(Newswire.net — September 22, 2021) –The pandemic brought with it unprecedented challenges. Nevertheless, Virginia was able to navigate those challenges and emerge as the best US state for business, according to CNBC’s America’s Top State for Business 2021 survey. CNBC graded all 50 states according to 85 metrics in 10 categories to determine their level of competitiveness. Each category is weighted according to the frequency with which states use that category as a selling point in their marketing materials. In other words, the study grades state according to how they perceive and sell themselves. CNBC developed its criteria and metrics after consultation with a number of policy and business experts and states. The study is not by any stretch of the imagination a survey. The data used to come up with the conclusions is derived from publicly available sources. CNBC’s methodology seems very correct because it essentially allows states to rank themselves.
Virginia’s Success
Virginia has emerged as the top state to do business on five occasions since CNBC first started measuring state competitiveness in 2007. Virginia was first in 2019 and defended its title in 2021. CNBC did not measure state competitiveness in 2020. It is the first state to successfully defend the top spot. According to CNBC, Virginia thrives on nurturing and retaining talent through its network of public schools and world-class higher education facilities. The data shows that Virginia’s population is among the most educated in America. 39% of its workers hold a bachelor’s degree or higher. The US Bureau of Labor Statistics says that Virginia has the third densest concentration of science, technology, engineering, and mathematics workers.
The report cites the Port of Virginia as a major contributor to the state’s success. In May 2021, the port recorded an all-time traffic record. Virginia has invested heavily into the development of the port, with $1.5 billion set aside for a 10-year expansion that the port is right in the middle of. Each state is graded according to 10 categories. A perfect score gives a state 2,500 points. Virginia scored 1,587 points.
The 10 categories are access to capital; business friendliness; the cost of doing business; the cost of living; economy; education; infrastructure; life, health, and inclusion; technology and innovation; and workforce.
The Top 20 States
According to the study, the top 20 states were:
- Virginia
- North Carolina
- Utah
- Texas
- Tennessee
- Georgia
- Minnesota
- Colorado
- Washington
- Ohio
- Michigan
- Maryland
- Nebraska
- Massachusetts
- Illinois
- Idaho
- Florida
- North Dakota
- Indiana
- Iowa
Alaska is the worst place to do business in 2021. Maryland improved the most, rising 31 places from where it was in 2019, finishing 12th.
It’s not surprising that Gov. Northam has hailed Virginia’s success, calling it a “testament” to its workers, its education system, its diversity commitments, and its strong business climate.
Virginia has invested in connectivity, raised teacher pay, broadened access to early childhood education, and community college, and shifted even further toward green energy. Gov. Northam believes that doing the right things in terms of the social good has proved profitable for the state. For him, continuing on that path will be rewarded. He was very keen to stress that the social good is not opposed to the economic and business goals of the state.
This study is especially important because it is in many ways a verdict on the performance of states during the pandemic and a statement about what states are likely to do well in the pandemic; aftermath. Virginia enjoys the talent density that companies crave, has the inclusiveness which is so essential for innovation and thriving across multiple markets, and has made the right infrastructure bets.
The battle between states for investment and jobs is intense. The pandemic only made the competition even more intense and took on new dimensions. For instance, with the emergence of remote work, there has emerged a dislocation between work and where workers live. Attracting business is no longer the same as creating jobs.
CNBC’s methodology is designed to be adaptable to even the most seismic changes and has done a splendid job. During the pandemic, most states touted their low cost of doing business, and this became the most heavily weighted category. This shows how business changed as a result of the pandemic. In previous years, the Workforce was the most widely cited advantage. With economic uncertainty, businesses were keen to reduce their costs of doing business. Access to capital was another category that was heavily weighted. This makes sense given the number of business closures and disruptions to revenue streams.
Businesses needed to find ways to access capital in order to survive. One of the great themes of the pandemic has been the shift to digital and the importance of infrastructure. It’s no surprise then that infrastructure was another heavily weighted category.
Health Care and Inclusiveness Are More Important Than Ever
2021 was a very important year for the study, given the enormous stresses put on its methodology. In order to be as accurate as possible, CNBC made the study even more rigorous, putting states through 85 metrics across all 10 categories.
One insight derived from this study is the importance of health care to how states market themselves and see their competitive advantages. In the aftermath of the Black Lives Matter protests and the emerging consensus around diversity and inclusiveness, many corporations and workers have pushed states to do more to improve the racial climate and social justice. States have responded to varying degrees. CNBC captured this through their Quality of Life category.
Life, Health and Inclusion, another new category, look at traditional measures of life such as health care, crime rates, and environmental quality. CNBC placed even greater emphasis on health care resources and how well states performed in their fight against Covid-19. CNBC looked at the Covid-19, to assess their competitiveness in terms of the fight against Covid-19. Equity and inclusion, although not part of this category, was important throughout the study.
As we have argued throughout this website, finding the right state to do business is important not just for tax and legal purposes, but also in terms of ensuring the long-term health not only of the business but of its workers.
Pages created by states new category, Life, Health and Inclusion, still looks at the traditional quality of life measures like crime rates, health care, and environmental quality. Now, we also look more closely at healthcare resources and the states’ progress in ending the pandemic. In addition to the state economic development websites, we review annually to weigh the categories, this year we reviewed special Covid-19 resource pages that many states established. We also pay greater attention than ever to equity and inclusion — not only in this category but throughout the study.
