Special Report

Best and Worst States for Business

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16. Minnesota
> 1-yr. real GDP change: +2.6% (16th best)
> Avg. earnings per job: $61,415 (16th highest)
> Adults with a bachelor’s degree: 36.7% (10th highest)
> 2018 venture capital deals: 2.2 per 100,000 people (14th most)

Minnesota ranks in our index as one of the states where workers are the most likely to be healthy and happy. The state ranks seventh overall in United Health Foundation’s health rankings in 2019, which is likely related to the high health insurance coverage in the state. Just 4.4% of state residents lack health insurance, the fifth smallest share among states and less than half the national share of 8.9%.

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17. South Dakota
> 1-yr. real GDP change: +1.9% (13th worst)
> Avg. earnings per job: $50,991 (12th lowest)
> Adults with a bachelor’s degree: 29.2% (17th lowest)
> 2018 venture capital deals: 0.3 per 100,000 people (5th fewest)

Businesses and workers alike in South Dakota benefit from the state’s low cost of living. Goods and services in the state are about 12% less expensive than they are nationwide, on average.

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18. Texas
> 1-yr. real GDP change: +4.0% (5th best)
> Avg. earnings per job: $61,875 (12th highest)
> Adults with a bachelor’s degree: 30.3% (24th lowest)
> 2018 venture capital deals: 1.5 per 100,000 people (20th most)

The business climate in Texas ranks better than that of most states due largely to pro-business regulations. A so-called right-to-work state, Texas has a lower union membership rate than all but three other states. Additionally, the Texas tax code is more business friendly than that of most other states, according to the Tax Foundation.

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19. Montana
> 1-yr. real GDP change: +2.6% (15th best)
> Avg. earnings per job: $46,321 (2nd lowest)
> Adults with a bachelor’s degree: 31.7% (23rd highest)
> 2018 venture capital deals: 1.1 per 100,000 people (22nd fewest)

According to the Tax Foundation’s 2020 State Business Tax Climate Index, Montana has the fifth most favorable tax climate for businesses. The state also ranks relatively well in categories like infrastructure and quality of life. However, the state ranks below average in some measures of technology and innovation, with relatively little venture capital investment in the state, even after adjusting for the state’s small population.

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20. Florida
> 1-yr. real GDP change: +3.2% (11th best)
> Avg. earnings per job: $50,879 (10th lowest)
> Adults with a bachelor’s degree: 30.4% (25th lowest)
> 2018 venture capital deals: 1.1 per 100,000 people (19th fewest)

According to the Tax Foundation, Florida has one of the most business friendly tax policies of any state. Employers also benefit from having more control over their workforce. Florida is a right-to-work state, and just 5.6% of the labor force belongs to unions, well below the comparable national share of 10.6%.

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