Study Ranks Best and Worst States for New Business

CareerBuilder and Economic Modeling Specialists Intl. yesterday released a study that provides a window into the health of the business landscape in the U.S. It explores the net growth in private-sector business establishments from 2001 to 2012, ranking the best and worst states for new establishments post-recession—since 2009.

The analysis is based on data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages, which has been updated through 2012.

A business establishment is defined as a single physical location that produces some form of economic activity. One company can have multiple establishments—for example, each coffee shop in a large metro area is considered a single establishment even if it’s part of a chain of coffee shops.

Connecticut, ranked by the study at number 36, saw negative growth in business establishments from 2009 to 2012, losing 1%, or 595 establishments, and ending 2012 with a total of 107,737.

Historical Perspective

The U.S. produced between 115,000 and 210,000 net new private-sector establishments each year from 2001 to 2007. In subsequent years, net new establishment formation bottomed out during the recession and hasn’t approached 100,000 per year since the downturn.

“Net new business establishments in the U.S. have tracked closely with the performance of the economy and labor market overall, showing a notable decline following the last recession,” says Matt Ferguson, CEO of CareerBuilder.

“The number of private-sector business establishments grew just 2% from 2009 to 2012 after growing 12% from 2001 to 2007. Growth patterns are poised to be stronger in 2014 and beyond as the economy becomes more energized, which will in turn help to influence the creation of new jobs.”

Best and Worst

Texas, at number one, gained nearly 30,000 more establishments from 2009 to 2012, an increase of 5%. Number-two New York gained 21,000 (4%), followed by Illinois with 18,000 (5%), Florida with 13,000 (2%), and Washington with 12,000 (5%).

At the bottom was Michigan, coming in with nearly 14,000 fewer business establishments in 2012 compared with 2009, for a loss of 6%. Rounding out the bottom five were New Jersey (lost 5,500; -2%), Idaho (2,800; -5%), Colorado (2,800; -2%), and Nevada (2,728; -4%).