A flood of government money and the rapidly changing nature of work are helping to transform the competitive landscape among the states. CNBC’s America’s Top States for Business for 2024 — our 17th study of state competitiveness — reflects that transformation.
This year’s study includes new metrics on infrastructure, from sites to sustainability. We are tracking the battle to lead the artificial intelligence revolution. And, we are calculating the cost equation, including housing affordability and a growing insurance crisis. Our study measures an influx of foreign investment in the states. And, while worker shortages are finally easing as the economy stabilizes, the battle for talent remains front and center.
Fortunately, our Top States methodology, developed in 2007, was built for change. Yet the goal has always been consistent: determining which states are delivering most effectively on the things that mean the most to business.
To do that, we start with ten broad categories of competitiveness. These are the factors companies consider year after year when making site selection decisions, and that states pitch in their efforts to woo business. Those categories have remained the same since our study began, but the weight each category carries varies from year to year based on the factors that are most important in the site selection process.
To determine the appropriate weight for each category, we analyze each state’s economic development marketing pitches to see which selling points come up the most. For example, if more states are talking about their workforces, the Workforce category is worth more possible points. That way, we measure the states based on the attributes they use to sell themselves.
The more weight a category carries, the more metrics it includes. This year’s study employs 128 metrics — the most ever — across the ten categories. We develop our metrics with input from a broad and diverse range of business leaders, policy experts, and the states themselves. States can earn a maximum of 2,500 total points. The states with the most points are America’s Top States for Business.
In 2024, for the first time since our study began, Infrastructure is the heaviest weighted category. It replaces Workforce, which held the title for the past ten years. This stands to reason, according to Seth Martindale, chairman of the Site Selectors Guild, an industry trade group that supplied some of the data for this year’s study.
“When you’ve got all those variables combined — the federal money, the mitigation of risk and reshoring, moving production capacity away from abroad and moving it back to the United States, it has created a situation where you’ve got a lot of companies vying for a limited amount of pad-ready sites in the U.S.,” he said.
Other categories generating more marketing buzz, and carrying more weight this year as a result, include Access to Capital as interest rates and business costs remain high, and Business Friendliness as companies race to develop new sites.
“Can the state move fast with permitting and approvals? Can you get easements and rights-of-way put into place quickly?” Martindale said. “If you have a business environment where those things all come together, you can allow things to happen quickly.”
Workforce is still enormously important as companies clamor for skilled employees. But with fewer job openings nationwide than a year ago, according to the Labor Department, the category slips slightly in importance. Partly as a result, Quality of Life, essential to attracting a strong workforce, slips a bit as well.
Our study is not an opinion survey. We gather empirical data on the states’ performance in each metric using the most recent figures available. Where it makes sense, we calculate some metrics on a per capita basis to allow large and small states to compete on a level playing field.
In addition to their point totals, states receive a letter grade in each category to measure their performance relative to the competition. Grading is scaled, with the high score equal to 100 percent and the low score equal to 50 percent. However, each state’s overall ranking, as well as its ranking within each category, is based solely on the number of points scored.
Here are this year’s categories and weightings, and an explanation of each:
Infrastructure (425 points – 17%)
Revitalizing domestic manufacturing, rebuilding supply chains and redefining the very nature of work takes a reimagined infrastructure. We measure the vitality of each state’s transportation system by the value and volume of goods shipped by air, waterways, roads and rail. We look at the condition of highways and bridges, the availability of air travel, and the time it takes to commute to work. With remote work here to stay, we also consider the quality, availability and price of broadband service in each state. We consider access to markets by measuring the population living within 500 miles of each state. We look at the availability of vacant land, and office and industrial space. New in 2024, we measure state site readiness programs in terms of their overall funding and the number of certified sites. We rate each state’s utility infrastructure including the condition of drinking water and wastewater systems, the reliability of the electrical grid, and the availability of renewable energy. And we measure each state’s sustainability in the face of climate change, looking at the risk of flooding, wildfires, and extreme weather.
Workforce (375 points – 15%)
With skilled workers in such short supply, and with the rising role of advanced manufacturing, the definition of a qualified worker is expanding. In addition to measuring each state’s concentration of science, technology, engineering and math (STEM) workers and the percentage of workers with college degrees, we also consider workers with associate degrees and industry-recognized certificates. We look at which states are most successful in attracting talent at all levels, considering the net migration of educated workers to each state. We look at state worker training programs, right to work laws, and worker productivity based on economic output per job.
