Ranked: America's Best States To Do Business In
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Ranked: America’s Best States to Do Business In

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states to do business in

Ranked: America’s Best States to Do Business In

The United States often ranks as one of the best countries to start a business in, but the ease with which one can do business varies state by state. There are many considerations that factor into starting a business like the available workforce, the condition of local infrastructure, access to investors, a culture that’s open to business, and so on.

This map ranks America’s best states to do business in based on a study from CNBC which measured 88 factors across 10 broad categories.

Methodology

Here is a further breakdown of the weight given to each of the 10 categories:

states to do business in

The Most Business Friendly States

North Carolina—coming in first place in the ranking—attracts an extremely talented and innovative workforce, largely thanks to the state’s investment in its Research Triangle Regional Partnership (RTRP).

Overall RankState
#1North Carolina
#2Washington
#3Virginia
#4Colorado
#5Texas
#6Tennessee
#7Nebraska
#8Utah
#9Minnesota
#10Georgia
#11Florida
#12Iowa
#13North Dakota
#14Indiana
#15Ohio
#16Michigan
#17Pennsylvania
#18Oregon
#19Illinois
#20Idaho
#21Kansas
#22South Dakota
#23Wisconsin
#24Massachusetts
#25Missouri
#26Kentucky
#27Maryland
#28Delaware
#29California
#30Montana
#31Vermont
#32Wyoming
#33Alabama
#34Arizona
#35New Hampshire
#36New York
#36South Carolina
#38Oklahoma
#39Connecticut
#39Nevada
#41Arkansas
#42New Jersey
#43Maine
#44West Virginia
#45Rhode Island
#46Hawaii
#46New Mexico
#48Louisiana
#49Alaska
#50Mississippi

Notably, there are three ties in the ranking: New York and South Carolina had the same score, tying for 36th, Connecticut and Nevada tied for 39th, and Hawaii and New Mexico tied for 46th.

Other states ranking high on the list are Washington, Virginia, and Colorado. One of the newest individual metrics CNBC took into consideration was an openness to the cannabis industry, likely playing into Colorado’s move up from 8th to 4th compared to last year.

Some states that perhaps surprisingly don’t crack the top 10 include California and New York, both often considered centers of finance and entrepreneurship. But with the high costs of living and of starting a business in those states, their overall score is reduced.

A Look at the Scoring — North Carolina, California, and Nevada

To better understand how this ranking works we’ve broken down three different states and how they ranked in all 10 categories that gave them their overall spot. Here’s a brief look at their place in each category:

states to do business in

While North Carolina is the number one state to do business in and has an extremely strong economy, they are 26th when it comes to the Cost of Doing Business.

states to do business in

Whereas California ranks low overall, the state ranks first in terms of Technology and Innovation, as well as Access to Capital.

states to do business in

Although Nevada scored highly in the Infrastructure and Business Friendliness categories, the state scored poorly in Technology and Innovation, and was dead last in the Education category.

Doing Business in America

New business applications have actually decreased 4% this year in comparison to the same timeframe in 2021.

Here’s a look at new business applications by region as of July 2022:

  • Northeast: 63,058
  • Midwest: 70,827
  • South: 197,663
  • West: 94,150

New business applications in July were the highest in the retail trade industry, numbering around 69,000 new applications, according to the U.S. Census Bureau. Applications for professional service businesses were the second highest at 53,000, followed closely by construction businesses at 43,000.

Here’s a closer look at the industry breakdown:

IndustryNumber of Applications
Retail Trade68,974
Professional Services53,321
Construction43,442
Other Services 38,605
Transportation and Warehousing 34,952
Administrative and Support 31,602
Health Care and Social Assistance 25,725
Accommodation and Food Services 24,166
Real Estate23,953
Finance and Insurance18,890
Arts and Entertainment12,684
Unclassified12,350
Wholesale Trade8,893
Information7,802
Educational Services 5,762
Manufacturing5,744
Management of Companies 4,166
Agriculture3,703
Mining542
Utilities421

A potential looming recession, alongside rising interest rates and inflation, may be creating a sense of cautiousness among businesspeople, leading to the lower rate of business applications compared to last year. And, at existing companies, the economic situation has lead to cuts in growth forecasts and subsequently, major layoffs.

But overall, the U.S. is a country which values entrepreneurship—even during the pandemic, massive spikes in new business formations were recorded—and certain industries and states will continue to flourish in any business environment.

