Last week, CNBC released its 2024 list of “America’s Top States for Business,” which ranks all fifty states. CNBC has been publishing this annual list since 2007 and for the 17th consecutive year (there was no published list in 2020), Georgia has ranked in the Top Ten, including a ranking of fourth both this year and last. While CNBC regularly makes changes to both the metrics and their relative weights used to determine the rankings, it is a credit to our state that it consistently remains highly ranked. There is also good news this year for our neighbors in South Carolina. After ranking from the mid-20’s to the upper-30’s in the prior years, South Carolina cracked the Top Twenty for the first time this year at #19. In today’s column, I will look deeper into these rankings to see why Georgia is so highly ranked and what it might want to do looking forward to remain one of the top states for business.
In order to see what Georgia is doing right, we can look at the methodology CNBC uses to determine its rankings. CNBC scores the 50 states on 128 metrics that fit into ten broad categories of competitiveness. Those ten categories are weighted based on how frequently states use them as a selling point in their economic development marketing materials. The 10 categories (and their associated point allocation/weighting) are as follows: Infrastructure (425 points/17%); Workforce (375 points/15%); Economy (350 points/14%); Quality of Life (325 points/13%); Cost of Doing Business (275 points/11%); Technology & Innovation (250 points/10%); Business Friendliness (250 points/10%); Education (125 points/5%); Access to Capital (75 points/3%); and Cost of Living (50 points/2%).
Let us first look at the categories in which Georgia shines. Georgia ranks first in the nation in Infrastructure, scoring 285 out of a possible 425 points and a letter grade of A+. The infrastructure category captures such things as a state’s transportation system (air, waterways, roads, and rail), its quality and availability of broadband service, availability of land, office, and industrial space, and utility (water, electrical grid) infrastructure. We are fortunate to have the world’s busiest airport in Atlanta, providing access to travel around the globe, two of the busiest ports on the East Coast (Savannah and Brunswick), and numerous interstates crisscrossing the state. Our state has done a great job leveraging some of its geographical advantages, such as expanding and deepening the Port of Savannah to enable its handling of bigger vessels. The state will need to continue to proactively refresh and expand its infrastructure to maintain this most important competitive advantage.
Two related categories in which Georgia stands out are Workforce and Education. Georgia ranked 4th in the nation in Workforce with a letter grades of B+ in Workforce which is critically important and often cited as the most important factor in business location decisions in recent years. This category captures each state’s concentration of STEM workers and the percentage of workers with bachelor’s degrees, associate degrees, and industry-recognized certificates. It also considers the net migration of educated workers to the state, worker training programs, and worker productivity. The Education, where the state ranked 8th with a letter grade of A-, looks at multiple measures of K-12 education, including test scores, class sizes, and spending while looking at the colleges and universities in the state and long-term trends in support for higher education. The University System of Georgia (USG) and Technical College System of Georgia (TCSG) provide excellent higher education at affordable prices while the Hope scholarship and grant programs make higher education even more affordable and accessible. In recent years, we are finally seeing the investment necessary in K-12 education to support our future workforce and additional investment at this level will need to continue.
Georgia grades out very well in most of all the other categories, scoring letter grades of B (Economy (ranks 7th in the country); Cost of Doing Business; Technology & Innovation; and Access to Capital. However, grades below B were received in Cost of Living (B-), Business Friendliness (C+), and Quality of Life (D-). I think it is worth looking at our three low grades and determining what, if anything, needs to be done about them.
Despite the B- grade, Georgia ranked 18th in the nation in Cost of Living. This category is based on an index of costs for basic items, with an added emphasis on housing affordability. In the grand scheme of things, Georgia still seems to be relatively affordable, but maybe the one thing the state can look at is providing incentives for more affordable housing. I was extremely surprised to see the relatively low grade for Business Friendliness, but this is again somewhat offset by a ranking of 19th in the nation. The Business Friendliness category appears to be driven most heavily by the state’s regulatory environment and I would have expected Georgia to score well there. It might be advisable for our state chamber and economic development agencies to examine our regulatory environment and the state lawsuit and liability climate, the other major drivers of this category.
Quality of Life is probably the most controversial category in the ranking and the one in which Georgia performed the worst, ranking 40th in addition to the D- grade. In this category, “livability factors” such as per capita crime rates, environmental quality, and health care help drive the score. However, the score is also impacted by things like inclusiveness in state laws, protections against discrimination, accessible and secure election systems, and reproductive rights. I think this is particularly controversial because these factors are not inhibiting people from moving to Georgia. Georgia’s net migration of 74,000 in 2022 (the most recent year available) was the fifth highest in the nation. However, I think the state needs to examine these factors, particularly crime rates and health care, to ensure that they complement all the positives the state has to offer.
It’s clear that Georgia remains one of the best states for business and that enables our state to both recruit new businesses and attract new workers. However, we must remain vigilant and diligent, as other states are doing their best to compete against us. Our state government and local municipalities have done a good job leveraging our strengths and mitigating our weaknesses, but they need to continue to do so proactively to remain a business and economic powerhouse.
You can visit the full CNBC top states for business rankings here.