Economy (350 points – 14%)
Particularly in uncertain times, companies are seeking states with stable finances and solid economies. We examine the economic strength of each state by looking at gross domestic product (GDP) growth and job growth over the past year. We measure each state’s fiscal condition by looking at its credit ratings and outlook, and its overall budget picture including spending, revenue and reserves, as well as pension obligations. We rate the health of the residential real estate market based on multiple factors including inventory, price appreciation, equity, foreclosure activity and mortgage delinquencies, affordability and property taxes. Because a diverse economy is important in any environment, we consider the number of major corporations headquartered in each state. We measure each state’s entrepreneurial economy based on new business formations. New in 2024, we measure foreign direct investment in absolute terms and as a percentage of state GDP.
Quality of Life (325 points – 13%)
With unemployment low and workers still in short supply, companies are seeking to locate in states that can attract a broad array of talent. That makes quality of life an economic imperative. We rate the states on livability factors like per capita crime rates, environmental quality, and health care. We look at worker protections. We look at inclusiveness in state laws, including protections against discrimination of all kinds, as well as voting rights, including accessible and secure election systems. With studies showing that childcare is one of the main obstacles to employees returning to the workforce, we consider the availability and affordability of qualified facilities. And with surveys showing a sizeable percentage of younger workers would not live in a state that bans abortion, we factor reproductive rights in this category as well.
Cost of Doing Business (275 points – 11%)
As stubborn inflation continues to erode company balance sheets, we measure each state’s tax burden and the strength of its business tax climate. We also measure wage and utility costs, as well as the cost of office and industrial space. New in 2024, with the nation gripped by an insurance crisis, we measure increases in commercial property and casualty premiums. We consider the incentives and tax breaks that states offer to reduce business costs, and we consider available incentives targeted toward development in disadvantaged communities.
Technology & Innovation (250 points – 10%)
Truly competitive states prize innovation, nurture new ideas, and have the resources to support them. We measure the states based on results, including the number of patents issued per capita, as well as health, science and agriculture research grants. With domestic semiconductor research, development and manufacturing taking center stage, we look at each state’s place in this crucial technological ecosystem. New in 2024, we measure each state’s role in the artificial intelligence revolution in terms of where new AI models are being developed and where the AI jobs are. Also new in 2024, we look at how states fared in the Tech Hubs program authorized through the federal CHIPS and Science Act.
Business Friendliness (250 points – 10%)
Companies follow the path of least resistance. That includes a legal and regulatory framework that does not overburden business. We measure each state’s lawsuit and liability climates, regulatory regimes covering areas such as trade and labor, as well as overall bureaucracy. We also consider how hospitable states are toward emerging industries. New in 2024, we look at which states are leading the way in providing a regulatory framework to guide but not stifle the artificial intelligence industry. Also new in 2024, with infrastructure being so crucial, we look at state land use regulations.
Education (125 points – 5%)
A state’s education system is its main source for talent and an engine of innovation. It is also a key consideration for companies and families deciding where to put down roots. We look at multiple measures of K-12 education including test scores, class size and spending. We consider the number of colleges and universities in each state as well as long-term trends in state support for higher education. We also consider historically Black colleges and universities (HBCUs), which companies are increasingly seeking to partner with. With the search for talent expanding to include employees with marketable, industry-recognized skills, we measure each state’s community college and career education systems.
Access to Capital (75 points – 3%)
As business costs and interest rates remain stubbornly high, companies large and small need ready access to financing. We look at venture capital investments in each state, as well as traditional bank lending by state in relative and absolute terms. We also look at state-backed capital assistance and loan guarantee programs. New in 2024, we measure foreign direct investment in each state.
Cost of Living (50 points – 2%)
With inflation persisting, companies and workers are seeking states where prices are stable and daily living is affordable. The cost of living helps drive the cost of doing business. We measure the states based on an index of costs for basic items, with an added emphasis on housing affordability. New in 2024, as the insurance crisis spreads, we consider the cost to insure a median priced home in each state.
Our sources
We base our rankings primarily on publicly available data. In addition, real estate cost and availability data are compiled for CNBC by CoStar Group, and they are factored in the Infrastructure and Cost of Doing Business categories. Labor market data firm Lightcast developed a State Talent Attraction Scorecard exclusively for CNBC. Those results are factored into the Workforce category. First Street Foundation, a non-profit, nonpartisan climate risk research firm, provided some of the sustainability data for the Infrastructure category. Also in that category, the Site Selectors Guild compiled data on state site readiness programs.
Most of the rest of our information comes from federal government databases. In the cases where government statistics are not available, we seek neutral and/or ideologically diverse data sources.
We use data from every state’s primary economic development arm, and from the most recent Annual Comprehensive Financial Report (ACFR) issued by each state, in addition to the sources listed below.