We would like to introduce the Richardcyoung.com, Open for Business Index, a proprietary index ranking states based on their friendliness to business derived using ten factors:
- The state’s status as a Right to Work state
- The state’s tax burden
- The percentage of the state’s workforce that is unionized
- The state’s cost of living
- The state’s median income
- Government as a percentage of state GDP
- Education
- Infrastructure
- Tort reform
- And the health of the state’s citizenry
These factors are weighted and the states are ranked according to their performance. The Open for Business Index seeks to provide readers and entrepreneurs with a guide to the states that offer them the best chance for success.
The chart below is an entire list of the Open for Business Index rankings.
Click on the chart for a larger view.
Ten Worst States for Business:
#10 Minnesota: Open for Business Index Score- 66.35
Minnesota scored well for having a healthy, educated population. The Land of 10,000 Lakes also posted decent scores for infrastructure, and came in about average for tort reform. But that’s where the good news stops for Minnesota. The cost of living is high, government dominates the state’s economy and unions are powerful in this non-Right to Work state. The nail in the coffin is the state’s tax burden, which is one of the worst in the country.
#9 Maine: Open for Business Index Score- 65.45
Maine excelled in education and health, followed by average scores in infrastructure and tort law. But after that things get ugly. Maine had terrible scores for the size of government compared to its economy, cost of employees, cost of living, taxes, percentage of the workforce represented by unions and for a failure to protect employees with a Right to Work law.
#8 Hawaii: Open for Business Index Score- 64.9
Hawaii shined in three categories of our index, including government footprint as a percent of state GDP, the effects of tort law, and health of its citizens. For reasons that are not entirely comparable, Hawaii scored worst of all in costs of living. But it also scored poorly in education, infrastructure, union representation, and cost of employees—problems its government can work on. Worst of all, Hawaii does not afford its citizens the protection of a Right to Work law.
#7 Maryland: Open for Business Index Score- 62.8
What really tore down Maryland’s score was the cost of employing labor. Combined with high taxes, high cost of living, poor infrastructure, and education, Maryland’s business climate leaves something to be desired. The state scored near average in our categories for citizen health, and tort law. One bright spot for the state was government as a portion of the state’s economy. Maryland does not protect employees from forced unionization.
#6 California: Open for Business Index Score- 62.25
It seems given that California will rank near the bottom of any competitiveness index, but the Golden State escaped our bottom five by posting respectable numbers in infrastructure. California’s scores in health, government as a percent of GDP, and education were decent. California ranked near the bottom in percent of employees represented by unions, cost of living, tax burden, cost of employees, and tort law. California does not protect its citizens from forced unionization with a Right to Work law.
#5 Vermont: Open for Business Index Score- 60.1
Back in 1989 Greg Guma wrote his book, The People’s Republic: Vermont and the Sanders Revolution. In 2012 our Open for Business Index illustrates just what happens when a state abandons business owners with a bottom five ranking for Vermont. But let’s start with the good. Vermont has the nation’s healthiest citizens—after that our index gets ugly. Vermont scores below average in all other categories, and near the bottom in cost of living, tax burden and infrastructure.
#4 New York: Open for Business Index Score- 58.6
New York’s best categories were infrastructure and health, where it scored slightly better than average. The Empire State posted dismal scores for education and size of government, but even worse in the remaining categories. For tax burden, cost of living, cost of employing labor, and tort law New York scored near the bottom, and for percentage of employees represented by unions, New York scored at the very bottom.
#3 Connecticut: Open for Business Index Score- 58.6
Connecticut was tied with #4 New York as one of the worst states in the nation for business. Perhaps Connecticut’s lousy business climate is the reason billionaire hedge fund manager Eddie Lampert moved his firm, ESL Investments Inc. to Florida earlier this year from Greenwich (Ed Note: Florida is ranked 10th on our Open for Business Index). Connecticut scored terribly in almost every category, coming in near the bottom in taxes, percent of employees represented by unions, cost of living, cost of employing labor, size of government, infrastructure and tort law. The Nutmeg state also came in below average in education. The one standout for Connecticut was a near top rank for health among its citizens.
#2 New Jersey: Open for Business Index Score- 58.2
For all the improvement made in New Jersey during Gov. Chris Christie’s tenure, the state still has a long way to go to improve on our Open for Business Index. New Jersey scored dead last in not one, but two categories, tax burden and tort law. The Garden State came in near the bottom in cost of living, cost of employing labor, size of government, and percent of labor represented by unions. New Jersey came in well below average in education. Better categories for the state were infrastructure and health where it came in slightly above average.
