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Inward Investment Guides

Top States Commentary: States With Deep Pools of Skilled Workers Come Out on Top

Scott Redabaugh, Managing Director, JLL (Fall 2012)
Top States for Doing Business Full Results: 2012 Top States for
Doing Business Survey
»

OVERALL RANKINGS
2012

1.  Texas
2.  South Carolina
3.  Georgia
4.  Alabama
5.  North Carolina
6.  Louisiana
7.  Tennessee
8.  Indiana
9.  Mississippi
10.  Oklahoma

2011

1.  Texas
2.  Georgia
3.  Alabama
4.  South Carolina
5.  Indiana
6.  Louisiana
7.  North Carolina
8.  Tennessee
9.  Mississippi
10.  California

2010

1.  Tennessee
2.  Texas
3.  South Carolina
4.  Alabama
5.  Georgia
6.  Indiana
7.  Mississippi
8.  North Carolina
9.  Virginia
10.  Oklahoma

CONSULTANTS COMMENTARY
Winning States Offer Low Taxes, Generous Incentives, and Fewer Regulations
Eric Stavriotis, Senior Vice President, Strategic Consulting, Jones Lang LaSalle
States that have led the economic recovery have, by definition, achieved high job growth. The pace of new job creation is the measure of economic viability - but there are two paths to that position. While some states have highly diversified economies, others attribute new jobs to very specific industries and sectors on a rapid growth path. Emerging growth industries tend to gravitate to a few geographic regions that can benefit strongly from the success of those industries.

Among states with strong diversified economies, Texas is a standout in this economic cycle. Since 2010, job growth in Texas has accounted for 20 percent of all employment growth from all 50 states and the District of Columbia, and has demonstrated the second-fastest economic growth rate during this period. Growth has been robust across all sectors, signaling a diverse economy and, not surprisingly, population growth. Neighboring Oklahoma has demonstrated this same type of diversified growth.

North Carolina is another example of a state with a diversified economy. The Raleigh-Durham-Chapel Hill Research Triangle area is a center for pharmaceutical and biotechnology R&D, as well as IT operations, while Charlotte continues to serve as a financial services center with capacity for higher-skilled back-office operations.

In contrast, growth in particular sectors has led to competitive advantages in some states, including government in Virginia, leisure and hospitality in Florida, and education and health services in Louisiana. For Michigan, Indiana, and Ohio, strong economic growth figures have been driven by an increase in manufacturing jobs; meanwhile, Florida, Georgia, North Carolina, and Virginia have shown strong employment in professional and business services.

Overall Labor Climate
States that are performing well also have deep pools of workers with strong skills and appropriate education levels, available at a cost that is moderate, but competitive. This balance between critical mass and cost of labor is a key factor for the most successful markets. As the economy transitions to a higher level of activity, companies that are anticipating future growth are seeking locations where appropriate labor is available at a reasonable cost today, but also that there is labor available for future expansion.

Some high-performing states have become aligned with a variety of industries seeking myriad skill profiles. One reason that Texas is the top state for business right now is that it offers a variety of labor pools and environments for different kinds of businesses. San Antonio, for instance, has a labor pool suitable for large-scale back-office and call-center operations at a lower cost than in competing similar-sized markets. Austin has a highly educated work force and strong alignment with IT and technical industries, while Dallas has a strong work force for the technical and financial sectors, and both of these cities are lower-cost than competing markets with similar characteristics.

Both Michigan and California have performed well because each has a deep and unique labor pool for particular industry sectors. Michigan has a large labor pool for automotive manufacturing, obviously, as well as the life sciences research emerging from the state's research institutions. Northern California is known, of course, for its technology innovation and its concentration of software engineers and other knowledge workers related to information technology.
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Top States for Doing Business 2013
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