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The Biggest Tech Talent Hubs in the U.S. and Canada

6.5 million skilled tech workers currently work in the U.S. and Canada. Here we look at the largest tech hubs across the two countries

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The Biggest Tech Talent Hubs in the U.S. and Canada

The tech workforce just keeps growing. In fact, there are now an estimated 6.5 million tech workers between the U.S. and Canada — 5.5 million of which work in the United States.

This infographic draws from a report by CBRE to determine which tech talent markets in the U.S. and Canada are the largest. The data looks at total workforce in the sector, as well as the change in tech worker population over time in various cities.

The report also classifies which metro areas and regions can rightly be considered tech hubs in the first place, by looking at a variety of factors including cost of living, average educational attainment, and tech employment levels as a share of different industries.

The Top Tech Hubs in the U.S.

Silicon Valley, in California’s Bay Area, remains the most prominent (and expensive) U.S. tech hub, with a talent pool of nearly 380,000 tech workers.

Here’s a look at the top tech talent markets in the country in terms of total worker population:

🇺🇸 MarketTotal Tech Talent% Talent Growth (2016-2021)
SF Bay Area378,87013%
New York Metro344,5203%
Washington D.C. 259,3106%
Los Angeles235,80010%
Seattle189,57032%
Dallas/Ft. Worth187,95015%
Chicago167,5606%
Boston166,4502%
Atlanta145,0807%
Denver117,62023%
Philadelphia115,450 7%
Minneapolis100,9905%
Phoenix99,60018%
Houston98,930-2%
Detroit 93,7705%
Austin 84,68021%
Baltimore79,0008%
San Diego77,780 16%
Raleigh/Durham69,05011%
Portland67,410 28%
South Florida66,660 8%
Charlotte61,95022%
Salt Lake City55,93029%
St. Louis53,9102%
Kansas City52,5000%
Tampa 52,24013%
Columbus50,3904%

America’s large, coastal cities still contain the lion’s share of tech talent, but mid-sized tech hubs like Salt Lake City, Portland, and Denver have put up strong growth numbers in recent years. Seattle, which is home to both Amazon and Microsoft, posted an impressive 32% growth rate over the last five years.

Emerging tech hubs include areas like Raleigh-Durham. The two cities have nearly 70,000 employed tech workers and a strong talent pipeline, seeing a 28% increase in degree completions in fields like Math/Statistics and Computer Engineering year-over-year to 2020. In fact, the entire state of North Carolina is becoming an increasingly attractive business hub.

Houston was the one city on this list that had a negative growth rate, at -2%.

The Top Tech Hubs in Canada

Tech giants like Google, Meta, and Amazon are continuously and aggressively growing their presence in Canada, further solidifying the country’s status as the next big destination for tech talent. Here are the country’s four tech hubs with a total worker population of more than 50,000:

🇨🇦 MarketTotal Tech Talent% Talent Growth (2016-2021)
Toronto289,70044%
Montreal148,90027%
Vancouver115,40063%
Ottawa81,20022%

Toronto saw the most absolute growth tech positions in 2021, adding 88,900 jobs. The tech sector in Canada’s largest city has seen a lot of momentum in recent years, and is now ranked by CBRE as North America’s #3 tech hub, after the SF Bay Area and New York City.

Vancouver’s tech talent population increased the most from its original figure, climbing 63%. Seattle-based companies like Microsoft and Amazon have established sizable offices in the city, adding to the already thriving tech scene. Furthermore, Google is set to build a submarine high-speed fiber optic cable connecting Canada to Asia, with a terminus in Vancouver.

Not to be left behind, Ottawa has also taken giant strides to increase their tech talent and stamp their presence. The country’s capital even has the highest concentration of tech employment in its workforce, thanks in part to the success of Shopify.

Map showing tech employment concentration in the U.S. and Canada

The small, but well-known tech hub of Waterloo also had a very high concentration on tech employment (9.6%). The region has seen its tech workforce grow by 8% over the past five years.

Six out of the top 10 cities by tech workforce concentration are located in Canada.

Evolution of Tech Hubs

The post-COVID era has seen a shifting definition of what a tech hub means. It’s clear that remote work is here to stay, and as workers migrate to chase affordability and comfort, traditional tech hubs are seeing some decline — or at least slower growth — in their population of tech workers.

While it isn’t evident that there is a mass exodus of tech talent from traditional coastal hubs, the rise in high-paying tech jobs in smaller markets across the country could point to a trend and is positive for the industry.

