The best, and the worst, states for businesses in America today


USAIt could be argued that America is quickly becoming the most unfriendly nation in the world when it comes to her relationship with private business.  America currently has the highest corporate tax in the world,{1} and if we stay on course, with our current pace of federal regulations, we may eventually also be able to soar beyond our current ranking as the fourth most heavily regulated country in the world.{2}  Some are hoping for this.  Some perceive corporate America to be evil, and they believe that the further we move away from corporate America the better this country will be.  For others, jobs are the primary concern.  They want families to be able to feed their children, and with unemployment rates currently running as high as they are, and appearing to only be getting higher in the near future, they look for some kind of hope.  It’s out there, say some of the publications listed below, but it’s not at the federal level.

Individual states in our union are still, at this point in history, able to carve out their own niche to independently make themselves attractive to businesses.  They are able, as Michigan did in December 2012, to change their status from forced union to a right-to-work.  States are also able to provide lenient exceptions to state regulations on businesses, and they are allowed to provide tax breaks, and even put an end to state income taxes altogether.  The search for the perfect formula is always on in some states to make themselves the most attractive states in the union to businesses, but some believe that there is no perfect formula and that each state must attract various businesses on a case by case basis.

In 2012, three different organizations listed the best states to currently do business in, and while every state has unique characteristics to offer (such as natural resources), there are some qualities that remain nearly consistent in the states these three organizations listed as those most attractive to interested businesses.  Having a Republican Governor and a Republican majority in the State Legislature, for example, is the most consistent quality in those listed here, as Colorado is the only state on any of these lists to have a Democrat Governor and Democrat State Legislature.  And Colorado and Ohio are the only states that force unions upon potential employers, as the rest of the states listed are right-to-work.

The ChiefExexcutive.net. website lists the top ten most business friendly states in the following order:

  1. Texas
  2. Florida
  3. North Carolina
  4. Tennessee
  5. Indiana
  6. Virginia
  7. South Carolina
  8. Georgia
  9. Utah
  10. Arizona

In this particular list, all of these states are right-to-work, all of them have Republican legislatures, and they all have Republican Governors. {3}

The CNBC.com website lists the top ten most business friendly states in the following order:

  1. Texas
  2. Utah
  3. Virginia
  4. North Carolina
  5. North Dakota
  6. Nebraska*
  7. South Dakota
  8. Colorado*
  9. Georgia
  10. Wyoming.

*As stated above, all of these states are right-to-work states, all of them have Republican legislatures, and they all have Republican governors, except Colorado which is a forced union state, and that state has a Democrat Governor, and a Democrat legislature.{4}  Nebraska’s State Legislature, a unicameral, is officially listed as non-partisan, but it has thirty Republican representatives, seventeen Democrats, and two independents.
The siteselection.com website has the following list for top ten most business friendly states in order:

  1. North Carolina
  2. Ohio*
  3. Texas
  4. Georgia
  5. Virginia
  6. Alabama
  7. Louisiana
  8. Tennessee
  9. South Carolina
  10. Florida

*All of these states have a Republican Governor, a Republican State Legislature, and they are all right-to-work states with the exception of Ohio. {5}

Anyone that has worked in a right-to-work state, for any length of time, has heard the horror stories of being in a right-to-work state.  Most people want some form of security, and when somneone tells them that they can be fired for any reason at all, it sends a chill up their spine.  After revealing this scary threat, all listeners are supposed to exchange a harrowing look with one another.  Having lived in a right-to-work state my whole life, and worked in it for twenty-five years, I can tell you that I have never seen anyone get fired based on the fact that the boss simply didn’t like them, or that the boss had a bad day and arbitrarily decided to fire someone.  Right-to-work laws do not protect an employer from being sued for wrongful termination.  The law only means that you don’t have to join a union to get a job.  And if you live in a right-to-work state, and you believe these three separate and distinct organizations, you’re more like to have a job.  There are only twenty-four states in the union, and a majority of them are listed in at least one of these three lists. Two of the three organizations also listed those states that are the least attractive to businesses, or they listed these states at the bottom of their “best of” list, and the “worst of” could be implied.  The worst states are not as consistent in their qualities, as even some Republican states are not well run.  Having a Democrat Governor, a Democrat controlled Legislature, and laws on the state books that force unions on employers does not assure you of making a “worst of” list, in other words, but as you’ll see below it helps.

In another interesting note to support this theme, the USA Today had a study that found that “Personal income in 23 red states has risen 4.6% since the recession began in December 2007, after adjusting for inflation.  Income is up just 0.5% in 15 blue states and Washington, D.C., during that time.  In the dozen swing states identified by the USA TODAY that could vote either way Nov. 6, income has inched ahead 1.4% in 4 ½ years.”{9}

CNBC.com listed the top 10 worst states to do business in, and they are as follows:

  1. Rhode Island*
  2. Hawaii*
  3. West Virginia
  4. Alabama
  5. Mississippi
  6. Nevada*
  7. Colorado*
  8. Delaware*
  9. Louisiana
  10. New Jersey*

