America’s Top 20 States for Business in 2023
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In this article, we will be analyzing the strategic competitive moves by some of the big companies in the US while going through the country’s top 20 states for business in 2023. If you wish to skip our detailed analysis, you can move directly to America's Top 5 States for Business in 2023.
A Thriving Business Environment
The competitiveness of a firm in a specific location can be attributed to several factors that the business environment has to offer. In the case of the United States, factors such as workforce, government policies, access to capital, and a strong business infrastructure contribute to the success of firms in different states. Let’s look at the state of the business environment in the country.
On June 15, CNBC reported that the country is experiencing a tight labor market with the number of job openings exceeding the available workers. Thus, companies have been trying to relocate to talent-attracting states to where people are migrating. Corporate taxes and the extent of support from the government also impact business decisions of expanding or relocating between states. For instance, Texas is a highly recommended destination for businesses. The state has also been ranked for having the best business climate at the International Economic Development Council Annual Conference in Dallas. On September 18, The Texas Economic Development Corporation reported that corporations prefer to position themselves in Texas because of an absence of state income tax and a supportive government regulatory structure.
Multinationals Settling in Low-Tax Business States
According to the filings reported by the US Securities and Exchange Commission, the period between March 2022 and March 2023 witnessed the largest rates of headquarter relocations by US corporations. Whether it is an attempt to cut costs, benefit from low corporate taxes, or aim at a target market more closely, many companies with a global footprint have migrated their headquarters from high-tax states to low-tax states. Some of these companies include Tesla, Inc. (NASDAQ:TSLA), Caterpillar Inc. (NYSE:CAT), and Hewlett Packard Enterprise Company (NYSE:HPE). The Lego Group has also been planning one such transition for the future. You can also take a look at top US companies with the highest profit margins.
Tesla, Inc. (NASDAQ:TSLA) is a leading manufacturer of electric vehicles. It is also one of the biggest suppliers of battery energy systems across the globe. Back in 2021, the company relocated its headquarters from California to Texas. The rationale behind this migration as reported by Reuters, back in October 2021, was that California was subject to high housing and living costs while Texas had cheap labor, no state income tax, and less strict regulations to offer to the company. However, on February 22, Forbes reported that the EV maker is considering moving its engineering headquarters back to the golden state. The exact timeline for this movement has not yet been specified but the CEO, Elon Musk, announced the upcoming transition of its headquarters to Palo Alto after a 2-year stay in Texas.
Caterpillar Inc. (NYSE:CAT) is a leading global manufacturer of construction equipment. On June 15, 2022, Reuters reported that the company announced plans to move its headquarters from Illinois to Texas. While the company didn’t disclose any such incentives offered by Texas that drove the move, the governor of Texas believed that the state was a 'perfect fit' for the company. The absence of state income taxes and decreased labor costs can also be taken into consideration in regard to this strategic business move by the company.
On August 1, Caterpillar Inc. (NYSE:CAT) reported strong earnings for the fiscal second quarter of 2023. The company reported earnings per share of $5.55, beating EPS estimates by $0.97. The company's revenue for the quarter amounted to $17.32 billion, up 22% year-over-year and ahead of revenue consensus by $788.99 million.
Hewlett Packard Enterprise Company (NYSE:HPE) is a multinational information technology company, based in the US. On April 4, 2022, the company reported the inauguration of its new headquarters in Houston, Texas. The company took 2 years to completely relocate from California to Texas and expressed commitment to accommodate employees who had been in the process of moving, to settle in the new headquarters. The company had earlier stated that it was announcing this move as a way to save costs, attract potential talent, and leverage the company’s presence in the region which it also labeled as ‘a great place to do business’.
On August 29, Hewlett Packard Enterprise Company (NYSE:HPE) reported its earnings for the fiscal third quarter of 2023. The company reported earnings per share of $0.49 and outperformed EPS estimates by $0.02. The company's revenue for the quarter amounted to $7 billion, up 0.73% year-over-year and was ahead of revenue consensus by $6.32 million.
Apart from Tesla, Inc. (NASDAQ:TSLA), Caterpillar Inc. (NYSE:CAT), and Hewlett Packard Enterprise Company (NYSE:HPE), The Lego Group which is a renowned global toy manufacturer, is also looking at the business potential of states. On January 26, The Lego group announced that it would be moving its head office from Connecticut to Boston by the end of 2026. The company has also decided to assist its employees in moving to the new Boston office if they are willing to relocate. The company’s Connecticut office has been there since 1975. Elaborating on this move, the CEO, Skip Kodak said:
“Boston is ranked one of the best cities in the world to attract and retain talent. This, along with its world-class academic institutions, skilled workforce, and great quality of life makes it an ideal location for our US head office”
Let's now take a look at some of the top US states for business in 2023.
