If you want to know whether the state in which you run your business is costing you, the results of a recently released survey will give you an answer. Hawaii, New York and Alaska are the most expensive states for businesses, maintaining the top three spots for the second consecutive Milken Institute Cost-of-Doing-Business Index. All three states increased their overall year-over-year costs. A major factor in the rankings is the cost of electricity. South Dakota, meanwhile, maintained its position as the least-expensive state for business, decreasing its costs to 30 percent below the national average. The Cost-of-Doing-Business Index measures wage costs, taxes, electricity costs and real estate costs for industrial and office space. The biggest mover in this year’s index was Maine, moving up 11 spots to 17th from 28th, thanks in large part to higher electricity costs, which jumped from six percent above the national average in the 2006 rankings to 43 percent above the national average in this year’s rankings. Mississippi, which moved up eight places, also had an increase in electricity costs. Mississippi’s change in its ranking reflects other states’ abilities to contain or even decrease electricity costs during the same period. Of the states that moved down the rankings most, Michigan leads the pack in reining in its costs, moving from 13th place in the 2006 rankings down to 20th. Michigan had a slight increase in all of the rated factors, but dropped down because those states ranked near it had more pronounced increases. The Cost-of-Doing-Business Index indicates each state’s comparative advantages or disadvantages in attracting and retaining businesses. Each state is measured on the five individual categories, and those weighted scores are compiled to make the overall index. An index score of 100 means that the state is equal to the U.S. average in that particular category. This year, the states with the highest and lowest costs by category are: Wages - Highest: Connecticut; Lowest: South Dakota
Taxes - Highest: Vermont; Lowest: New Hampshire
Electricity costs - Highest: Hawaii; Lowest: Idaho
Industrial space costs - Highest: Hawaii; Lowest: Iowa
Office space costs - Highest: New York; Lowest: Iowa Ten Most Expensive 1 Hawaii
2 New York
3 Alaska
4 Massachusetts
5 Connecticut
6 California
7 New Jersey
8 Vermont
9 Delaware
10 Rhode Island Ten Least Expensive 50 South Dakota
49 Iowa
48 North Dakota
47 Idaho
46 South Carolina
45 Montana
44 Missouri
43 Vermont
42 Tennessee
41 Arkansas
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