The Best And Worst States For Labor And Employment Costs4:00 PM EST Mon. Sep. 23, 2013
Labor costs can be the single largest expense for businesses like solution providers that are built around expertise rather than capital equipment and property. CRN's analysis has already explored the best states for finding educated, experienced IT workers. But, what about the cost of hiring those workers and related costs of doing business? Some states may have a more educated workforce, but employees in those states often earn higher salaries, and there are other related costs, such as a state's unemployment insurance rates and the cost of energy (gas and electricity) used by employees, to consider. The analysis' criteria and metrics were weighted to reflect their importance to solution providers based on the results of a February 2013 CRN study conducted among 250 technology solution providers.
Here are the best and worst states for labor costs. The first five states have the highest scores (No. 5-No. 1), followed by the five states with the worst rankings (No. 46-No. 50). Data sources include CNBC, the Tax Foundation, and the U.S. Energy Information Administration.
North Dakota's overall No. 5 rank gets a boost from the company's cheap energy (No. 2). The Peace Garden State is ranked No. 12 for labor costs and No. 17 for unemployment insurance taxes.
Missouri's labor costs are ranked No. 19, roughly in the middle of the pack among all 50 states. But, the Show-Me State's overall ranking gets help from its relatively low unemployment insurance tax (No. 6) and low energy costs (No. 5).
Nebraska is ranked No. 10 for labor costs. The Cornhusker State is ranked No. 8 for its unemployment insurance tax and No. 9 for energy costs.
Louisiana is tied with Nebraska at No. 10 for straight labor costs. But, the Pelican State's lower unemployment insurance tax (No. 4) gives it an edge.
Oklahoma is the clear winner in the overall labor expenses competition. The Sooner State is ranked No. 2 for labor costs and No. 2 for unemployment insurance, behind only South Dakota and Arizona, respectively. It's No. 6 ranking for low energy costs seals the deal.
Hawaii's labor costs are ranked No. 48, and its energy costs (No. 50) are the most expensive among the states. The Aloha State's middle-of-the-road rank (No. 30) for unemployment insurance taxes keeps it from being the most expensive.
Maryland is expensive enough with its labor costs (No. 41) and energy costs (No. 39). But, the Old Line State's high unemployment insurance tax (No. 46) pushes it even closer to the bottom.
Rhode Island has the most expensive unemployment insurance taxes (No. 50) and has high energy costs (No. 43). So while the Ocean State is only No. 34 specifically for labor costs, it runs near the bottom for overall labor expenses.
It's probably no surprise New York is expensive. It's ranked No. 49 for labor costs, No. 45 for unemployment insurance taxes and No. 46 for energy cost, leading to the Empire State's overall No. 49 ranking.
Massachusetts is ranked dead last for overall labor costs, not surprising given the Bay State's No. 49 rank for unemployment insurance taxes, No. 47 rank for labor expenses and No. 45 rank for relatively high energy costs.