NEW JERSEY -- Personal finance site WalletHub has just released its annual report of Best and Worst States to Start a Business, and the Garden State ranked among the worst.
In fact, New Jersey rated 49th out of 50 states, with only Rhode Island faring worse in the analysis. In order to determine the best and worst states to start a business, WalletHub evaluated all 50 states across 26 relevant metrics and compared them across three key dimensions: 1) Business Environment, 2) Access to Resources and 3) Business Costs.
"Lower business costs are what New Jersey really needs to become more competitive. The state has some of the most expensive office spaces, second highest labor costs, and its corporate taxes are among the highest, as well," WalletHub analyst Jill Gonzalez told TAPinto.net.
"New Jersey's share of engaged workers is just 29 percent, the fourth lowest in the country, and businesses in the state are not using technology to improve their services, or increase their capacities. It also lacks in financing accessibility," Gonzalez added.
A spokesperson for Governor Phil Murphy, said that while we have some work to do, but the state also has a great deal to offer companies who do business here.
“Governor Murphy believes businesses that value education, infrastructure, and workforce, will value all that New Jersey has to offer," said spokesman Darryl Isherwood, a spokesperson for Governor Murphy via an email interview with TAPinto.net. "For starters, we are number one in the nation in our concentration of scientists and engineers. We have the highest percentage of K through 12 students in the country enrolled in foreign language classes, and we have some of the top ranked colleges and universities in the country."
"Our pre-K to 12 education system is No. 2 in the country, we were named the No. 1 place to raise a family last year, our health care system is among the top in the nation, and we are one of the safest overall states in America," Isherwood added. "“Our location offers unparalleled transportation opportunities, and our workforce is one of the most diverse and well-educated in the nation. This wide range of factors is not well represented by this particular formulaic survey."
WalletHub focused on the following metrics:
Business Environment was evaluated by Ave. Length of Work Week, Engaged Workers (those who are enthusiastic about their workplace), Growth in Number of Small Businesses, Growth of Ave. Business Revenues, Five-Year Business Survival Rate, Industry Variety, and Job Growth, among other factors.
Access to Resources was evaluated on Financing Accessibility, Human-Capital Availability, Higher-Education Assets (based on WalletHub’s “Best Universities Ranking” report), Share of College-Educated Population, and Working-Age Population Growth, among others.
Business Costs were evaluated on Office-Space Affordability (square-footage cost of commercial office space), Labor Costs, Ave. Annual Single Insurance Premium per Enrolled Employee (refers to employer-based health insurance), Corporate Taxes, and Cost of Living, among others.
New Jersey and its neighboring states ranked low in the WalletHub analysis. New York was rated No. 42, Delaware came in at No. 44, and Pennsylvania rated No. 45.
"Although there are several categories where New Jersey needs improvement, there are also areas where the state ranks at or near the top," Gonzalez added. "Some of these include employment specialization, a large share of fast growing firms, and the fifth highest percentage of college educated population."
States outside of the Northeast and Mid Atlantic regions placed much higher in the rankings -- with Texas rated as the best state for small business.
According to U.S. Bureau of Labor Statistics data, about a fifth of all startups typically don’t survive past the first year, and nearly half never make it to their fifth anniversary. Startups fail for different reasons, a “bad location” is among the most common.
To view the entire WalletHub ranking, click here.