Best and Worst States for Business

With a well-educated workforce and a high concentration of innovative startups, Massachusetts ranks as the best state for business. Of all adults 25 or older in the state, 44.5% have a bachelor’s degree or higher. Additionally, there were 660 venture capital deals in the state in 2018, or 9.6 for every 100,000 people, the highest rate of VC deals per capita of any state.

Massachusetts-based businesses and organizations were also granted over 7,600 patents in 2018, or 111.4 per 100,000 people, the most of any state and well above the national average rate of 49.5 patents per 100,000.

Four of the top five states for business are located west of the Mississippi River, and of them, Utah ranks the highest. Startup companies in the state are also drawing far more venture capital investment than those in most other states. Utah companies drew in nearly $1.2 billion in VC funding in 2018, equal to $369 per state resident, more per capita than all but four other states.

Colorado ranks just behind its neighbor, Utah, among the best states for business. As one of the top states, Colorado boasts a highly-educated workforce. Nearly 42% of adults in the state have a bachelor’s degree or higher, well above the 32.6% share of adults nationwide. There will also not likely be a shortage of labor in the state anytime soon. Over the next decade, the number of working-age state residents is projected to climb by 10.5%, more than double the comparable projected national growth rate of 4.6%.

Businesses in Washington likely benefit from lower costs of operation in some areas. For example, the average price of electricity in the state is 8 cents per kilowatt-hour, less than in all but two other states. The tax climate in the state is also more favorable to businesses than in most other states, according to analysis conducted by the Tax Foundation.

Washington’s economy expanded by 5.8% between 2017 and 2018, more than any other state economy in the country. The state’s tech sector likely was partially responsible for this growth. There were about 99 patents granted in the state for every 100,000 people in 2018, nearly double the comparable national rate of 50 per 100,000.

North Dakota ranks as the best state for business in the Midwest and fifth best nationwide. Businesses in the state benefit from reliable infrastructure. Just 7.8% of roads are in poor condition, well below the 21.8% share nationwide. Additionally, roadway congestion is less costly to the trucking industry in North Dakota than it is in all but a handful of other states.

According to the U.S. Chamber Institute for Legal Reform’s 2019 Lawsuit Climate Survey, businesses consider North Dakota’s liability systems to be one of the most favorable.