Virginia is again as America’s High State for Enterprise in 2021

The Virginia State flag and the American flag fly close to the Virginia State Capitol.

Drew Angerer | Getty Photos

A yr of pandemic and social reckoning has modified the nation in numerous methods. However one factor has stayed the identical: America’s High State for Enterprise is Virginia.

The Outdated Dominion captures prime honors in CNBC’s 2021 competitiveness rankings, simply because it did within the earlier research revealed in 2019. It’s Virginia’s fifth win for the reason that research started in 2007, greater than another state. And it’s the first state to publish back-to-back victories (CNBC didn’t publish rankings in 2020 as a result of pandemic.)

Virginia pulls off the repeat efficiency regardless of a vastly altered aggressive panorama, a testomony to the resilience of the state’s enterprise local weather.

Mitsui Osk Traces ship MOL Magnificence docked at one among Norfolk’s port terminals.

Alexandre Tziripouloff | iStock Editorial | Getty Photos

“We have seen a outstanding V-shaped restoration from Covid,” mentioned Stephen Edwards, CEO and government director of the Port of Virginia, a serious financial engine within the state, which is in the course of a 10-year, $1.5 billion enlargement. “Might 2021 was an all-time file for the port, 56% larger than we had been final yr, and considerably above 2019.”

Going into the pandemic and popping out of it, Virginia’s biggest power has been its potential to nurture and retain expertise. Public colleges carry out nicely by way of take a look at scores, and a world-class larger training system is reliably funded.

Virginia employers reap the advantages, with one of many best-educated workforces within the nation — practically 39% of employees have a bachelor’s diploma or larger, in keeping with the U.S. Census Bureau. Virginia additionally boasts the nation’s third-highest focus of science, expertise, engineering and math (STEM) employees, in keeping with the U.S. Bureau of Labor Statistics.

Virginia Tech Hokies followers cheer towards the Boise State Broncos at FedExField on September 6, 2010 in Landover, Maryland.

Geoff Burke | Getty Photos

“Schooling is the most effective device now we have to make our Commonwealth a greater, extra equitable place for everybody,” mentioned Gov. Ralph Northam, a Democrat, in his annual State of the Commonwealth tackle on Jan. 13.

The battle for inclusiveness

Fairness has not all the time been the state’s sturdy go well with — nor the governor’s.

In 2019, one yr into his time period, Northam was embroiled in a scandal over a racist photograph on his 1984 yearbook web page at Jap Virginia Medical Faculty displaying a person in blackface standing with one other in Ku Klux Klan robes and hat. The governor has insisted that neither particular person is him, however he has in any other case struggled to elucidate the photograph, resulting in widespread calls two years in the past for his resignation.

Virginia Gov. Ralph Northam speaks at an occasion titled “Reworking Rail in Virginia” on the Amtrak-VRE station in March 30, 2021 in Alexandria, Virginia.

Win McNamee | Getty Photos

As a substitute, Northam vowed to make use of the rest of his time period to work towards equality within the state.

“There are a variety of inequities in our society, to incorporate entry to well being care, entry to training, entry to the enterprise setting, entry to the voting sales space,” Northam instructed CNBC in 2019. “So, we’re actually specializing in these inequities.”

Two years later, Northam has gone a good distance towards preserving his guarantees.

This yr alone, the state enacted laws requiring all companies to develop plans for range, fairness and inclusion of their ranks. And in April, Virginia bucked the pattern amongst many different Southern states with a package deal of legal guidelines to broaden voting rights, repealing voter ID legal guidelines, and making Election Day a state vacation.

In 2020, Northam signed the Virginia Values Act, increasing anti-discrimination legal guidelines to make Virginia the primary state within the South to increase complete protections to LGBTQ residents.

The brand new panorama for rating the states

The push in Virginia comes as firms are more and more vocal of their calls for for inclusiveness within the states the place they do enterprise. That, in flip, has elevated the significance of fairness and inclusion in CNBC’s 2021 competitiveness research. It’s among the many many modifications this yr to convey High States consistent with the brand new aggressive panorama, together with new metrics on range, sustainability and connectivity.

As up to now, our methodology scores the states in 10 classes, weighted based mostly on how ceaselessly the states cite them of their financial growth advertising and marketing pitches, for a complete of two,500 factors. This yr, Virginia scores 1,587 factors to take the 2021 High States crown.

