New study: Pa. is the 6th worst state in the nation to start a new business | Tuesday Morning Coffee

July 9, 2019 7:20 am

Good Tuesday Morning, Fellow Seekers.

Well, you just knew this one was coming: Amid all the economic good news Pennsylvania got this year, with booming tax collections, and low unemployment, someone was just going to come along and, like, totally harsh our mellow, man.

For that, you can thank the wonks at the financial literacy site WalletHub, who crunched the numbers, and concluded that the Keystone is the 6th worst state in the nation to open or start a new business.

To reach their conclusion, WalletHub’s wonks said they “compared the 50 U.S. states across 26 key indicators of startup success. The data set ranges from financing accessibility to availability of human capital to office-space affordability.”

Mouse over the map below for state-by-state results:

Source: WalletHub

So what did they find? Well, the numbers aren’t pretty, with a score of 1 being the best and 25 being just average, Pennsylvania ranks:

  • 32nd  for the average growth in the number of small businesses
  • 33rd  for office space affordability
  • 29th  for labor costs (Cue hysterical baying from anti-minimum wage hike hawks)
  • 26th  for the availability of human capital
  • 29th  for the length of the average working week (in hours, not the cost to your soul)
  • 31st  for the cost of living
  • 40th  for the variety of industries in the state

The top five best states to start a new business, according to WalletHub’s ranking list, are:
1. Texas
2. Utah
3. Georgia
4. North Dakota
5. Oklahoma

And the five worst states are:
1. Rhode Island
2. New Jersey (so we have that going for us)
3. New Hampshire
4. Hawaii
5. Connecticut

The Pittsburgh skyline, viewed from the Duquesne Incline. (Dllu/WikiMedia Commons)

Brandon Scott Cohen, a senior lecturer at the College of Business & Innovation at the University of Toledo, has some advice for states looking to pull themselves out the basement on the rankings list.

On the impact of corporate tax rates and other policies have on the decision to start a new business (Despite continued attempts at reductions, Pennsylvania still has one of the highest corporate tax rates in the nation): “I think corporate tax levels are more relevant to where a business is started as opposed to whether a business is started,” he told WalletHub. “I don’t know anyone, at least not in the United States, who said I am not starting a business because taxes are too high. Money flows to the lowest barriers and those entrepreneurs that want to start a business will simply move if the state tax policies are too high for the business to thrive.”

On whether tax breaks and other incentives are a good or bad investment for states over the long haul:  “It’s great for economic development professionals who get outsized salaries for their impact and the entrepreneur rent seeker who knows how to pull funds out of the states and federal government, but I am pretty sure the taxpayer is getting screwed in the end,” he said.

On how state officials can encourage entrepreneurs to start new businesses: “The states and federal government, with the right law and monitoring practices in place to avoid fraud, should completely eliminate payroll tax for five years for new businesses or businesses that make under $1 million,” he said. “They should also eliminate unemployment taxes for those companies and every other cost that encourages an employer to employee 1099 rather than W2. Start-ups and early stage companies game the system as long as they can to eliminate the payroll and other taxes – let’s stop the gaming and just eliminate it for certain stage and size companies, especially mom and pop restaurants.”

WikiMedia Commons

Our Stuff.
Elizabeth Hardison brings you the details on Gov. Tom Wolf signing some key sexual assault reporting requirements into law.

And we team up with Stephen Caruso for a story on new efforts to find $90 million in funding so that counties can pay for new voting machines.

And on our Commentary Page, a survivor of the Columbine massacre argues that a new state law expanding the ranks of school security guards won’t make our classrooms any saferKim Stolfer, the head of the pro-Second Amendment Firearms Owners Against Crime, says the state was right to leave it up to districts to make their own calls on safety.

(Patrick Feller/Flickr)

Defense lawyers are moving to dismiss federal charges against Philly labor boss John “Johnny Doc” Dougherty, the Inquirer reports.
A charity run by former NYC Mayor Mike Bloomberg has awarded $10 million in projects to fight opioid abuse in Pennsylvania, the Post-Gazette reports.
Some missing computers, containing important financial records, have turned up in the Harrisburg school district (Quelle miracle!). PennLive has the story.
The Morning Call has its take on that new law requiring anonymous reporting of sexual assault on college campuses.
Police in southwestern Pennsylvania have made their biggest-ever fentanyl bust, the Tribune-Review reports.

Here’s your #Pittsburgh Instagram of the Day:

Iraqi and Syrian refugees in Philadelphia are using art to ‘shift the narrative’ about their communities, WHYY-FM reports.
A pair of murals in Philly are celebrating the UWNT’s World Cup win (the squad includes two Penn State alumna, by the way). BillyPenn has the story.
The PA Post explains why there’s still a real risk of gerrymandering in Pennsylvania.
Democratic presidential candidate Kirsten Gillibrand will campaign in PittsburghPoliticsPA reports.
Officials are looking for better ways to get your attention during times of disaster and reports.
More than a dozen members of Congress tell Politico that they haven’t read the Mueller Report all the way through.

What Goes On.
A ‘Tax the Rich’ event at 3:30 p.m. on the Capitol Steps. Because, why not?

Gov. Tom Wolf, LG John Fetterman 
and Treasurer Joe Torsella huddle for a 1:30 p.m. newser in the Governor’s Reception Room, where they’ll make a (what we assume to be figurative) deposit into the state’s Rainy Day Fundsavings account and take a fiscal victory lap. Counter-messaging from legislative Republicans crediting their policies for the availability of that money will begin, we assume, moments after the news conference begins.

You Say It’s Your Birthday Dept.
Best wishes go out this morning to Harrisburg PR exec, and longtime Friend O’the Blog, Corinna Vescey Wilson, who celebrates today.

Heavy Rotation.
Here’s a new one — for us. It’s ‘Ghosts,’ by Scavenger Hunt.

Tuesday’s Gratuitous Baseball Link.
NY Mets star Pete Alonso 
won the Home Run Derby on Monday night, taking home a $1 million grand prize.

And now you’re up to date.

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John L. Micek
John L. Micek

A 3-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's Editor-in-Chief. An award-winning political reporter, Micek’s career has taken him from small town meetings and Chicago City Hall to Congress and the Pennsylvania Capitol. His weekly column on U.S. politics is syndicated to 800 newspapers nationwide by Cagle Syndicate. He also contributes commentary and analysis to broadcast outlets in the U.S., Canada and the U.K. Micek’s first novel, “Ordinary Angels,” was released in 2019 by Sunbury Press.