SBE Council Ranks the 50 States in “Small Business Policy Index 2017”

By SBE Council at 8 February, 2017, 6:00 am

21^st Annual Edition Includes 55 Policy Measures to Gauge the Policy Environment Among the States

FOR IMMEDIATE RELEASE

Contact: Raymond J. Keating, rkeating@sbecouncil.org 

631-909-1122 or 703-242-5840                                                                  

Washington, D.C. – Today, the Small Business & Entrepreneurship Council (SBE Council) released its 21^st annual look at how public policies in the 50 states affect entrepreneurship, small businesses and the economy.

The “Small Business Policy Index 2017: Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending measurements.

The most entrepreneur-friendly states under the “Small Business Policy Index 2017” are: 1) Nevada, 2) Texas, 3) South Dakota, 4) Wyoming, 5) Florida, 6) Washington, 7) Indiana, 8) Arizona, 9) Alabama, 10) Ohio

In contrast, the policy environments that rank at the bottom include: 40) Rhode Island, 41) Oregon, 42) Iowa, 43) Connecticut, 44) Maine, 45) Hawaii, 46) Vermont, 47) Minnesota, 48) New York, 49) New Jersey, 50) California.

The “Small Business Policy Index 2017” can be read or downloaded here, with an interactive map that includes highlights and individual state summaries here.

Raymond J. Keating, SBE Council’s chief economist and author of the study, noted, “In the end, the greater the governmental burdens – via taxes, regulations, spending, debt, and failures to adequately execute the essential duties of government – the greater the negatives for economic risk taking, small businesses, and the state’s competitiveness and attractiveness.”

In the report, Keating explains why each measure is included, such as the economics regarding the effects on small business and the economy, along with an extensive section reviewing various studies relevant to the items included in the Index.  Five new measurements were added within the 2017 Index including: annual fees on LLCs, health care open access, paid leave mandates and civil asset forfeiture.

Keating also observed, “Economic growth and population growth are faster in the top half of the states ranked on the Index compared to the bottom half. In terms of people moving among the states, those ranking in the bottom half on the Index lose significant population to the states ranked in the top half.”  Consider:

• Real annual economic growth from 2011 to 2014 among the top 25 states ranked on the 2016 “Small Business Policy Index” averaged 1.68 percent, which was 29.2 percent faster than the 1.30 percent average rate for the bottom 25 states.

• Also, the top 25 states averaged state population growth of 4.9 percent from 2010 to 2015 versus only 2.5 percent for the bottom 25 states. That is, the average growth rate was basically double among the top 25 states versus the bottom 25 states. And in terms of total population numbers, the top 25 states saw an increase in state populations of 8.44 million from 2010 to 2015 versus a gain of 4.15 million in the bottom 25 states. That is, again, the growth among the top 25 states was more than double (103.3 percent higher) than in the bottom 25 states.

• Perhaps most telling is net domestic or internal migration, or the movement of people between the states (that is, excluding births, deaths and international migration). It captures people voting with their feet. From 2010 to 2015, the top 25 states on the “Small Business Policy Index” netted a 2.00 million increase in population at the expense of the bottom 25 states, which lost 2.03 million (with the District of Columbia’s gain explaining the difference). It also is worth noting that among the top 10 states on this year’s Index, 8 gained population from other states, while among the bottom 10 states, 9 lost population to other states.

SBE Council President and CEO Karen Kerrigan said: “As we have been saying over the course of our organization’s nearly 25 year history, policy matters when it comes to starting up, operating and investing in a small business. That is the case at all levels of government – federal, state and local. Getting policy right makes a big difference in terms of boosting a state’s economy, job creation and competitiveness. Many governors and state legislatures have taken this reality very seriously, and have implemented policies that reduce the burden of taxes and regulations on small business. These policy doers have reaped the rewards.  The best states understand that doing nothing can lead to an erosion in their competitiveness, and have also acted accordingly.”

Small Business Policy Index 2017 Rankings

Rank   State                            SBPI

1          Nevada                        44.789

2          Texas                           46.014

3          South Dakota              48.445

4          Wyoming                    51.862

5          Florida                         54.751

6          Washington                 64.175

7          Indiana                        66.852

8          Arizona                       67.263

9          Alabama                      67.799

10        Ohio                            69.250

11        Utah                            69.269

12        Michigan                     69.852

13        Colorado                     72.053

14        North Carolina            73.715

15        Mississippi                   74.597

16        South Carolina            75.112

17        Virginia                       76.550

18        Tennessee                    77.804

19        Oklahoma                    78.956

20        Missouri                      79.128

21        North Dakota              79.299

22        Louisiana                     79.525

23        Georgia                       80.229

24        New Mexico               80.597

25        Kansas                         81.067

26        Alaska                         84.313

27        Idaho                           84.566

28        Wisconsin                    87.720

29        Illinois                         88.134

30        West Virginia              88.674

31        Pennsylvania               89.552

32        Montana                      89.771

33        New Hampshire          90.069

34        Delaware                     97.906

35        Nebraska                     98.238

36        Kentucky                    98.264

37        Massachusetts             99.405

38        Arkansas                     100.886

39        Maryland                     101.859

40        Rhode Island              102.332

41        Oregon                          107.593

42        Iowa                            107.933

43        Connecticut                 113.828

44        Maine                          115.285

45        Hawaii                         117.008

46        Vermont                      117.226

47        Minnesota                   118.602

48        New York                   118.735

49        New Jersey                  127.892

50        California                    138.376

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years, SBE Council has worked to advance initiatives and policies that strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil or Facebook: www.facebook.com/sbecouncil.

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