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CNBC's Worst States For Doing Business

Friday, 11 Jul 2008 | 8:22 AM ET

California may have an economy that’s among the top ten in the world, but when it comes to CNBC’s Top States For Business 2008 survey, the state is clearly average, ranking 25, just a step ahead of New York.

It’s one of several seemingly surprising findings in the 2008 data.

Another is Delaware. Though many a major company has chosen to incorporate there, the state is a lowly 41 in our rankings.

On closer inspection, however, figuring out why states fared poorly in America’s Top States For Business 2008 takes a bit less work than determining why others did well.( Texas, the winner, scored well in most categories, especially the ones with the most points.)

Itusually comes down to performance and scoring in three key categories, and they happen to be the three with the most impact on the weighting and the overall rankings: Cost of Doing Business, Workforce and Economy.

California, where is considered a highly regulated state, ranked 48 out of 50 in Cost of Doing Business. It also ranked at the bottom in Business Friendliness (48) and Cost of Living (49).

That more than offset high scores in Access To Capital (1), Quality of Life (4) and Economy (7).

A low ranking in Cost Of Doing Business (33) also hurt Delaware, as did bottom-ten showings in Transportation (47) and Access To Capital (41). Being No. 1 in Business Friendliness can hardly offset those negatives.

The 10 Worst States

The pattern is even more apparent in the bottom ten, what we’ll call the worst states for doing business.

Look at Hawaii (49) and Alaska (50), which repeated their 2007 survey showings.

The Aloha State ranked 49 or 50 in four categories, including Cost of Doing Business and Cost Of Living.

Alaska ranked 48 or 49 in three categories, as well as 47 in Cost Of Living. Unlike Hawaii, which made the top ten in Quality of Life, Alaska’s best showing was 35. Neither state scored well in Business Friendliness.

Maine (44) is another good example. In fact, you could call it “The Forty-Something State”, as it ranks 40 or higher in six of ten categories, including Cost of Doing Business, Economy and Workforce. Strong showings in two other relatively important categories, Education (8) and Quality of Life (14), spared it from keeping company with the likes of Hawaii, Alaska and Rhode Island.

Close behind Maine is Mississippi (46), which ranked 44 or higher in five categories, including Economy, Education and Business Friendliness. Unsurprisingly, perhaps, the nation’s poorest state, scored well in the Cost of Doing Business (17).

Rhode Island (48 for the second year in a row) ranked in the bottom ten in five categories, including Cost of Doing Business and Business Friendliness.

Worst States for Business

Rank State Overall Score
41 Delaware 853
42 Alabama 842
43 Louisiana 792
44 Maine 776
46 Mississippi 739
47 West Virginia 729
48 Rhode Island 692
49 Hawaii 624
50 Alaska 539

The remaining worst states --Alabama(42), Louisiana(43), Nevada (45), West Virginia (47) – performed poorly in enough key areas to explain their lowly status, but the data yielded some interesting results in individual categories.

Nevada ranks 49 in Education but 16 in Workforce.

Louisiana finished 50 in Quality of Life (vs. 40 in 2007), even though it scored relatively well in Cost of Living (19) and Economy (14).

Perhaps, the fun-loving city of New Orleans may not be so enjoyable for its residents, especially in the wake of hurricanes Katrina and Rita three years ago.

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Top States For Business 2012

Top States For Business 2011