Special Report

The Best (and Worst) States for Business

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36. South Carolina
> 1-yr. real GDP change: +1.8% (16th largest growth)
> Avg. salary: $44,134 (12th lowest)
> Adults w/ bachelor’s degree: 27.2% (tied — 13th lowest)
> Patents issued/100,000 people: 19.1 (18th fewest)
> Working-age population chg. 2020-2030: +7.1% (17th largest growth)

Businesses operating in states with a higher quality of life are more likely to be able to attract new employees. South Carolina rates as one of the worst states in quality of life, ranking among the worst states in measures such as the presence of arts, entertainment, and recreation facilities and the presence of violent crime. That the state is a less attractive place to live might help explain why it also has a relatively small share of professionals. South Carolina has a below average share of adults with bachelor’s degrees and adults with graduate and professional degrees.

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37. Arkansas
> 1-yr. real GDP change: +0.9% (13th smallest growth)
> Avg. salary: $42,157 (6th lowest)
> Adults w/ bachelor’s degree: 22.4% (3rd lowest)
> Patents issued/100,000 people: 7.8 (4th fewest)
> Working-age population chg. 2020-2030: +4.3% (14th smallest growth)

Businesses in a state with a high poverty rate can find it harder to turn a profit as consumers are less likely to have disposable income to spend on goods and services. In Arkansas, 17.2% of the population lives below the poverty line, the sixth highest poverty rate in the country. Also, the state’s median household income of $44,334 a year is the third lowest among states.

In addition, Arkansas has one of the highest violent crime rates of any state, at 550 incidents per 100,000 people, compared to a national violent crime rate of 386 incidents per 100,000. Local violent crime can drive away business, and areas with a reputation for crime are less likely to attract potential employees.

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38. Oklahoma
> 1-yr. real GDP change: -4.1% (3rd largest decrease)
> Avg. salary: $44,781 (14th lowest)
> Adults w/ bachelor’s degree: 25.2 (8th lowest)
> Patents issued: 13.6 (9th fewest)
> Working-age population chg. 2010-2020: +7.8% (15th largest growth)

A high violent crime rate can discourage businesses from relocating to an area. In Oklahoma, there were 450 violent crimes for every 100,000 residents in 2016, more than in the majority of states and well above the U.S. violent crime rate of 386 per 100,000. Due to a range of socioeconomic factors, Oklahoma’s economy is struggling. The state’s GDP contracted by 4.1% between 2015 and 2016, nearly the largest decline of any state.

Employers in the state may also struggle to find enough skilled workers. Only 25.2% of adults have a bachelor’s degree, a smaller share than in the vast majority of states.

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39. Maine
> 1-yr. real GDP change: +1.6% (19th largest growth)
> Avg. salary: $43,843 (8th lowest)
> Adults w/ bachelor’s degree: 30.1 (25th highest)
> Patents issued: 15.1 (12th fewest)
> Working-age population chg. 2010-2020: -6.1% (2nd largest decrease)

A focus on technology and innovation can benefit the economy as a whole and contribute to a friendly business environment, but Maine ranks among the worst in this category. Just 201 of the 140,969 patents issued by the U.S. Patent and Trademark Office in 2015 went to state enterprises. Also, there are relatively few venture capital deals in the state, and their average size is relatively small.

Maine’s is unfavorable also in some measures of infrastructure. The state has a low concentration of airports relative to its size. This can make transportation of goods, as well as businesses-related trips, more difficult.

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40. Pennsylvania
> 1-yr. real GDP change: +0.6% (9th smallest growth)
> Avg. salary: $51,323 (18th highest)
> Adults w/ bachelor’s degree: 30.8 (22nd highest)
> Patents issued: 29.9 (24th fewest)
> Working-age population chg. 2010-2020: -0.1% (13th largest decrease)

In the 2015 American Survey of Entrepreneurs, Pennsylvania businesses were among the most likely to report a negative impact on their business from unpredictable conditions, late or non paying customers, and slow business or lost sales. State businesses are also among the most likely in the country to suffer from lost business due to problems with transportation infrastructure. A higher than average 20% of the state’s bridges are structurally deficient or obsolete, and an above average share of roadways are in poor condition. Such poor conditions can cause delays in the shipment of goods in state.