#1 Rhode Island: Open for Business Index Score: 57.35
Rhode Island came in dead last on our Open for Business Index. The Ocean State scored well for the health of its citizens, but posted lousy scores for every other component. Rhode Island scored second-to-last for infrastructure, and third-to-last in tax burden. The state scored well below average on the percent of employees represented by unions, cost of living, the cost of employing labor, size of government, education, and tort law. Rhode Islanders are not protected from forced unionization.
Ten Best States for Business:
#10 Florida: Open for Business Index Score- 82.5
Florida made high marks with a low tax burden, great infrastructure and low unionization. As a Right to Work state, Florida’s employees are protected from forced unionization. Grades for cost of living, income and health were average, while the state could use improvement in government as a percentage of the state’s GDP, education and tort reform.
#9 Kansas: Open for Business Index Score- 82.85
Kansas scored well for being a Right to Work state, having a low cost of living, a well educated population and ranked well in tort law reform. State government doesn’t play a disproportionate role in Kansas. The state scored near the averages for tax burden, unions as a percent of the population, incomes, and health. Overall Kansas is friendly to new business.
#8 Mississippi: Open for Business Index Score- 82.95
Mississippi excelled in costs for employing workers, having a small government footprint, low percentage of the workforce represented by unions, protecting employees with a Right to Work law. Average scores were recorded for Mississippi in tax burden, cost of living, education and tort law. Infrastructure in Mississippi could use some improvement, and the state’s worst category is health, where it scored dead last.
#7 Idaho: Open for Business Index Score- 84.05
Idaho scored near the top for cost of hiring employees, and put up excellent scores in tort law, cost of living, and percentage of the workplace represented by unions. Idaho also protects employees from forced unionization with a Right to Work law. The state turned in average scores for health, education, government footprint, and tax burden. One area ripe for improvement in Idaho is infrastructure, where the state scored low.
#6 Wyoming: Open for Business Index Score- 84.35
A state’s tax burden is one of the most important parts of the Open for Business Index. Wyoming scored best of all in that category, and the state scored very well in government as a percent of GDP, education and protections for employees with a Right to Work law. Average numbers in percentage of labor represented by unions, health, and tort law also made Wyoming desirable for business. The state’s businesses face headwinds in cost of living, costs of employees, and infrastructure.
#5 Virginia: Open for Business Index Score- 84.4
Virginia is the first member of our elite five states. The Old Dominion has achieved a strong position in a number of our grading categories. Virginia is ranked near the best in the size of government, percentage of the workforce represented by unions, infrastructure and tort law. Virginia also protects its citizens from forced unionization with a Right to Work law. Virginia scores around average in health, education, cost of living and tax burden. Virginia’s worst score came in the cost of employing labor.
#4 South Dakota: Open for Business Index Score: 85.85
South Dakota is the second of the elite top five states on our Open for Business Index. Vaulting The Mount Rushmore State to number four on our list are its low tax burden, and tort law, low percentage of its workforce represented by unions, good education and the protection of employees from forced unionization with a Right to Work law. South Dakota posted average scores for health, cost of employing labor, cost of living, and size of government. One area that could use improvement in South Dakota is the state’s infrastructure.
#3 Texas: Open for Business Index Score- 87.05
Texas is the third state on our Open for Business Index. The top three states scored within 0.4 points of one another, so close they are approximately tied. Rocketing the Lone Star State to the top ranks on our index was the state’s best-in-the-nation score in infrastructure, and near top scores for its tax burden, percent of union representation, and cost of living. Better than average scores for tort law and cost of employing labor also served to boost Texas. The state scored near average for government as a percent of the state’s economy. The state needs improvement in health and education, where it scored near the bottom.
#2 Utah: Open for Business Index Score- 87.1
Utah scored near the top for health and cost of employing labor, while scoring among the leaders in tax burden, percent of employees represented by unions, cost of living, tort law, size of government, and education. Utah’s worst component was infrastructure, where it came in slightly lower than average. The Beehive State is a model for what is right for attracting business. Gov. Gary Herbert recently said “Utah’s economy is growing twice as fast as the national economy, proving yet again that when government gets out of the way and simply facilitates economic growth, the private sector thrives.”
#1 Tennessee: Open for Business Index Score- 87.45
The number one state for business is Tennessee, driven by best in the nation cost of living scores, impeccable infrastructure, low union representation, a low tax burden, a low cost of employing labor and strong scores in education. The volunteer state scored slightly better than average in tort law. Tennessee could use improvement in health and government as a percent of the economy. Tennessee protects its citizens from forced unionization with a Right to Work law.