While more workers with great talent, resources, and education continue to opt for cost-friendly places to reside and work remotely, will newer markets like Charlotte, Tennessee, and Calgary see a rise of tech companies, or will large corporations and startups alike continue to opt for the larger cities on the coast?

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Animation: Visualizing U.S. Interest Rates Since 2020

U.S. interest rates have risen sharply after sitting near historic lows. This animation charts their trajectory since 2020.

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Visualizing Interest Rates Since 2020

In March 2020, the U.S. Federal Reserve cut already depressed interest rates to historic lows amid an unraveling COVID-19 pandemic.

Fast-forward to 2022, and the central bank is grappling with a very different economic situation⁠ that includes high inflation, low unemployment, and increasing wage growth. Given these conditions, it raised interest rates to 2.25% up from 0% in just five months.

The above visualization from Jan Varsava shows U.S. interest rates over the last two years along with its impact on Treasury yields, often considered a key indicator for the economy.

Timeline of Interest Rates

Below, we show how U.S. interest rates have changed over the course of the pandemic:

DateFederal Funds Rate (Range)Rate Change (bps)
July 27, 20222.25% to 2.50%+75
June 16, 20221.50% to 1.75%+75
May 5, 20220.75% to 1.00%+50
March 17, 20220.25% to 0.50%+25
March 16, 20200.00% to 0.25%-100
March 3, 20201.00% to 1.25%-150

In early 2020, the Federal Reserve cut interest rates from 1% to 0% in emergency meetings. The U.S. economy then jumped back from its shortest recession ever recorded, partially supported by massive policy stimulus.

But by 2022, as the inflation rate hit 40-year highs, the central bank had to make its first rate increase in over two years. During the following Federal Reserve meetings, interest rates were then hiked 50 basis points, and then 75 basis points two times shortly after.

Despite these efforts to rein in inflation, price pressures remain high. The war in Ukraine, supply disruptions, and rising demand all contribute to higher prices, along with increasing public-debt loads. In fact, a Federal Reserve estimate suggests that inflation was 2.5% higher due to the $1.9 trillion stimulus, an effect of “fiscal inflation.”

Impact on the Treasury Yield Curve

The sharp rise in interest rates has sent shockwaves through markets. The S&P 500 Index has steadily declined 19% year-to-date, and the NASDAQ Composite Index has fallen over 27%.

Bond markets are also showing signs of uncertainty, with the 10-year minus 2-year Treasury yield curve acting as a prime example. This yield curve subtracts the return on short-term government bonds from long-term government bonds.

When long-term bond yields are lower than short-term yields—in other words, the yield curve inverts—it indicates that markets predict slower future growth. In recent history, the yield curve inverting has often signaled a recession. The table below shows periods of yield curve inversions for one month or more since 1978.

Yield Curve Inversion DateNumber of MonthsMaximum Difference (10 yr - 2 yr bps)
Aug 197821 -241
Sep 198013 -170
Jan 19824 -71
Jun 19821 -34
Dec 19886 -45
Aug 19892 -18
Jun 19981 -7
Feb 200010 -51
Feb 20061 -16
Jun 20061 -7
Aug 20067-19
Jul 20222*-48

*Data as of September 9, 2022
Source: Federal Reserve

For example, the yield curve inverted in February 2000 to a bottom of -51 basis points difference between the 10-year Treasury yield and the 2-year Treasury yield. In March 2001, the U.S. economy went into recession as the Dotcom Bubble burst.

More recently, the yield curve has inverted to its steepest level in two decades.

This trend is extending to other countries as well. Both New Zealand and the UK’s yield curves inverted in August. In Australia, the yield spread between 3-year and 10-year bond futures—its primary measure—was at its narrowest in a decade.

What’s On the Horizon?

Sustained Treasury yield inversions have sometimes occurred after tightening monetary policy.

In both 1980 and 2000, the Federal Reserve increased interest rates to fight inflation. For instance, when interest rates jumped to 20% in 1981 under Federal Reserve Chairman Paul Volcker, the U.S. Treasury yield inverted over 150 basis points.

This suggests that monetary policy can have a large impact on the direction of the yield curve. That’s because short-term interest rates rise when the central bank raises interest rates to combat inflation.

On the flip side, long-term bonds like the 10-year Treasury yield can be affected by growth prospects and market sentiment. If growth expectations are low and market uncertainty is high, it may cause yields to fall. Taken together, whether or not the economy could be headed for a recession remains unclear.

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