This yr’s classes and level totals are:

  • Value of Doing Enterprise – 400 factors
  • Infrastructure – 375 factors
  • Life, Well being and Inclusion (previously High quality of Life) – 375 factors
  • Workforce – 325 factors
  • Financial system – 250 factors
  • Enterprise Friendliness – 200 factors
  • Entry to Capital – 175 factors
  • Expertise and Innovation – 175 factors
  • Schooling – 150 factors
  • Value of Dwelling – 75 factors 

Virginia’s strongest class is Schooling, the place it finishes a detailed second to perennial chief Massachusetts. The state is available in third for Workforce, hampered barely by a relative scarcity of employees. Unemployment is operating barely under the nationwide common, and Virginia lags by way of educated employees transferring into the state, in keeping with CNBC’s evaluation of Census Bureau information.

A bicyclist stops in entrance of signage within the Crystal Metropolis neighborhood of Arlington, Virginia, on June 28, 2019, the positioning of Amazon’s HQ2.

Andrew Harrer | Bloomberg | Getty Photos

The state finishes No. 11 for Life, Well being and Inclusion, incomes factors for the voting rights and anti-discrimination legal guidelines, however falling brief on some health-care metrics together with public well being funding, the place Virginia ranks thirty sixth per capita in keeping with the United Well being Basis. The state has logged higher than common Covid-19 vaccination charges, however the state’s hospitals had been stretched past capability when the pandemic peaked earlier this yr.

Virginia’s worst class is Value of Dwelling, the place it finishes No. 32. The state finishes No. 26 within the all-important Value of Doing Enterprise class, harm by the Eleventh-highest wage prices within the nation, in keeping with the Labor Division.

Political calculus in a governor’s race

Virginia will elect a brand new governor this fall. Northam won’t be on the poll — the state structure bars a governor from serving consecutive phrases — however his insurance policies shall be.

The Republican nominee, former Carlyle Group Co-CEO Glenn Youngkin, is promising to convey a enterprise chief’s perspective and “shared values” to the job.

Glenn Youngkin, former co-CEO of the Carlyle Group, on the 2020 World Financial Discussion board in Davos, Switzerland on Jan. twenty first, 2020.

Glenn Youngkin, Co-CEO of the Carlyle Group

Youngkin has criticized Northam’s insurance policies as being exterior the mainstream, and has vowed to reverse a few of them, similar to restoring the voter ID regulation. He has additionally accused the governor of mismanaging the pandemic by preserving colleges and companies closed for too lengthy. However Youngkin has targeted extra of his consideration on the Democratic nominee, former Gov. Terry McAuliffe, positioning himself as an outsider and McAuliffe as an entrenched politician.

In an election that’s more likely to pit the suburbs within the northern a part of the state towards rural areas elsewhere, voters will determine which candidate is healthier geared up to maintain Virginia on prime.

The remainder of the highest 5 states for enterprise

Ending second this yr is North Carolina, marking its finest end within the CNBC research’s historical past. In truth, the Tar Heel State trails Virginia by simply 41 factors.

Charlotte North Carolina

Myles Gelbach | iStock | Getty Photos

North Carolina does nicely in Financial system (No. 4) with strong progress, and Workforce (No. 6) with a gradual inflow of educated employees. Each helped persuade Apple earlier this yr to decide on the Analysis Triangle space exterior Raleigh for its first East Coast company campus.

However as one among solely 5 states with no statewide public lodging regulation to guard nondisabled residents towards discrimination in keeping with the Nationwide Convention of State Legislatures, North Carolina falls brief on Life, Well being and Inclusion (No. 37), probably sufficient to maintain the highest spot out of attain.

Utah finishes third due to the third-best financial system within the nation, in keeping with CNBC’s evaluation. Financial progress barely missed a beat in 2020, in keeping with U.S. Division of Commerce information. The Beehive State’s financial system contracted by simply 0.1% for the yr — the most effective within the nation — helped by a 7.1% surge within the fourth quarter.

Followers of the Texas Rangers maintain a Texas state flag at a recreation in Arlington, Texas.

Stephen Dunn | Getty Photos

Texas is available in fourth on the power of America’s prime workforce — educated employees are flocking to the state in droves, in keeping with Census Bureau information — and the fifth-best financial system. However this yr’s end ties for the worst ever for the four-time High State, which final received in 2018.

