Technology and innovation, workforce, and the state's pandemic response pushed Connecticut to its best performance ever in CNBC's America's Top States for Business, up 11 spots from 2019 to number 24 this year.
CNBC's influential business climate study ranked Connecticut in the top 20 in six of the 10 weighted categories it utilized to measure a state's economic competitiveness.
The state ranked eighth in both the technology and innovation and business friendliness categories, with the cable network noting that the latter category reflected a state's response to the pandemic.
"As companies seek to emerge from the crisis, they are following the path of least resistance," CNBC explained. "That includes a legal and regulatory framework that does not overburden business."
Connecticut is among the leading states for its pandemic response, including keeping much of the state's economy open during the height of the pandemic, managing the public health crisis, and a high per capita vaccination rate.
CNBC also ranked the state's education system 11th (2019 rank: 8th) and its workforce at 15th, unchanged from two years ago, when the traditional annual study was last produced.
Connecticut's infrastructure rank jumped to 18th from 43rd, based on CNBC broadening the definition of that category to include broadband access, where the state is a leader.
“It’s not that we fixed all our roads and speeded up our bridges,” Gov. Ned Lamont told reporters after the July 13 release of the study.
Access to capital—one of the state's traditional areas of strength—also ranked 18th, up two spots from 2019.
This year's study overhauled the quality of life category, renaming it life, health, and inclusion to reflect growing demands by companies for states to provide a welcoming and inclusive environment for employees.
Connecticut ranked 24th in that category, which measures crime rates, healthcare and environmental quality, protections against discrimination, voting rights, and COVID-19 vaccination rates.
Economy, Business Costs
The state's economy ranked 32nd, an improvement of 12 spots from 2019, reflecting the ongoing recovery from the pandemic.
Connecticut's GDP grew 7% in the fourth quarter of 2020—fourth fastest in the country—and six percent in the first three months of this year.
The state's high cost of living and high business costs—both barriers to long-term growth—continue to negatively impact overall economic competitiveness.
CNBC ranked Connecticut 43rd for affordability this year, unchanged from 2019. The study notes that "companies and workers are seeking states where prices are stable and daily living is affordable."
The cost of living also drives up business costs. CNBC says Connecticut's cost of doing business—perennially ranked in the bottom 10 states—is now the sixth highest in the country.
"At a time of unprecedented economic uncertainty, cost has returned to the forefront of competitiveness," CNBC noted.
CBIA president and CEO Chris DiPentima linked Connecticut's improvement in the CNBC rankings to the state's management of the pandemic and the bipartisan fiscal reforms enacted as part of the 2017 state budget.
"There's no doubt that those 2017 reforms are a major catalyst behind what's being called Connecticut's comeback," DiPentima said. "The reform measures in that budget began addressing our long-term fiscal issues and ended a pattern of recurring tax hikes.
"The new CNBC ranking highlights the impact of those reforms, including the historic rainy day fund balance, Wall Street agencies upgrading the state's credit rating, and the recent relocation announcements by major companies.
“We cannot lose sight of what’s important. It's critical that we maintain the fiscal discipline of recent years and tackle those areas like affordability and the high cost of doing business that are undermining the state's ability to realize its full economic potential.
"There's no doubt that we still face significant challenges, but good things happen when we work together, when the public and private sectors collaborate and develop solutions that benefit a wide range of stakeholders."
At 14th overall—unchanged from 2019—Massachusetts was the best of the New England states, ranked first for education and in the top 10 for technology and innovation, access to capital, life, health, and inclusion, and workforce.
New Hampshire fell 12 spots to 37th, driven by significant drops in the state's workforce (from 8th to 30th), business friendliness (first to 13th), and access to capital (35th to 40th) rankings.
Vermont ranked first for life, health, and inclusion and fell two spots to 42nd overall with bottom 10 rankings for workforce, infrastructure, and economy.
Rhode Island rose four spots to 46th, driven by significant improvements in infrastructure (50th to 42nd), workforce (32nd to 23rd), economy (48th to 36th) and business friendliness (40th to 30th).
Maine dropped four places to 48th, burdened by bottom 10 rankings in the infrastructure, workforce, access to capital, and technology and innovation categories.
Top, Bottom States
Virginia retained its top place ranking this year, ranked among the top 10 states for education (2nd), workforce (7th), and access to capital (9th). The state's worst category ranking was 32nd for cost of living.
CNBC's 2021 top five states for business:
- Virginia (2019: 1st)
- North Carolina (3rd)
- Utah (4th)
- Texas (2nd)
- Tennessee (13th)
And the bottom five:
46. Rhode Island (50th)
47. West Virginia (45th)
48. Maine (44th)
49. Hawaii (49th)
50. Alaska (47th)