2013 Best & Worst States for Business State Rankings

Chief Executive ^ | 05/16/2013

[SeekAndFind]

In its ninth annual survey of CEO opinion about the best and worst states in which to do business, 736 CEOs—the highest response on record—rendered their verdict. Business leaders were asked to grade states with which they are familiar on a variety of competitive metrics that CEOs themselves regard as critical. These include: 1) taxation and regulation; 2) quality of workforce; and 3) living environment. The tax and regulatory grade includes a measure of how CEOs grade a state’s attitude toward business, a key indicator.

In the minds of most leaders, a state’s friendliness is closely aligned with its tax and regulatory regime. Similarly, workforce quality also measures the perceived cooperativeness of workers with management, as well as the people’s general work ethic and education attainment. The living environment metric measures the perceived quality of education and public health facilities, as well as the affordability and quality of real estate, the transportation system and related environmental factors.

For the ninth consecutive year, the Lone Star state continues to rank first, with the Golden State continuing to rank dead last. Florida, North Carolina, Tennessee and Indiana place second through fifth respectively—unchanged from last year’s ranking—while Arizona elbows its way into sixth place, up from 10th place in 2012. Virginia and South Carolina follow, with Nevada moving into a solid ninth place up from 12th in 2012. The most dramatic ranking change was scored by Ohio, which moved up 13 places, and by Delaware, which dropped 13 places. Louisiana, Wisconsin, Kansas, Montana and Minnesota also advanced in the rankings since 2012.

Simply put, “a good state is one that understands the private sector pays for the public sector and makes it easy for the private sector to conduct business and grow,”remarks David N. Willis, CEO of CRW Parts, a Baltimore wholesale distribution firm. “California, New York and Illinois have high costs of living, high taxes and high regulation,” says Mark Larsen, CEO of Maxxcap Group, a mid-size financial services firm. Additionally, each of these states makes it difficult, and often worse, than other places to do business. By contrast, “states like Texas and Ohio are consistently trying to help us grow our business and are listening to the leaders of companies to help solve problems,” says Toledo-based Impact Products CEO Terry Neal.

More and more states are getting the pro-growth message. Wisconsin governor Scott Walker’s position is typical of this new thinking. “I’ve never seen a store get more customers by raising its prices, but I’ve seen customers knock down doors when they cut prices,” he says. News that Michigan became the nation’s 24th right-to-work (RTW) state sent a message and a warning to other states. [See "Is Right to Work the Right Move?"] When neighboring Indiana became a RTW state, Caterpillar announced that it would move its London, Ontario plant to Muncie.

The federal government may be a tax reform wasteland but the states are out there competing with gloves off. Nine states, including top-ranked places like Texas, Florida and Tennessee have no income tax. Oklahoma and Kansas have lowered theirs. Indiana Governor Mike Pence has called for a 10 percent cut. The governors of New Mexico, Nebraska and North Carolina have prioritized tax reform. Then there’s Louisiana’s Bobby Jindal, who wants to eliminate his state’s corporate tax and replace it by raising the state’s current 4 percent sales tax. Louisiana has come a long way since 2006 when it ranked 47th.

“A lot of states are making strides in moving towards more favorable business climates,” offers Stephen Maher, principal of RMA, an architecture firm with offices in Brookline, Massachusetts and Mumbai. “Louisiana has made strong strides in this direction and is still pushing. Texas has been there for years…others are being left behind.”

CEOs are well disposed to Texas, and it’s not hard to understand why. Fifty-two Fortune 500 companies now call Texas home. Fifteen Texas companies went public in 2011, making the state the hottest IPO market in the nation. Austin has become one of the fastest growing tech hubs. (The A5 chips in Apple’s iPhones and iPads are made in Austin.) Young programmers and engineers can actually afford to live well in Austin, where the housing cost index is 300 percent lower than in San Francisco. Texas job creation has outpaced the national average, too. Writing in Investors Business Daily, Wendell Cox commented that, “the number of jobs in Texas has grown by a truly impressive 31.5 percent since 1995, compared with just 12 percent nationwide, according to BLS data. Texas lapped California, an important economic rival and the only state with a larger population.” In addition, Texas jobs pay well and employees there fared better than the rest of the U.S. from 2002 to 2011, according BLS data. Adjusted for cost of living, Texas’ per capita income is higher than California’s and nearly as high as New York’s, observes Cox, who is principal of Demographia, a consultancy.

