by Kurt Badenhausen, Forbes Magazine
Utah is Forbes’ Best State for Business for a third straight year. The state has a pro-business climate and companies benefit from energy costs that are 29% below the national average. Utah’s economy has expanded at 2.3% a year over the past five years—fifth best in the U.S. Utah is well known for its winter activities and has seen an increase in tourism since the 2002 Winter Olympics.
...Utah heads our list of the Best States for Business for a third straight year. Utah’s economy has expanded 2.3% annually since 2006–fifth best in the U.S–versus 0.5% for the nation as a whole. “We have a very fertile environment for entrepreneurs and business,” says Gov. Gary Herbert, who was reelected last month in a 68%-28% landslide.
Herbert cites three areas where Utah has a competitive advantage: taxes, its labor force and a favorable regulatory climate. Utah’s 5% flat corporate tax rate is one of the lowest in the country. The Tax Foundation, which released a study in February that measures the tax burdens in each state across different industries, rated Utah sixth best for existing firms. (It ranked No. 10 for new firms.)
Utah has a young, vibrant workforce. The state’s median age of 29 is four years less than the next youngest state, Texas. A third of the state’s workforce is bilingual, according to the Economic Development Corporation of Utah. This is largely a result of the state’s large population of Mormons, many of whom spend time as missionaries overseas. It is an attractive benefit for companies in an increasingly global economy and has helped lure large U.S. companies with international operations like eBay, Goldman Sachs, Oracle and Procter & Gamble. Goldman Sachs’ Salt Lake City office is its second biggest in the Americas with more than 1,400 employees. Utah has doubled its international trade over the past five years and this year it is up nearly 40%.
Utah ranks third for regulatory climate in the Mercatus Center’s Freedom in the 50 States study–a new metric in our Best States study. “Utah is less likely to reward frivolous lawsuits or hand out excessive judgments,” says Jason Sorens, who co-authored the report. “Utah’s health insurance regulations are generally light, resulting in less costly policies and more choice for people in the small group and individual markets.”
Last year, Gov. Herbert initiated a review of the state’s nearly 2,000 administrative rules. The state eliminated or modified 368 of them that Herbert characterized as “a drag on the economy.”
Among the other pluses for Utah: energy costs that are 29% below the national average. It is also one of only seven states to maintain an Aaa bond rating from the three rating agencies–something the U.S. lost last year. Herbert’s motto: “Government should get off of your backs and out of your wallets.”
Our ranking is based on six vital factors for businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life. We weighed 35 points of data to determine the ranks in the six main areas. Business costs, which include labor, energy and taxes, are weighted the most heavily. We relied on 10 data sources; research firm Moody’s Analytics was the most-utilized resource (click here for a detailed methodology).Click to read the full article...