America's Top 20 States for Business in 2023
Methodology
In order to compile a list of the top 20 American states for business in 2023, we decided to choose job growth over the last ten years as our metric. The rationale behind this metric was that the top states for business attract the highest number of companies and hence create the most jobs. To find the job growth rates over the last ten years, we sourced the number of jobs in all US states from 2012 to 2022, from the US Bureau of Economic Analysis' employment statistics. The latest statistics for the number of jobs in each of the respective states were from 2022. Thus, the job growth from 2012 to 2022 was expressed as a percentage change and the US states with the highest percentage change in jobs were selected as America’s top 20 states for business in 2023.
Below, we have listed America’s top 20 states for business in 2023 in ascending order of their job growth rates from 2012 to 2022.
America's Top 20 States for Business in 2023:
20. Alabama
Cumulative 10 Year Job Growth Rate: 15.29%
Alabama is a top US state for business in 2023. The state has kept its business value thriving by providing a favorable business climate and good workforce training thereby being a potential attraction for large firms to settle in.
19. Virginia
Cumulative 10 Year Job Growth Rate: 16.86%
The business friendliness and access to capital is quite good in Virginia which makes it one of the 20 best US states for business in 2023. The administration is also getting industrial sites ready for mega projects by big companies in the future.
18. New Jersey
Cumulative 10 Year Job Growth Rate: 17.61%
The economy of New Jersey has seen a recent growth which signifies its importance as one of the top US states for business in 2023. The quality of life in the state is also characterized by low crime and inclusiveness thereby attracting workers to the state.
17. Massachusetts
Cumulative 10 Year Job Growth Rate: 17.85%
Massachusetts has also risen to be one of the best US states for business in 2023. The state has witnessed improvements in terms of corporate friendliness, access to capital, and inclusion for businesses.
16. Montana
Cumulative 10 Year Job Growth Rate: 18.70%
Montana also makes it to our list of the top US states for business in 2023. It is attractive for businesses as the state offers a low cost of doing business and a booming technology industry.
Tesla, Inc. (NASDAQ:TSLA), Caterpillar Inc. (NYSE:CAT), and Hewlett Packard Enterprise Company (NYSE:HPE) are well established American companies that have a strong financial position in their respective industries.
15. Oregon
Cumulative 10 Year Job Growth Rate: 19.74%
The list of the best US states for business in 2023 includes Oregon as well. The state is known to have a highly skilled workforce. As a result of increased trade and tourism, the state’s economy has also grown which makes it favorable for businesses.
14. Delaware
Cumulative 10 Year Job Growth Rate: 21.89%
Delaware is a potential destination in America for business in 2023. New businesses are emerging in the state. The state is also close to cities such as Baltimore and Philadelphia which makes it ideal for businesses to capture a market in the region.
13. California
Cumulative 10 Year Job Growth Rate: 22.42%
California has a growing technology industry which enables investments from big tech firms. Funding for businesses is also available in the state which helps it become one of the top US states for business in 2023.
12. Washington
Cumulative 10 Year Job Growth Rate: 23.19%
Washington has a lot to offer to businesses as the state economy is strong. The high GDP of the state makes it one of the most favorable US states for business in 2023.
11. North Carolina
Cumulative 10 Year Job Growth Rate: 23.26%
Another favorable US state for business in 2023 is North Carolina. The worker training programs in the state are really effective and the workforce is quite educated and dedicated, adding to the state’s potential as a business location.
10. Tennessee
Cumulative 10 Year Job Growth Rate: 23.97%
The top US states for business in 2023 also include Tennessee. The state has an abundant talent pool and an infrastructure that can support business growth in the state.
US-based companies that have successfully achieved a global footprint include Tesla, Inc. (NASDAQ:TSLA), Caterpillar Inc. (NYSE:CAT), and Hewlett Packard Enterprise Company (NYSE:HPE).
9. South Carolina
Cumulative 10 Year Job Growth Rate: 25.02%
South Carolina is another highly rated US state for business in 2023. The corporate tax rate in the state is comparatively low making it ideal for businesses to settle or expand in the state.
8. Colorado
Cumulative 10 Year Job Growth Rate: 28.35%
Colorado is a top ranked state in the US for business in 2023. This is because of its skilled workforce and a sense of inclusiveness.
7. Georgia
Cumulative 10 Year Job Growth Rate: 29.47%
Georgia also makes it to the top US states for business in 2023. The state has a supportive business environment and a low cost of doing business which makes it attractive for businesses in America.
6. Texas
Cumulative 10 Year Job Growth Rate: 30.04%
Texas has a strong economy with a high job growth rate. These conditions make it worthy for businesses to operate in the state.
Click to continue reading and see America's Top 5 States for Business in 2023.
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Disclosure: None. America's Top 20 States for Business in 2023 is originally published on Insider Monkey.