How US States Fared Over 20 Years of Business Rankings
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The Top States Myth: What Two Decades of Rankings Reveal About American Competitiveness
The concept of the “Top State” has been a staple of business journalism for two decades. However, it’s essential to examine what this metric actually tells us about a state’s ability to attract and retain businesses.
Over the past 20 years, states have experienced significant fluctuations in their rankings. Some, like Virginia, Texas, and North Carolina, have consistently ranked near the top, while others, such as Alaska, Hawaii, Rhode Island, and West Virginia, have struggled to rise above the middle pack.
Michigan’s transformation is particularly noteworthy. After ranking No. 41 overall in 2007, the state now ranks No. 6, thanks in large part to its low costs, robust infrastructure, and favorable access to capital. This remarkable turnaround occurred despite the U.S. auto industry’s near-death experience just a few years prior.
Ohio has also undergone significant changes. In 2007, it ranked No. 30 overall and No. 33 for Cost of Doing Business. By 2026, Ohio had topped the charts as America’s Top State for Business, with a #1 ranking in Cost of Doing Business.
Conversely, some states have experienced a decline in their rankings. South Dakota, which held the top spot in 2013, now ranks No. 44 overall, with its economy ranking No. 45 and quality of life slipping to No. 33 from No. 18 in the inaugural year.
The case of Idaho is also intriguing – it dropped from No. 6 in 2007 to No. 30 this year, despite boasting the lowest Cost of Doing Business at one point. The fluctuations in these states’ rankings can be attributed to a combination of deliberate policy changes and shifting economic currents.
It’s essential to critically evaluate the limitations of relying solely on these rankings. A state’s performance in a single metric doesn’t tell the whole story. For instance, while Ohio excels in Cost of Doing Business, its overall ranking masks other challenges. Conversely, South Dakota’s decline might be attributed to factors beyond its control.
The Top States for Business rankings have become a benchmark for governors and business leaders alike. However, we must acknowledge their limitations by examining the past two decades. Even the most consistent performers can stumble, while those who struggle can experience remarkable turnarounds.
As we look ahead to the next 20 years, it’s clear that states will continue to compete for businesses and talent. Policymakers should focus on understanding what drives competitiveness in each state, rather than simply emulating top performers or trying to identify innovative solutions to address unique challenges.
The stories of Michigan and Ohio demonstrate that even the most unlikely turnarounds can occur with the right combination of policy, infrastructure, and access to capital. By examining these cases and others like them, we can gain a deeper understanding of what truly drives competitiveness.
As the Top States for Business rankings enter their third decade, it’s time to reexamine our assumptions about economic development and what constitutes success. The stories of Michigan, Ohio, South Dakota, and Idaho serve as cautionary tales – they remind us that even the most seemingly robust economies can be fragile and subject to change.
The Top States for Business rankings remain a valuable tool for policymakers and business leaders. However, we must use them with a critical eye, recognizing both their limitations and the complexities of economic development. By doing so, we can create more informed policies that foster growth, job creation, and competitiveness – and perhaps one day, a truly “Top” state will emerge from the pack.
Reader Views
- SBSam B. · deal hunter
The Top States rankings are just a snapshot in time. But what about the long game? How do states adapt their policies and strategies when they're ranked low, versus when they're on top? We need more analysis on how these fluctuations impact state budgeting and decision-making over the years. For instance, did Michigan's sudden rise to #6 lead to a surge in investments that might not have materialized otherwise? How about Ohio's newfound #1 ranking for Cost of Doing Business - is this just a temporary reprieve from a looming economic downturn?
- PRPat R. · frugal living writer
It's about time someone started questioning the validity of these rankings. I've long maintained that what matters most for businesses isn't some arbitrary score, but rather the real-world costs and benefits of setting up shop in a particular state. For instance, low labor costs can be offset by higher regulatory burdens, while states with high tax rates may incentivize businesses to invest in infrastructure, thereby creating a more favorable business environment overall. The article highlights Michigan's impressive turnaround, but what about other factors that contributed to its success? It's time for policymakers and business leaders to focus on the underlying drivers of economic growth rather than chasing after a Top State badge.
- TCThe Cart Desk · editorial
The "Top State for Business" designation is a simplistic metric that fails to account for the diversity of industries and regional economies within each state. For instance, states like Michigan and Ohio have made significant strides in their overall rankings, but at what cost? The article mentions low costs and favorable access to capital as key drivers, but it's worth noting that these factors can also contribute to income inequality and an over-reliance on cheap labor. A more nuanced approach would consider the long-term implications of these policies on workers' well-being and community development.