America's Top States for Business 2009

CNBC's Top States For Business '09 -- What's New

Our annual study of America’s Top States for Businessrates the states on the criteria they use to sell themselves. To do that, we analyze each state’s economic development marketing pitch, then weight our categories and criteria based on how prevalent they are as selling points.

In calculating this year’s weightings, we found some significant changes in the states’ pitches, perhaps because of the stark changes in the economy since we began our study in 2007.

The top selling point remains the Cost of Doing Business—it’s hard to beat the bottom line.  So, for example, Oregon(Overall Rank 18) touts the “second lowest effective business tax rate” in the nation, and South Carolina (37) says it is “proud” of its low-tax structure. And nearly every state pitches its top notch Workforce, which remains the number two category.

After that, however, things start to change.

With most state economies in rough shape, states are instead emphasizing their Quality of Life, a relatively minor category in previous years. This year, it has become a major selling point, so we’ve moved it up to the third-heaviest weighting.

While Michigan(41) suffers from one of the worst economies in the nation, it can still boast of “the superb quality of life” its residents enjoy. That’s not to say Economyis not a key category, but this year it drops into fourth place, just ahead of Transportation& Infrastructure. That category has also moved up in importance, as states emphasize a resource that is less susceptible to changes in the economy.

In contrast, Education and Cost of Living are extremely sensitive to the economy, and states are de-emphasizing the two subjects in their sales pitches. As a result, we have de-emphasized them in our study. Business Friendliness and Access to Capital have both moved up in relative importance.

Here are the new and previous category weightings:

In order to accommodate the changes in category weightings, we increased the total possible points in our study to a nice, round 2,500 from the previous maximum of 2,021.  So if you’re playing at home, the point totals do not represent an apples-to-apples comparison with previous years. The rankings, however, are comparable. Just like in 2007 and 2008, America’s Top States for Business 2009 ranks the states on the criteria they use to sell themselves.