By Haddon Libby
Which state do you think is the best place to live? If you run a business, which state might be the best for doing business?
If you combine the needs of business as well as workers, one can make a strong case that Maryland and Utah do the best jobs at balancing these often conflicting needs.
In coming to this conclusion, I started by looking at a recent report issued by The Tax Foundation. They analyzed what $100 is worth in each state.
Their study found that $100 was worth the most in Mississippi ($115.34), Arkansas ($114.29), and Alabama ($113.90), followed by South Dakota and West Virginia. Suffice it to say that the places where most of us do not want to live were the friendliest toward our pocket books.
Where did you spend your $100 the fastest? It is almost comical but the answer is Washington DC at $84.67. Second on the list made more sense with Hawaii at $85.62. Population centers took the next three spots with New York ($86.43), New Jersey ($87.34) and our very own home state of California at $88.97.
For comparison, Texas was $103.52, Massachusetts at $93.37, Maryland ($90.66) and Utah (103.09).
Next, I looked at a report by the Council for Community and Economic Research that analyzed this data differently and came up with their Cost of Living Index. This used the same information as the Tax Foundation and used this to adjust the median income of a person in a state up or down in order to see which person had the most (or least) purchasing power.
Their study found that Washington DC’s neighbor, Maryland, had the highest median income at $76,165 as well as the highest purchasing power at $67,100. Meanwhile, New Yorkers had a median income of $54,310 and the worst purchasing power at $35,600.
Remember Mississippi where $100 gets you $115.34 of stuff? Their median income is the lowest in the nation at $35,521 but buys $37,900 of stuff which is $2,300 higher than those living in New York.
Here in California, we were 41st with purchasing power of $44,900 and ahead of Kentucky, South Carolina, Alabama, Florida, Maine, Louisiana, West Virginia, Mississippi and New York.
Behind Maryland at the top of the list was Minnesota at $64,900, a full $20,000 higher than California followed by Utah ($61,300), Virginia ($60,700), North Dakota ($58,900), New Hampshire ($58,500) and Iowa ($57,700).
Lastly, I looked at a recent CNBC/Global CFO Council to see which states were the best (and worst) for businesses.
Utah ranked #1 for business followed by Texas, Colorado, Minnesota and North Carolina. The least business friendly state was Rhode Island followed by Hawaii, West Virginia, Mississippi and Maine.
Where did California rank? We were 32nd due in large part to Silicon Valley and their access to capital as well as a relatively robust economy.
California was the least friendly state toward business while New Hampshire was the friendliest. We were also the second most costly state for businesses behind only Hawaii while Indiana was the least expensive.
Colorado has the best workforce while Maine has the worst with California 21st.
Education was best in Massachusetts and worst in Nevada with California 38th. When it came to high school education, California ranked third with Maryland first and South Dakota last.
When putting all of this information into context, I came to the conclusion that California may be a great place to live but it is expensive as well as being a tough place for businesses that are not in the technology arena.
Over time, a poor business climate will cause many businesses to relocate to friendlier, less costly places thus harming the quality of life for the people of a state. Utah and Maryland did the best jobs at balancing the needs of their residents and businesses alike.
Haddon Libby is an Investment Advisor and Managing Partner for Winslow Drake and came be reached at 760.449.6349 or HLibby@WinslowDrake.com