Set It in Stone! South Dakota Is 2013 Top State for Business

Tuesday, July 09, 2013

Article By: CNBC  |  Scott Cohn

 

We have a winner—and a new champion!

 

South Dakota has climbed to the top of America's Top States for Business for 2013.

 

It is the best finish yet for the Mount Rushmore State, which has always been a quiet contender in our annual study, rarely finishing outside the Top 10. But more impressive, South Dakota's point total this year—1,639 out of a possible 2,500—is the highest logged by any state since we began keeping score in 2007.

 

(Read more:More Than Mount Rushmore by SD Gov. Daugaard)

 

Each year, we rate all 50 states on more than 50 metrics in 10 categories of competitiveness. We weight the categories based on how frequently they appear as selling points in state economic development marketing materials. That way, we hold the states to their own standards. You can read more about our methodology here.

 

This year's categories and point values are:

  • Cost of Doing Business (450 points)
  • Economy (375 points)
  • Infrastructure (350 points)
  • Workforce (300 points)
  • Quality of Life (300 points)
  • Technology & Innovation (300 points)
  • Business Friendliness (200 points)
  • Education (150 points)
  • Cost of Living (50 points)
  • Access to Capital (25 points)

 

In many ways, the competitive landscape—and our study—shifted in South Dakota's direction this year. A wave of tax cutting following the 2010 Republican sweep of statehouses across the country has led to a wave of states touting their low costs of doing business. This is more than just politics, and claims about low costs are hardly limited to Republican administrations. After all, the message falls on very receptive ears. Business leaders and groups we consult for our study consistently put cost at the top of their criteria.

 

As a result, Cost of Doing Business carries more weight than ever in our study.

 

(Read More:States Battle for Business With Fatter War Chests)

 

And no state delivers the goods on low business costs the way South Dakota does.

 

South Dakota not only offers one of the lowest tax burdens in the country—no individual or corporate income taxes and low sales and property taxes—but it also has among the nation's lowest utility rates, wages and commercial rent costs.

 

The state is not a one-trick pony, however.

 

In Business Friendliness, which measures the state's legal and regulatory climate, South Dakota finishes No. 2 this year, to perennial favorite Delaware.

 

With a pristine environment, relatively low crime, and some of America's most stunning natural beauty, South Dakota finishes seventh in Quality of Life.

 

And South Dakota's economy, while often overshadowed by its oil-booming neighbor to the north, finishes a solid sixth. State finances are strong, the housing market is recovering, and the unemployment rate is among the nation's lowest.

 

(Read More:States for Creating Manufacturing Jobs)

 

That low unemployment hurts South Dakota in the Workforce category, where it finishes 11th—in part due to the short supply of available workers. It is a problem Gov. Dennis Daugaard is not taking lying down.

 

In May, Daugaard traveled to neighboring Minnesota to open a kiosk in the Mall of America to attract workers to his state.

 

"I like to think of South Dakota is not stealing employees, but providing refuge," Daugaard said.

 

But he has other issues to deal with beyond a worker shortage.

 

South Dakota finishes near the bottom, 48th, in the Technology & Innovation. It is among the least Internet-connected states, and research dollars largely bypass the state. Venture capital funding also steers clear, with a 39th-place finish in Access to Capital. And the state lags in Education, where it finishes 30th.

 

Still, South Dakota overcomes all of that to come out on top overall.

 

Read the rest of the article online here.

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