Best and Worst Run States in America: A Survey of All 50
Detailed Findings & Methodology
Many of the metrics that can be used to assess how well a state is run influence others. For example, many of the states that rank well on this list, one way or another, have been able to draw in new residents. New residents, in turn, bring in new money and new demand for goods and services, which can stimulate economic growth. Nine of the 10 states with the fastest population growth attributable solely to migration reported GDP growth at least as high as the 2.2% national GDP growth rate in 2017.
Drawing in new residents and new workers can also boost tax revenue and help meet budgetary obligations, like public pension funding. Of the same 10 rapidly growing states by population, seven have better than average funding for their pension obligations.
Some states are using economic incentives to bring people in. Maine, for example, has one of the oldest populations in the country. Currently, the state is offering tax credits to recent college graduates in order to draw in younger workers to support retirement-age residents.
A strong job market is another hallmark of well-run states. Having sufficient employment opportunities for those seeking them can have wide-reaching positive effects, including boosting financial prosperity and economic growth, and gaining the ability to draw new residents seeking work into the state. Of the 10 highest ranking states on this list, Washington is the only one with a higher 2017 unemployment rate than the 4.4% rate national that year.
Many of the states ranking near the bottom of the list are heavily dependent on their energy industry. Resource-rich, petroleum-producing states like Alaska, Louisiana, and Oklahoma rank among the 10 worst states, partially due to the continued effects of the global collapse in oil prices in 2014.
However, not every state that relies heavily on oil ranks poorly. Texas, for example, by far the largest petroleum-producing state, ranks on the better half of this list, with a growing population, a relatively well-funded state pension system, and relatively little debt.
To determine how well each state is run, 24/7 Wall St. constructed an index of 20 measures of state finances, economy, job market, social-economic measures, and more from a variety of sources. From the U.S. Census Bureau, we looked at net migration to a state from July 2016 to July 2017 as a percentage of the 2016 population. We reviewed each state’s finances for the 2016 fiscal year, including revenue, per capita tax collection, expenditure, and debt levels, all from the Census. Also from the Census, we reviewed the per capita value of a state’s exports.
Additionally, we considered pension funding ratios for each state from the Pew Charitable Trusts, as well as each state’s rainy day fund balance as a percentage of total general fund expenditures estimated for fiscal 2018 from The National Association of State Budget Officers. NASBO defines rainy day funds as “budget stabilization funds set aside to respond to unforeseen circumstances.” From credit rating agency Moody’s Investors Service, we considered government general obligation ratings — they are the most recent as of this writing.
From the U.S. Census Bureau’s 2017 American Community Survey we also considered a range of socio-economic factors to assess social outcomes and residents’ well-being. We looked at poverty, high school educational attainment, the percentage of adults without health insurance, median household income, and 1- and 5-year changes in median home value. Violent crime rates came from the FBI’s 2017 Uniform Crime Report. Annual foreclosure rates, measured as the number of housing units at some stage of the foreclosure process, were provided by housing market data tracker Attom Data Solutions and are for 2017.
To evaluate each state’s job market, we reviewed annual 2017 unemployment rates as well as jobless rates as of October 2018 from the Bureau of Labor Statistics. Additionally, we reviewed the change in a state’s labor force from 2013 to 2017. For each state’s unemployment insurance benefits system we also considered average weekly benefit amounts and as a percentage of the average weekly wage, the percentage of UI claimants exhausting their benefits before finding a job, the average duration in weeks of insurance benefits, and the percentage of unemployed individuals receiving UI benefits from the Department of Labor’s Employment and Training Administration as of the twelve months ending Q1 2018.
Lastly, to assess the strength of each state’s economy, we reviewed real GDP growth rates and per capita real GDP for 2017 from the Bureau of Economic Analysis. Also from the BEA, we considered 2016 regional price parity, a proxy for an area’s cost of living.