Special Report

The Best (and Worst) States for Business

Source: Thinkstock

26. Kansas
> 1-yr. real GDP change: -0.9% (6th largest decrease)
> Avg. salary: $45,343 (16th lowest)
> Adults w/ bachelor’s degree: 32.8 (15th highest)
> Patents issued: 31.5 (22nd most)
> Working-age population chg. 2010-2020: +2.6% (8th smallest growth)

Ranking where it does, Kansas unsurprisingly has some attributes that are good for business and some that are not. A state’s infrastructure condition is important, as travel delays and poor commutes can eat into profits. In Kansas, less than 1% of roadways are in poor condition, the lowest share of any state. Also, the average commute time for state residents is less than 20 minutes, compared to a national average of 26.6 minutes.

However, unlike most states, Kansas’ economy is not growing. The state’s GDP contracted by 0.9% in 2016 — just as the national economy expanded by 1.5%. A lack of capital for small businesses might help partially explain the state’s stagnant economy. There were just 1,439 small business loans per employee in 2015, the second fewest in the country.

Source: Thinkstock

27. Oregon
> 1-yr. real GDP change: +3.8% (2nd largest growth)
> Avg. salary: $50,424 (20th highest)
> Adults w/ bachelor’s degree: 32.7 (16th highest)
> Patents issued: 57.8 (8th most)
> Working-age population chg. 2010-2020: +5.5% (16th smallest growth)

Oregon’s economy has been growing recently, a good sign for existing and prospective businesses. State GDP increased by 3.8% in 2016, the second largest growth rate of any state. The previous year, the number of private businesses in the state increased by 2.3%, the sixth largest increase of any state. However, one factor weighing on Oregon’s rank is the relative unaffordability of doing business in the state. Median ownership costs are among the most expensive in the country relative to incomes.

Source: Thinkstock

28. Nevada
> 1-yr. real GDP change: +1.4% (22nd largest growth)
> Avg. salary: $48,343 (25th highest)
> Adults w/ bachelor’s degree: 23.5 (6th lowest)
> Patents issued: 24.7 (23rd fewest)
> Working-age population chg. 2010-2020: +17.5% (2nd largest growth)

The quality of life in a given state can have an impact on the ease with which employers can entice candidates to relocate there. Nevada businesses are at somewhat of a disadvantage, as the state ranks poorly in key measures of quality of life. For example, Nevada has the third highest violent crime rate in the country, at 678 incidents per 100,000 people — nearly double the national violent crime rate.

The state also has relatively few highly-educated workers and relatively few working in science, technology, engineering, and math. A highly-educated workforce with many workers in STEM fields signifies a growing and innovative economy. Just 8.1% of Nevada adults have a graduate or professional degree, the second lowest share among states. Similarly, just 3% of jobs in the state are in STEM fields, also the second lowest share in the country.

Source: Thinkstock

29. New Jersey
> 1-yr. real GDP change: +0.7% (10th smallest growth)
> Avg. salary: $62,222 (5th highest)
> Adults w/ bachelor’s degree: 38.6 (tied — 4th highest)
> Patents issued: 51.5 (11th most)
> Working-age population chg. 2010-2020: +1.0% (4th smallest growth)

A high cost of living is a potential deterrent for any business as it translates to less disposable consumer income and high costs of doing business. And New Jersey is a particularly expensive state. Goods and services in in the state cost about 13% more than they do nationwide. Both commercial real estate and commercial electricity are more expensive in New Jersey than in the vast majority of states. In addition, the Tax Foundation ranks the state dead last for its business tax climate.

One of the state’s greatest assets, however, is its highly skilled workforce. Of adults in the state, 38.6% have at least a bachelor’s degree, and 14.9% have a graduate or professional degree — the fourth and seventh largest shares among states, respectively. Partially as a result, 5.6% of all jobs in Garden State are in STEM fields, a larger share than in all but 10 other states.

Source: Sean Pavone / iStock

30. Tennessee
> 1-yr. real GDP change: +2.9% (6th largest growth)
> Avg. salary: $46,961 (22nd lowest)
> Adults w/ bachelor’s degree: 26.1 (10th lowest)
> Patents issued: 15.2 (13th fewest)
> Working-age population chg. 2010-2020: +5.3% (15th smallest growth)

While Tennessee ranks below most states in business friendliness, the state’s low cost of living may be a boon to businesses in the area. Goods and services in the state cost 11.1% less than they do nationwide, the ninth lowest price parity of any state. Also, taxes paid by Tennessee residents amount to just 7.3% of income, the fourth lowest tax burden in the country.

Tennessee has also reported faster growth and more business activity than most states. The state’s real GDP grew 2.9% in 2016, nearly twice the national GDP growth rate of 1.5%. Some 36,000 new business permits were issued in the state that year, the 12th most of any state when adjusted for population. Tennessee is also one of just 11 states with a triple-A rating and stable outlook from both Moody’s and S&P, a sign of a stable economy.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.