*Of these states, six force unions upon their businesses, four have Democrat governors with, arguably, the most liberal Governor in the union, Lincoln Chaffee of Rhode Island, listing himself as an independent, and eight of the ten have state legislatures that are dominated by a Democrat majority.{7}
ChiefExecutive.net lists the top 10 worst states to do business in, and they are as follows:

  1. California
  2. New York
  3. Illinois
  4. Massachusetts
  5. Michigan*
  6. New Jersey
  7. Connecticut
  8. Pennsylvania
  9. Oregon
  10. Hawaii

*Of the top 10 worst states for business, according to ChiefExecutive.net, only Michigan is a right-to-work state, but again we are forced to note that Michigan only became a right-to-work state on December 12, 2012.  Only Michigan, New Jersey and Pennsylvania have Republican governors, and only Michigan and Pennsylvania have Republican State Legislatures.{8}

As has been written throughout these paragraphs, some of the changes in these states may reflect recent elections, or a conversion in thought, but the overall paints the picture that for your state to be a business friendly state, you have to elect Republican governors, Republican legislators, and be a right-to-work state.

The website for 24/7 Wall Street compiled a list that was less concerned with the specifics of the business climate in a state and more concerned with the manner in which a state was run in their top 10 “Best Run” states list.  Their list weighed each state’s financial health based on factors including credit score and debt.  They also evaluated how a state uses its resources to provide its residents with high living standards, reviewing dimensions such as health insurance, employment rate, low crime and a good education.  They considered hundreds of data sets and chose what they considered to be the 10 most important measurements of financial and government management.

The results were as follows:

  1. Wyoming
  2. Nebraska
  3. North Dakota
  4. Minnesota*
  5. Iowa
  6. Utah
  7. Vermont*
  8. Virginia
  9. Kansas
  10. South Dakota

*Other than Minnesota and Vermont, the states that are run the best, according to 24/7 Wall Street, all have Republican Governors, Republican State Legislatures, and are right-to-work.  Iowa has a Republican Congress, but a two-seat Democrat majority in their Senate.

That seems to provide a reader fairly consistent barometer of which party, and which laws for employers, allow its state officials to run a state better, until we look at the 24/7 Wall Street list of the worst run states.  They are as follows:

  1. California
  2. Illinois
  3. Michigan*
  4. Arizona*
  5. Nevada
  6. South Carolina*
  7. Kentucky*
  8. Rhode Island
  9. Louisiana*
  10. New Mexico*

* In their list of the worst run states, it appears as though five of the ten states are right-to-work, have a Republican majority in the State Legislature, and six in the seat of Governor.  Kentucky has a Democrat Governor, a Democrat controlled House, a slim Republican majority and one Independent in the Senate.

Forbes Magazine’s best states for business are as follows:

  1. Utah
  2. Virginia
  3. North Dakota
  4. North Carolina
  5. Colorado*
  6. Nebraska
  7. Texas
  8. Georgia
  9. Oklahoma
  10. Iowa*

*As usual, all of the states in Forbes list contain predominantly Republican governors, other than Colorado, and Republican State Legislatures, other than Colorado and Iowa’s two-seat Democrat majority in the State’s Senate.

What do all these lists mean?  Well, Forbes ties all these lists up nicely by providing a “moving list” that quotes the moving company United Van Lines’ 36th annual study of customer migration patterns.  This study analyzes a total of 125,000 moves across the 48 continental states in 2012. The study provides an up-to-date, representative snapshot of overarching moving patterns in the U.S., and reveals a mass exodus from the Northeast.

This United Van Lines’ study includes the states that most people are moving out of:

  1. New Jersey*
  2. Illinois
  3. West Virginia
  4. New York
  5. New Mexico
  6. Michigan*
  7. Connecticut
  8. Maine
  9. Kentucky*
  10. Wisconsin.* {10}

*Michigan and Wisconsin are the only states on this list with Republican Legislatures and Republican Governors, with Kentucky’s split majority in the legislature and Democrat Governor.  New Mexico and New Jersey also have a Republican Governor.  Michigan is the only right-to-work state, but again it only became one on December 12, 2012

{1} http://money.cnn.com/2012/03/27/pf/taxes/corporate-taxes/index.htm {2}http://articles.economictimes.indiatimes.com/2011-01-27/news/28432561_1_survey-economic-risk-consultancy-bandwidth {3}http://chiefexecutive.net/best-worst-states-for-business-2012#sthash.XwES1dY1.dpuf {4} http://www.cnbc.com/id/100016697 {5}http://www.siteselection.com/issues/2012/nov/top-business-climates.cfm  (Site selection is a database for Conway Data New Plant Database {6} Best and Worst Run States in America — An Analysis Of All 50 – 24/7 Wall St. http://247wallst.com/2011/11/28/best-and-worst-run-states-in-america-an-analysis-of-all-50/#ixzz2MXeTOM8c {7} http://en.wikipedia.org/wiki/List_of_United_States_state_legislatures {8} http://en.wikipedia.org/wiki/List_of_current_United_States_governors {9}http://usatoday30.usatoday.com/news/nation/story/2012-09-26/red-blue-states-income-economy/57846600/1 {10}http://www.forbes.com/sites/jennagoudreau/2013/02/07/the-states-people-are-fleeing-in-2013/

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