted by just 0.3% in the most recently reported year. Credit agencies Moody’s and Standard & Poor’s clearly recognize the state’s stability and rate its debt a perfect AAA and Aaa, respectively, with a stable outlook.

The state’s businesses not only benefit from a stable economy, but also from a growing labor force. Texas’ working age population is projected to grow by 14.9% between 2020 and 2030, the fourth most of any state.

Source: Thinkstock

14. Maryland
> 1-yr. real GDP change: +2.5% (9th largest growth)
> Avg. salary: $59,606 (6th highest)
> Adults w/ bachelor’s degree: 39.3 (3rd highest)
> Patents issued: 30.5 (25th fewest)
> Working-age population chg. 2010-2020: +6.5% (19th largest growth)

In Maryland, 39.3% of adults have at least a bachelor’s degree, and 18.5% of adults have a graduate or professional degree — respectively the third and second largest shares of any state. A highly-educated workforce can help attract advanced, high-paying industries to a given state. In Maryland, 8.3% of workers are employed in a STEM field, the largest share in the country.

In addition to its deep talent pool, another factor making Maryland a business-friendly state is its rapid economic growth. The state’s real GDP grew 2.5% in 2016, far greater than the 1.5% national growth rate. Maryland is also one of just 11 states with a triple-A rating and stable outlook from both Moody’s and S&P.

Source: Thinkstock

15. California
> 1-yr. real GDP change: +3.3% (4th largest growth)
> Avg. salary: $63,409 (4th highest)
> Adults w/ bachelor’s degree: 32.9 (14th highest)
> Patents issued: 102.4 (the most)
> Working-age population chg. 2010-2020: +3.0% (10th smallest growth)

A highly innovative business environment has wide-reaching positive effects on new business growth as well as on existing businesses. California, home to Silicon Valley, the American tech industry’s stronghold, is home to by far the most patents and venture capital deals. Even when adjusted for inflation, there are over 100 patents issued to California enterprises per 100,000 residents, well more than double the national figure. There were 2,801 venture capital deals in California in 2016 — more than 44 other states combined.

Equality has been shown to have wide-reaching positive impacts on workers and employers alike. In California, women earn 88 cents for every dollar men earn, the second smallest gender earnings gap in the country.

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