Whereas the scale, depth and breadth of the Lone Star State’s financial system places it on the coronary heart of any dialog about competitiveness, Texas has relentlessly pursued insurance policies that run counter to inclusiveness. Additional proposed restrictions on voting and LGBTQ rights failed within the common legislative session, however Gov. Greg Abbott, a Republican, is urgent forward with the trouble in a particular session that started final week. Lawmakers had been to take up the voting restrictions as quickly as Tuesday, however Democrats left the state on Monday, leaving the legislature with no quorum, probably for the rest of the 30-day session. Abbott, who can name a vast variety of particular periods, has vowed to proceed his efforts to move the regulation.

Add a woefully underfunded public well being system, the nation’s highest charge of uninsured, and a low Covid-19 vaccination charge, and Texas finishes No. 49 for Life, Well being and Inclusion.

Coming in at No. 5 is Tennessee, making its first look within the High 5. The Volunteer State has the nation’s second-best financial system (following pink sizzling Idaho), in addition to the eighth-lowest price of doing Enterprise, bolstered by ample incentives and a aggressive tax local weather.

State movers

This yr’s most improved state is Maryland, surging 19 factors from its No. 31 rating in 2019 to complete No. 12 this yr.

The state improves primarily on the power of its infrastructure — not its conventional infrastructure like roads and water utilities which stay in suboptimal form, however in elements like broadband and the ability grid, each of that are new metrics for 2021. Maryland is a frontrunner on increasing broadband entry and grid modernization. And the state performs nicely in different areas, scoring larger rankings in eight of the ten classes of competitiveness.

The Chicago, Illinois, downtown skyline together with the Willis Tower, previously referred to as the Sears Tower, is seen from the air, February 15, 2013. 

Saul Loeb | AFP | Getty Photos

Different enhancements embody Illinois, leaping 15 spots to No. 15; Michigan, which rises 13 spots to No. 11, and Oklahoma, transferring 11 locations to No. 32.

The largest decline belongs to Oregon, which falls 13 spots in 2021 to No. 35 general, largely as a result of a giant drop in its Financial system rating. The state falls to No. 29 within the class, in contrast with No. 7 in 2019 when the Pacific Northwest was going gangbusters.

The pandemic hit the Beaver State laborious, state economists say. Greater than 20% of the labor pressure collected unemployment advantages sooner or later in 2020 after the shutdowns started. General financial progress for the complete yr fell 2.8% in Oregon, or barely higher than the nationwide common, in keeping with the Commerce Division. However Oregon has been slower than the remainder of the nation to rebound, with 2.7% progress within the fourth quarter versus 4.3% nationally.

Hardest hit was the state’s important tourism sector, however officers additionally notice that Oregon is among the many states which might be most depending on worldwide commerce. Its largest overseas buying and selling companions are China, Canada, Japan, Malaysia and South Korea, all of which suffered disruptions final yr.

Different large declines embody New Hampshire, which slides 12 spots to No. 37; Nevada, slipping 11 locations to No. 40, and Arizona and Wyoming, which every fall 10 locations to No. 20 and No. 36 respectively.

Backside states for enterprise

This yr’s also-rans discover themselves in acquainted territory.

State No. 46 Rhode Island improves from final place in 2019 even because it stays within the backside tier. The Ocean State’s bodily infrastructure stays dismal, however good broadband and a dependable electrical grid pull it out of the cellar.

No. 47 West Virginia ranks close to the underside for Expertise and Innovation, Entry to Capital, Enterprise Friendliness and Schooling.

Coal mounds sit beneath coaling towers on the SunCoke Vitality Companions LP Ceredo Terminal in Ceredo, West Virginia.

Luke Sharrett | Bloomberg | Getty Photos

No. 48 Maine has the nation’s worst Infrastructure, together with probably the most unreliable energy grid of any state. The common buyer endures greater than 15 hours per yr with out energy, in keeping with the U.S. Division of Vitality.

And states 49 and 50 — Hawaii and Alaska — are outrageously costly locations during which to reside and do enterprise at a time when price is king.

We welcome your suggestions on this yr’s rankings. Tell us your ideas on social media utilizing the hashtag #TopStates.

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