Forbes: Costs, Regulations, Fiscal Health Cloud State’s Business Climate
High costs, a burdensome regulatory climate, and the state’s fiscal health kept Connecticut among the bottom 10 states for the second consecutive year in Forbes’ latest Best States for Business rankings.
Forbes ranked the state’s business climate 42nd in its 2017 report, just one position higher than last year.
“The Nutmeg State rates fifth overall in quality of life thanks to low crime and poverty rates, a healthy populous and strong schools,” Forbes notes in its report.
“But the regulatory climate and fiscal health rank among the worst in the nation.
“Business costs are 9% higher than the national average, due in part to energy costs that are 60% higher.”
Forbes measures six key areas when compiling its best states list: business costs, labor supply, regulatory environment, economic climate, growth prospects, and quality of life.
Business Costs, Regulatory Climate
Connecticut ranked in the bottom 10 in four of those areas in 2017, with one top 10 rank for quality of life.
The state has the ninth highest business costs in the country (a slight improvement over last year’s 45th rank), which include energy, labor, and taxes.
Forbes ranked the state’s regulatory climate (including labor regulations, healthcare mandates, licensing, and tort system) 42nd, up four spots from 2016.
The state’s economic outlook, measured by job, income, gross state product growth, and average unemployment over the past five years, improved one spot to 42nd.
Connecticut’s economy saw improvement in the second quarter of this year, posting 1.4% growth after shrinking in each of the previous four quarters.
After a strong start to 2017, job growth declined dramatically in the second half of this year, with the state losing over 12,00 jobs since June.
At 9th among all states, Massachusetts’ economy ranked best of the New England states. Vermont’s economy ranked 44th, worst in the region.
Connecticut’s growth prospects fell three spots to 43rd this year. That category reflects employment, income, and GDP forecasts over the next five years, as well as capital investments and business openings and closings.
The regulatory climate and fiscal health rank among the worst in the nation. Business costs are 9% higher than the national average.
The percentage of high school students who attend college remained unchanged at 38%. However, net migration declined for a second year, with the state losing 12,800 residents.
The state's quality of life–measuring crime data, cost of living, education, and health and wellness—was also unchanged at fifth.
North Carolina Ranked First
The latest Forbes rankings follow CNBC's annual America's Top States for Business study, which saw Connecticut jump 10 places to 33rd overall based on based on surges in educational opportunities and workforce quality and productivity.
Like Forbes, CNBC ranks Connecticut poorly for the cost of doing business (43rd) and economic strength (41st).
North Carolina jumped one spot to top the Forbes rankings, finishing in the top 10 in three of the report's key categories.
Texas climbed two positions to second, Utah fell from first to third, Nebraska fell one spot to fourth, and Virginia moved into fifth.
West Virginia was again ranked last. Alaska, Vermont, New Mexico, and Maine rounded out the bottom five.
Forbes ranked Massachusetts' business climate 19th overall, the best of the New England states, followed by New Hampshire (34th), Connecticut, Rhode Island (43rd), Maine, and Vermont.
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