Forbes Highlights State’s Challenges
Not that we needed reminding, but Forbes‘ latest Best States for Business rankings painfully highlight the challenges facing Connecticut’s economy.
Forbes dropped the state three spots to 36th in its annual survey, which was released today. The high cost of doing business, regulatory burden, and the state state’s sluggish economic recovery all contributed to that fall.
The magazine analyzes 36 data points across six main areas for its rankings: business costs, labor supply, regulatory environment, economic climate, growth prospects, and quality of life.
Connecticut ranked 47th for business costs, which include energy, labor, and taxes, unchanged from last year. Forbes said only New Jersey, Massachusetts, and Hawaii have higher costs.
The cost of doing business in Connecticut is 14% higher than than the national average, Forbes said, due in large part to energy costs, which are 72% higher.
Forbes ranked the state’s regulatory environment (including labor regulations, healthcare mandates, licensing, tort system) 37th, up two spots from 2013.
And our economic climate, measured by job, income, and gross state product growth as well as average unemployment over the past five years, fell from 37th to 44th, second worst among the New England states.
Connecticut climbed from 39th to 33rd in the 2013 Forbes rankings based in large part on the state’s growth prospects, which reflect employment, income, and gross state product growth forecasts over the next five years, as well as capital investments and business openings and closings.
This year, Forbes downgraded the state’s growth prospects, further contributing to our overall decline in the Best States rankings.
Forbes does rank Connecticut a top 20 state for labor supply (20th, down from 17th last year), which factors high school and college graduation rates, net migration, and projected population growth.
Quality of life
And our quality of life was ranked third (down from second last year), behind Minnesota and Massachusetts. That category includes poverty rates, crime data, cost of living, education, and health and wellness.
CBIA executive vice president Joe Brennan said rankings such as Forbes Best States and CNBC’s America’s Top States for Business create a perception, good and bad, about a state’s viability as a place to start and grow a business and create jobs, daily impacting decisions companies make about investing, relocating, and expanding.
[Connecticut ranks 46th in CNBC’s 2014 study. CNBC’s analysis of the state’s cost of doing business, economy, regulatory burden, and quality of life mirrors Forbes‘ findings.] “This latest ranking reinforces the sense of urgency that lawmakers should have about addressing Connecticut’s business climate,” Brennan said today.
“The state’s economic competitiveness is what drives private investment. That, in turns, drives economic growth, job creation, and our quality of life.”
Utah ranked first
Utah climbed from third to finish first in Forbes 2014 Best States rankings. Forbes noted Utah’s pro-business climate, energy costs that are 26% below the national average, and an economy that expanded 2.4% a year over the past five years, fifth best in the U.S.
Utah was the only state to rank in the top 10 in five of the six categories Forbes uses in determining its Best States rankings.
North Dakota finished second for a second year, with North Carolina climbing one spot to third. Virginia fell one spot to fourth while Colorado retained the fifth spot.
Mississippi finished last among all states for the first time due to bottom five rankings in four of the six categories, including labor supply, economic climate, growth prospects, and quality of life.
Maine rose one spot to 49th; West Virginia dropped two spots to 46th; New Mexico also fell two spots, finishing 47th; and Rhode Island climbed two spots but remains in the bottom five.
Louisiana recorded the biggest jump of any state, rising from 40th to 29th based on income and economic growth rates that are among the best in the U.S. over the last five years, along with lower business costs and an improved economic outlook.
New Jersey took the biggest fall, dropping nine spots to 41st. The state’s job growth is the sixth worst in the country, economic growth and outlook are weak, and business costs are third worst, as is its regulatory environment.
Despite its high cost of doing business, Massachusetts performed the best of the Northeast states, ranked 13th overall, unchanged from 2013. The state’s strong economy, bright growth prospects, quality of life (highest in the U.S.), and labor supply rankings mitigated its cost ranking.
New York climbed four spots to 17th overall, its growing economy, growth prospects, quality of life, and improving regulatory climate offsetting the state having the fifth highest cost of doing business.
Pennsylvania was 30th (down from 27th), New Hampshire ranked 35th (31st), and Vermont 43rd (unchanged).
‘More than a business issue’
Brennan noted that a state’s economic competitiveness ranking was more than a business issue, which was why CBIA and more than 70 other organizations support the CT20x17 campaign, aimed at making Connecticut a top 20 state for business by 2017.
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