SANTA MONICA, Calif. – Massachusetts is the fourth most-expensive state in which to do business, with overall expenses 30.6 more higher than the national average, according to the 2007 Cost-of-Doing-Business Index released last night by the Milken Institute.
The weighted index is based on measurements in five categories: electricity costs, wage costs, taxes, and rental costs for industrial and office space.
Costs in Massachusetts exceeded the national average in every category: tax burden (101.0), wages (122.1), industrial rentals (129.0), office-space costs (165.2) and electricity costs (187.8 percent).
Changing places with the Bay State was Connecticut – moving down one notch to No. 5 – with an overall index of 127.5.
No. 1 this year was Hawaii, with an overall cost index of 151.5 (100 = the national average), followed by New York at 130.9 and Alaska at 130.8; the top three states were unchanged from last year, though each saw an increase in overall costs.
Least expensive was South Dakota, with an overall index of 72.2, indicating overall costs nearly 30 percent below the national average.
Rhode Island – 14th most expensive in 2006 – moved up four places to No. 10, with overall costs 8.0 percent above the national average. The Ocean State indexes for industrial real estate (74.0) and wages (94.6) lagged those nationally; the state exceeded the national average in tax burden (105.6), office-space costs (118.7) and electricity costs (174.9 percent).
The cost of electricity caused substantial changes this year, “both up and down, as some states’ retail electricity rates were on the rise and some states kicked in conservation measures,” according to Jennifer Manfrè, a spokeswoman for the economic think tank.
The biggest mover was Maine, climbing 11 spots to 28th most expensive as electrical costs there rose from 6 percent above the national average last year to 43 percent this year. Energy costs also were a factor in Mississippi, which moved up eight places to No. 34.
At the other end of the scale, Michigan was most successful at holding down costs, falling seven spots, from 13th most expensive to 20th, despite slight increases in every cost category. Arkansas was next most successful, moving down six places to No. 41.
The Milken Institute’s 2007 Cost-of-Doing-Business Index, sponsored by the California Manufacturers and Technology Association, includes real estate data from CB Richard Ellis. The full report can be found at www.MilkenInstitute.org; a chart summarizing this year’s results is available at www.milkeninstitute.org/pdf/2007CostofDoingBusiness.pdf.
