NCPA - National Center for Policy Analysis

Business Costs In South Dakota Are Cheapest In The States

January 9, 2001

The cost of doing business in some states is only 75 percent of the national average -- in terms of unit labor costs, taxes, and energy costs for businesses seeking to relocate. According to a new ranking of the states published by the economics research firm Inc., the Northeast remains by far the most expensive area for business -- while some Midwest and Southern states are bargains.

  • Avoid New Jersey -- the priciest state -- where costs are 114.3 percent of the national average.
  • Costs are almost as bad in Massachusetts, Hawaii, Connecticut, New York and Michigan.
  • But in South Dakota, Wyoming, Nebraska, Oklahoma and Iowa costs are 15 percent to 25 percent lower than the national average.

Fast growth in output per worker has offset wage gains in Utah, Arizona and New Mexico over the past decade. Yet urban areas in the Northeast and California are strong in human capital, with research centers and highly educated workforces -- which help to keep them competitive.

Source: Gene Koretz, "Economic Trends: The Lure of Low Business Costs," Business Week, January 15, 2001.


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