SBE Council Ranks the 50 States in “Small Business Policy Index 2016”

By SBE Council at 4 February, 2016, 11:45 am

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Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth

Washington, D.C. – Today, the Small Business & Entrepreneurship Council (SBE Council) released its 20^th “Small Business Policy Index 2016: Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth.” The Index, which SBE Council has published for 20 years, ranks the 50 states according to 50 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

The states that are most policy-friendly to entrepreneurs under the “Small Business Policy Index 2016” are: 1) Nevada, 2) Texas, 3) South Dakota, 4) Wyoming, 5) Florida, 6) Washington, 7) Alabama, 8) Arizona, 9) Ohio, 10) Indiana, 11) Colorado, 12) Michigan, 13) Utah, 14) North Dakota, and 15) Virginia.

In contrast, the policy environments that need the most work are: 40) Maryland, 41) Maine, 42) Iowa, 43) Oregon, 44) Connecticut, 45) Vermont, 46) Hawaii, 47) Minnesota, 48) New York, 49) New Jersey, and 50) California.

The “Small Business Policy Index 2016” full report can be read and downloaded here, with an interactive map and summary of each state here.

Raymond J. Keating, SBE Council’s chief economist and author of the study, noted, “The Small Business Policy Index provides the most comprehensive comparison of state policies that affect entrepreneurship, small business and investment. And make no mistake, tax, regulatory, government spending and other governmental performance and cost measures matter state by state. They have real impacts not only on entrepreneurship, investment, small businesses and their workers, but naturally therefore, on the overall economy of each state.”

Consider the following findings from the report:

-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: “Policy matters for entrepreneurship and small business growth. Quite simply, when elected officials impose weighty tax and regulatory burdens, the increased costs and uncertainties mean reduced risk taking and less economic opportunity. The message from our ‘Small Business Policy Index’ to state officials is clear: If you are serious about helping small business, then reduce barriers to entrepreneurship and government costs imposed on small business.”

This year, Small Business Policy Index 2016 has been expanded to include several new measures including: Section 179 expensing conformity, Project Labor Agreement mandates, insurance regulation along with the indexing of corporate income tax brackets.

Small Business Policy Index 2016

Rank State SBPI

1 Nevada 40.322

2 Texas 41.509

3 South Dakota 41.589

4 Wyoming 47.090

5 Florida 50.567

6 Washington 56.720

7 Alabama 62.206

8 Arizona 62.799

9 Ohio 63.758

10 Indiana 64.145

11 Colorado 64.148

12 Michigan 65.499

13 Utah 65.809

14 North Dakota 67.668

15 Virginia 67.832

16 South Carolina 69.547

17 Mississippi 70.375

18 Georgia 71.336

19 North Carolina 71.528

20 Oklahoma 71.845

21 Kansas 74.186

22 Louisiana 74.358

23 Tennessee 74.634

24 Missouri 75.171

25 Alaska 77.101

26 New Mexico 79.373

27 Illinois 80.994

28 West Virginia 82.247

29 Idaho 83.135

30 Pennsylvania 83.177

31 Montana 83.633

32 New Hampshire 84.847

33 Wisconsin 85.119

34 Kentucky 87.728

35 Massachusetts 88.635

36 Delaware 90.093

37 Arkansas 91.345

38 Nebraska 92.193

39 Rhode Island 94.676

40 Maryland 95.122

41 Maine 98.077

42 Iowa 98.110

43 Oregon 100.694

44 Connecticut 104.836

45 Vermont 107.168

46 Hawaii 108.654

47 Minnesota 111.836

48 New York 112.044

49 New Jersey 118.357

50 California 127.458

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil

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