Best states for business
These states weren’t immune to recession, but companies can prosper
 | In the rankings of best states for business, Washington comes in second, coming in after Virginia. Washington also ranks in top four in the labor supply category, which is one of several factors used to compile this list. |
Elaine Thompson / AP file |
The carnage of the economic downturn is everywhere with bankruptcies, foreclosures and unemployment soaring nationwide. None of the 50 states are immune. Only two, Alaska and North Dakota, are expected to see employment gains this year. Maryland, North Dakota and Virginia (by a hair) are the only states where the economy is projected to expand in 2009. Housing? Every state saw a decline in median home prices last year.
The recession has shaken up our fourth-annual ranking of the Best States for Business with some big movers up (North Dakota, Oregon and Iowa) and some former high-fliers on the way down (Florida, Nevada and Arizona).
Amid this mess, Virginia nabbed the top spot with the best business climate in the country for the fourth straight year. Virginia's economy has deteriorated, with the number of unemployed soaring 60 percent, while gross state product is flat and household incomes are expected to fall 4 percent, according to West Chester, Pa.-based research firm Moody's Economy.com.
Relative to the rest of the country though, Virginia is booming. Its 6.5 percent unemployment rate is fifth lowest in the country with the four states ahead of it all having dramatically smaller economies and employment bases. Virginia is the only state ranked in the top 20 in each of the six broad categories we examined. The state finished in the top three in half of those categories (labor supply, regulatory environment and quality of life). Virginia's $325 billion economy is expected to be the 10th largest in the U.S. in 2009.
The state benefits from a highly educated workforce that is expected to expand over the next five years. Energy costs are 30 percent below the national average. The state's tort environment ranks fifth best in the country, according to California think tank Pacific Research Institute. The state government's finances are in good shape — it's held on to a top AAA rating from Moody's since 1971. Eleven public companies with more than $10 billion in revenues call it home, including Altria, General Dynamics and Capital One Financial.
Virginia offers great incentives
Smart incentives help, too. Each year, Park Ridge, Ill.-based Pollina Corporate Real Estate does a study that compares states' economic development departments and programs. This year Virginia topped the Pollina study after finishing second last year.
"Virginia's economic development department truly understands what global competition is all about," says Brent Pollina, who authored the study. The Virginia Jobs Investment Program, for example, is open to both new and existing companies and offers flexible and customized employee recruiting and job training for businesses. The program has helped more than 2,400 companies over the past five years recruit and train 75,000 Virginians.
"We believe we offer a unique proposition because companies know the business climate is going to remain friendly," says Jeff Anderson, head of the Virginia Economic Development Partnership.
In February, Hilton announced it would move its corporate headquarters from Beverly Hills to Fairfax County. Last year Canon revealed plans to expand its Virginia operations with a $600 million investment that will create 1,000 new jobs. Overall, companies announced plans to spend $5.1 billion to relocate or expand in Virginia in 2008, which is expected to create more than 20,000 new jobs.
Our Best States ranking measures six vital categories for businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life. We factor in 33 different points of data to determine the ranks in the six main areas. Business costs, which include labor, energy and taxes are weighted the most heavily. We relied on nine different data providers. Moody's Economy.com is the most-utilized resource.
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