[SeekAndFind]

2013 Best & Worst States for Business State Rankings

Table is sortable

2013 Rank	State	2012 Rank	1 Year Change
1	Texas	1	0
2	Florida	2	0
3	North Carolina	3	0
4	Tennessee	4	0
5	Indiana	5	0
6	Arizona	10	4
7	Virginia	6	-1
8	South Carolina	7	-1
9	Nevada	12	3
10	Georgia	8	-2
11	Louisiana	13	2
12	Utah	9	-3
13	Colorado	11	-2
14	Oklahoma	17	3
15	North Dakota	15	0
16	Alabama	21	5
17	Wisconsin	20	3
18	South Dakota	19	1
19	Kansas	23	4
20	Wyoming	16	-4
21	Idaho	18	-3
22	Ohio	35	13
23	Iowa	22	-1
24	Montana	28	4
25	Nebraska	27	2
26	New Hampshire	26	0
27	Delaware	14	-13
28	Arkansas	29	1
29	Kentucky	25	-4
30	Minnesota	36	6
31	Missouri	24	-7
32	New Mexico	33	1
33	Alaska	31	-2
34	West Virginia	34	0
35	Maine	32	-3
36	Washington	37	1
37	Rhode Island	39	2
38	Mississippi	30	-8
39	Vermont	38	-1
40	Oregon	42	2
41	Maryland	40	-1
42	Pennsylvania	43	1
43	Hawaii	41	-2
44	Michigan	46	2
45	Connecticut	44	-1
46	New Jersey	45	-1
47	Massachusetts	47	0
48	Illinois	48	0
49	New York	49	0
50	California	50	0

[who knows what evil?]

Go Tennessee! (The northeast really took it in the shorts, eh?)

[fwdude]

Leftism always loses.

[PeaRidge]

The South shall rise again.

[econjack]

If there is any politician who still thinks a state taxes, both income and property, don’t have an impact on the economic health of a state needs to look at these numbers pretty hard.

[pogo101]

California has been #50 for as far back as I can find records (at least 2008). Way to go, California!

[txrefugee]

Why should politicians from the bottom dozen have any clout? They obviously have no background in economics.

[Fledermaus]

Shhhhhhhhhh, we don’t need more lefties fleeing and coming here.

[C19fan]

What happened to Delaware. It dropped 13 places from 14th best to 27th best. Looks like Kaisch is turning around Ohio as it increased by 13 places.

[uncommonsense]

11 Louisiana is ahead of 14 Oklahoma...? That's surprising.

I greatly enjoyed my 5 years rebuilding a company in LA (except for Kartina and Rita), but... New Orleans, public schools, and a LONG history of corruption - still needs work. It's WAY better after Katrina and the possibility is very significant, but it needs time to incubate.

Something interesting - a group of Baton Rouge leaders spent a lot of time traveling to Austin to learn how Austin created such a successful formula of growing business while creating an exciting magnet for talent.

[Pharmboy]

Wait just a guldurn minute here...I have seen commercials on TV here in Maryland saying that New York is a GREAT state for business. There must be some mistake at being listed as 49 out of 50.../sarcasm

[7thson]

Has anyone seen the New York commercials stating they are now a great place to do business, the taxes are great, it is Nirvana, etc. Makes you want to barf. The new Buffalo my arse. I wonder if any states have Maryland commercials. I can see them now - come to Maryland. Our citizens are leaving in droves and we need money!

[Hojczyk]

Warren Buffet is in one of the NEW YORK adds...about moving to Buffalo...I got out in 1980....it will never change now...The smart ones
Left....Wall Street supports the state when it goes there done

[uncommonsense]

And one more comment from The Lone Star State - wa, wa wa:

1 Texas

...

46 New Jersey
47 Massachusetts
48 Illinois
49 New York
50 California

If you live in the bottom tier states - just remember - Texas is hot, dry, dusty, full of rattle snakes, polluted, most men have no front teeth and are named Bubba, women have a girth greater than their height, terrible schools filled with ignorant gun clingin' Bible thumpin' racists, no health care, and a narrow industry base. It's best if you stay in your liberal utopia.

[Kenton]

Wha-wha-wha-what? The “New New York” is second from last? But I thought they had gone business-friendly. Or that’s the silly story they’re spending mega-bucks pushing on TV...

[central_va]

I guess those Michigan commercials are just propaganda. /sarc

[Atlas Sneezed]

Young programmers and engineers can actually afford to live well in Austin, where the housing cost index is 300 percent lower than in San Francisco.

---

300% lower? WTF does that mean?

[Joan Kerrey]

California has been #50 for as far back as I can find records

The California legislature thinks the biggest number in any contest is the goal. They gloat at having the highest number, proof of a great achievement

[latina4dubya]

Ping

[Gay State Conservative]

Massachusetts #47 out of 57...pretty close to the bottom.