Special Report

The Best (and Worst) States for Business

Source: Thinkstock

16. Connecticut
> 1-yr. real GDP change: +0.0% (the smallest growth)
> Avg. salary: $64,904 (3rd highest)
> Adults w/ bachelor’s degree: 38.6 (tied — 4th highest)
> Patents issued: 60.3 (7th most)
> Working-age population chg. 2010-2020: -0.6% (12th largest decrease)

Americans with higher educational attainment are often more attractive candidates for prospective employers — and Connecticut has one of the best educated populations in the country. Of all adults in the state, 38.6% have at least a bachelor’s degree and 16.7% have a graduate or professional degree — the fourth and third largest shares of any state, respectively.

Not only does a well educated population make for a more desirable workforce, but also such a population tends to earn more. The typical household in Connecticut makes $73,433 a year, more than in all but five other states. Higher incomes often mean residents have more disposable income, which can drive up consumer spending — a boon for local businesses.

Source: flickr

17. Florida
> 1-yr. real GDP change: +2.4% (11th largest growth)
> Avg. salary: $48,522 (23rd highest)
> Adults w/ bachelor’s degree: 28.6 (19th lowest)
> Patents issued: 19.7 (19th fewest)
> Working-age population chg. 2010-2020: +12.5% (5th largest growth)

One factor contributing to Florida’s business-friendly climate is the state’s growing population. The number of working-age adults in Florida is projected to grow 12.5% from 2020 to 2030, nearly three times the national growth projection. In a nationwide survey assessing the business costs in every state, only 24.8% of business owners in Florida reported difficulty finding qualified labor that negatively affected profitability, the smallest share of any state.

Florida also has one of the most business-friendly tax schemes in the country. It has some of the lowest unemployment insurance taxes, which are paid by businesses to fund recently unemployed workers. Just 41% of businesses in Florida report being negatively impacted by taxes, also the smallest share nationwide.

Source: Thinkstock

18. Iowa
> 1-yr. real GDP change: +1.6% (18th largest growth)
> Avg. salary: $43,902 (9th lowest)
> Adults w/ bachelor’s degree: 28.4 (17th lowest)
> Patents issued: 31.6 (21st most)
> Working-age population chg. 2010-2020: +4.3% (13th smallest growth)

With a cost of living nearly 10% lower than the national average, Iowa is one of the most affordable states in the country — both for residents and commercial enterprises. For example, annual homeownership costs account for only about one-quarter of the median household income in Iowa, the second lowest ratio of any state in the country. Lower housing costs mean residents have more disposable income, which can help drive up consumer spending. Similarly, no state has lower commercial real estate costs than Iowa.

Business owners in the state report relatively easy access to funds. According to the American Survey of Entrepreneurs, just 5.8% of Iowa business owners report a lack of access to financial capital as a negative impact to their business, and just 8.7% report the cost of borrowing as too high, each among the smallest shares of any state.

Source: Thinkstock

19. North Carolina
> 1-yr. real GDP change: +1.9% (14th largest growth)
> Avg. salary: $48,207 (25th lowest)
> Adults w/ bachelor’s degree: 30.4% (24th highest)
> Patents issued/100,000 people: 33.1 (20th most)
> Working-age population chg. 2020-2030: +7.8% (13th largest growth)

In recent years, North Carolina has had a larger increase in business activity than a majority of states. There were 60,550 building permits issued per 100,000 residents in the state in 2015, the ninth most of any state. Many of the permits were likely issued to small businesses, which also received more loans per capita than nearly any other state. In total, small businesses received $3,871 in major bank loans per employee in 2015, more than in any state other than California.

North Carolina also outranks most states in a number of measures related to technology and innovation. Approximately 150 venture capital deals were made in the state in 2016, many in clean technology. The average deal value was $51.7 million, the 12th most of any state. Additionally, due in part to the Research Triangle tech cluster and the presence of top tier research universities such as the University of North Carolina at Chapel Hill, Duke University, and North Carolina State University, an estimated 5.1% of workers in the state are employed in STEM fields — one of the larger shares nationwide. Not all is good for business in the state, and North Carolina ranks unfavorably on this list in a number of measures affecting business. The state has above average poverty and unemployment rates, for example.

Source: Schnitzel_bank / Flickr

20. Georgia
> 1-yr. real GDP change: +3.0% (5th largest growth)
> Avg. salary: $51,572 (17th highest)
> Adults w/ bachelor’s degree: 30.5% (23rd highest)
> Patents issued/100,000 people: 23.9 (21st fewest)
> Working-age population chg. 2020-2030: +8.2% (12th largest growth)

In order to thrive, businesses have to be able to rely on transportation infrastructure — and few states score as well as Georgia in road and bridge quality. For example, just 4.7% of bridges in the state are structurally deficient and fewer than 2% of roadway are in poor condition — the sixth and fifth smallest share among states, respectively.

Georgia also appears to be a relative hotbed of innovation. Startup businesses in the Peach State claimed some 126 venture capital deals in 2016, more than in the vast majority of states. Even more impressive, the average venture capital deal in Georgia was valued at $60.9 million, more than in all but six other states.

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