Industry Research

OUTLOOK: Best And Worst States For Doing Business

Michael Campos
Posted on August 15, 2011

In May 2011, Chief Executive Magazine published its 7th annual report on the best and worst states for business, which surveyed 550 CEOs and considered criteria related to taxation and regulation, workforce quality, and living environment. Also considered were each state’s GDP growth (or decline) from 2005 to 2009 and unemployment rates as of November 2010.

The report says that “while state incentives are always welcome, what CEOs often seek are areas with consistent policies and regulations that allow them to plan, as well as intangible factors such as a state’s overall attitude toward business and the work ethic of its population.” With that in mind, the results are hardly surprising, as states with venomous taxes and regulations — common business killers — were ranked lowest, and vice versa.

Texas, which experienced 16.56% growth in GDP from 2005-2009 and 20.6% population growth from 2000-2010, ranked at the top of the list thanks to low taxes and high labor market flexibility, which Brian Domitrovic, assistant professor of history at Sam Houston State University, says is a “key element in business creation.”  At the bottom of the list sit incumbents New York (No. 49 ranking) and California (No. 50 ranking), two states whose overbearing governments have strangled the economic growth of these once-golden empires.

However, the boom in Texas that has attracted job seekers over the years threatens to overwhelm its rate of job creation. It also faces a $27 billion shortfall in its 2011-2012 budget that may force cuts in areas where Texas needs to invest, such as education and infrastructure.

RANKING CRITERIA


Taxation and Regulations:

  • State income tax and corporate tax rates
  • Perceived attitude of government to business
  • Degree of employment compliance regulations
  • Degree of environmental compliance regulations
  • Tax incentives for locating in this state

Workforce Quality:

  • Cooperative employee-management relationship
  • Employee work ethic
  • General education level of workforce
  • Competitiveness of wage rates
  • Availability of workforce with specialized experience/education

Living Environment:

  • Crime rate
  • Quality of public education
  • Public health and hospitals
  • Real estate costs
  • Transportation access
  • Arts & cultural institutions

10 Best States For Business (Source: Chief Executive Magazine)

Rank State 2010 Rank Tax and Regulation Score (out of 10) Workforce Quality Score (out of 10) Living Environment Score (out of 10) GDP % Growth 2005-2009
1 Texas 1 8.44 8.05 8 16.56
2 N. Carolina 2 6.89 7.66 8.53 14.25
3 Florida 6 7.07 6.5 7.78 10
4 Tennessee 3 7.78 7.48 8.03 9.26
5 Georgia 7 6.65 7.15 7.73 9.92
6 Indiana 16 7.26 7.59 7.04 12.79
7 Virginia 4 6.86 7.98 8.22 16.4
8 S. Carolina 10 7.14 6.69 7.69 15.17
9 Utah 9 7.17 8.02 7.81 26.72
10 Nevada 5 7.43 6.34 6.21 12.53

 

10 WorstStates For Business (Source: Chief Executive Magazine)

Rank State 2010 Rank Tax And Regulation Score (out of 10) Workforce Quality Score (out of 10) Living Environment Score (out of 10) GDP % Growth 2005-2009
41 Ohio 43 4 6.45 5.97 7.39
42 W. Virginia 34 3.21 3.16 3.39 19.67
43 Hawaii 42 2.57 4 8.43 21.09
44 Connecticut 44 2.85 6.6 6.13 19.37
45 Massachusetts 46 2.44 6.52 5.56 15.05
46 Michigan 48 3.13 5.06 4.43 -0.97
47 New Jersey 47 2.48 5.3 4.4 13.52
48 Illinois 45 2.07 5.56 4.93 14.01
49 New York 49 1.8 5.74 4.6 14.31
50 California 50 1.6 5.81 6.5 16.13

 

 


 

5-Year Biggest Gains

  • Oklahoma: 2011 Rank: 11; 2006 Rank: 31; Change: 20
  • Louisiana: 2011 Rank: 27; 2006 Rank: 46; Change: 19
  • Missouri: 2011 Rank: 23; 2006 Rank: 41; Change: 18
  • Wyoming: 2011 Rank: 14; 2006 Rank: 30; Change: 16
  • Kentucky: 2011 Rank: 17; 2006 Rank: 33; Change: 16

 

 


 

5-Year Biggest Losses

Illinois: 2011 Rank: 48; 2006 Rank: 8; Change: -40

Ohio: 2011 Rank: 41; 2006 Rank: 22; Change: -19

Washington: 2011 Rank: 34; 2006 Rank: 16; Change: -18

Maryland: 2011 Rank: 37; 2006 Rank: 21; Change: -16

Pennsylvania: 2011 Rank: 39; 2006 Rank: 27; Change: -12

 

 

Related Topics: business trends, research and trends, state regulations, taxes

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