CNBC’s Top States for Business is not an opinion survey. We gather empirical data on the states’ performance in each metric, using the most recent figures available. Data specifically related to the coronavirus covers the period through May 2021. In addition to their point totals, states receive a letter grade in each category to measure their performance relative to the competition. Grading is scaled, with the high score equal to 100% and the low score equal to 50%. However, each state’s overall ranking, as well as its ranking within each category, is based solely on the number of points scored. Here are this year’s categories and weightings, and an explanation of each:
Cost of Doing Business (400 points – 16%)
At a time of unprecedented economic uncertainty, the cost has returned to the forefront of competitiveness. We measure the strength of each state’s business tax climate, as well as tax burdens for various types of businesses and facilities. We also measure wage and utility costs, as well as the cost of office and industrial space. And we consider incentives and tax breaks that states offer to reduce business costs, with special emphasis on incentives targeted toward development in disadvantaged communities.
Infrastructure (375 points – 15%)
The pandemic has sparked a worldwide re-evaluation of supply chains, as well as where and how we work and travel. We measure the vitality of each state’s transportation system by the value and volume of goods shipped by air, waterways, roads, and rail. We look at the condition of highways and bridges, and the availability of air travel. We consider access to markets by measuring the population within 500 miles of each state. With the rise of remote work, we consider the quality, availability, and price of broadband service in each state. We rate each state’s utility infrastructure, including the condition of drinking water and wastewater systems, and the reliability of the electrical grid. We measure each state’s sustainability in the face of climate change. And we consider the availability of sites for expansion and development.
Life, Health and Inclusion (375 points – 15%)
Combine an era of enhanced social consciousness with a growing worker shortage, and it explains why, now more than ever, companies are demanding that states offer a welcoming and inclusive environment for employees. At the same time, the pandemic has put a new spotlight on health and healthcare resources. These new dimensions of quality of life led us to reimagine and rename this important category for 2021. We continue to rate the states on livability factors like per capita crime rates, health care, and environmental quality. Because of the new focus from businesses, we have expanded our measures of inclusiveness, looking more deeply at protections against discrimination, as well as at voting rights and current efforts to expand or restrict access to the polls, based on legislation enacted as of June 1, 2021. As the nation seeks to move past the pandemic, we look at Covid-19 vaccination rates, and we consider public health and hospital resources to deal with the lingering effects of the pandemic as well as potential future crises.
Workforce (325 points – 13%)
Even as millions of Americans remain out of work due to the pandemic, companies report they are having difficulty finding qualified workers. So, states are aggressively touting the quality of their workforces. We measure the educational attainment of each state’s working-age population, as well as which states are attracting college-educated workers and which states are losing them. With skilled workers in particular demand, we consider each state’s concentration of science, technology, engineering, and math (STEM) workers. We measure worker productivity based on economic output per job. We look at union membership and right-to-work laws. And we measure the availability of workers, as well as the diversity of each state’s workforce.
Economy (250 points – 10%)
Particularly in uncertain times, companies are seeking states with stable finances and solid economies. We examine the strength of each state’s recovery by looking at economic growth and job growth over the past year. We measure each state’s fiscal condition by looking at its credit ratings and outlook, its overall budget picture including spending, revenue, and reserves, as well as pension obligations. We rate the health of the residential real estate market. Because a diverse economy is important in any environment, we consider the number of major corporations headquartered in each state.
Business Friendliness (200 points – 8%)
As companies seek to emerge from the crisis, they are following the path of least resistance. That includes a legal and regulatory framework that does not overburden business. We measure each state’s lawsuit and liability climates, regulatory regimes covering areas such as trade and labor, as well as overall bureaucracy.
Access to Capital (175 points – 7%)
The abrupt shutdown of much of the economy left businesses of all sizes scrambling for capital and states doing what they could to help. As a result, access to capital, which in prior years was mentioned by only a handful of capital-rich states, is now a feature of almost every state’s marketing and thus is a bigger factor in our rankings than in the past. We measure the maximum amount of state-funded Covid-related grants, loans, and loan guarantees. We also consider federal aid through the U.S. Small Business Administration Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) by state. Beyond Covid-19, we consider overall venture capital investments, as well as traditional bank lending by state with an emphasis on loans to small businesses.
Technology & Innovation (175 points – 7%)
Truly competitive states prize innovation, nurture new ideas and have the resources to support them. We measure the states based on results, including the number of patents issued per capita, as well as health, science, and agriculture research grants. We measure the vitality of each state’s technology ecosystem based on people, companies, and investment.
Education (150 points – 6%)
Not only do companies want to draw from an educated pool of workers, but they also want to offer their employees a great place to raise a family. Higher education institutions offer companies a source to recruit new talent, as well as a partner in research and development. We consider the number of higher education institutions in each state as well as long-term trends in state support for higher education. We also consider historically Black colleges and universities (HBCUs), which companies are increasingly seeking to partner with. We look at multiple measures of K-12 education including test scores, class size, and spending. We also look at life-long learning opportunities in each state.
Cost of Living (75 points – 3%)
With increasing concerns about potential inflation, companies and workers are seeking states where prices are stable and daily living is affordable. The cost of living helps drive the cost of doing business. From housing to food and energy, wages go further when the cost of living is low. We measure the states based on an index of costs for basic items.
Our Sources
Our rankings are based primarily on publicly available data. Most of the information comes from federal government databases. In the cases where government statistics are not available, we seek neutral and/or ideologically diverse data sources. In addition to the sources listed below, we use data from every state’s primary economic development arm, state statutes, and the most recent Comprehensive Annual Financial Report (CAFR) issued by each state.