Virginia rises to No. 2 in CNBC’s Top States for Business

Rated America’s best state for education, Virginia climbed to the No. 2 spot in CNBC’s 2023 Top States for Business rankings, with North Carolina taking the top spot for the second year in a row.

“Virginia is our most decorated state, a five-time winner,” the cable business news network said Tuesday, “but you’ll pay dearly for doing business here, one reason Virginia comes up just short this year.”

CNBC ranked Virginia the top state for business in 2021, 2019, 2011, 2009 and 2007. This year, while CNBC rated Virginia No. 1 for education and No. 4 in access to capital, it rated the commonwealth 34th for cost of doing business, giving it a C-minus grade. Virginia improved to a C-plus grade in cost of living, up from a D-plus in 2022. CNBC gave Virginia B grades in workforce; infrastructure; economy; life, health and inclusion; and technology and innovation. Virginia scored A’s in business friendliness; education; and access to capital.

Virginia was ranked the No. 3 state for business by CNBC in 2022.

Virginia Gov. Glenn Youngkin has noted that the high cost of living and doing business, especially in Northern Virginia and other urban sectors, is a major focus for his administration, offering tax cuts as a salve. Another administration focus is getting more industrial sites shovel-ready, to help prepare land for megaprojects like Lego Group’s $1 billion manufacturing plant in Chesterfield County, which broke ground in April.

A major reason Virginia doesn’t have as many big deals like this, compared with North Carolina and other Southern states, is because the state government hasn’t invested nearly as much money in prepping large land tracts for construction. Youngkin proposed $450 million more in the state budget for site preparation, but as of mid-July, Senate Democrats and House Republicans had not passed an amended budget.

“While the governor is always pleased with Virginia receiving accolades, rankings only tell part of the story,” Youngkin’s spokeswoman, Macaulay Porter, said. “Today’s CNBC rankings show that while Virginia has made gains under Governor Youngkin’s leadership, Senate Democrats need to come together to lower the cost of doing business and the cost of living. Virginia needs to move forward as a leader in business and become more competitive and fund critical priorities. The governor’s budget amendments addressed these issues head on with common-sense tax relief for Virginia families and local businesses. Virginians need a budget that moves the commonwealth forward and addresses these obstacles to growth so that Virginia can thrive.”

As for this year’s Top States for Business winner, North Carolina was also rated No. 1 for workforce this year, with CNBC saying of the Tar Heel State, “Educated workers are flocking here, and state worker training programs are among the most effective in the country.” North Carolina’s economy rated third in the nation, as CNBC lauded its “stable state finances and a healthy housing market.” It also ranked seventh for education.

“To win Top State for Business, you got to have the best workforce, and North Carolina has the most well-educated, dedicated and diverse workforce in the country. … We invest in our people. We know that they are the foundation of our success,” North Carolina Gov. Roy Cooper said Tuesday, speaking with CNBC’s “Squawk Box” on the lawn of the historic Biltmore Estate in Asheville.

However, CNBC noted political disharmony in North Carolina, with its Republican legislative supermajority this year passing a 12-week abortion ban over the veto of Cooper, a Democrat. CNBC, which included reproductive rights among its Top State metrics this year, rated North Carolina 34th in the nation for life, health and inclusion.

Also in this year’s rankings, Tennessee came in third place, with CNBC citing its infrastructure and community college system, but knocking the Volunteer State for “high crime and a crackdown on LGBTQ rights.” Georgia took the No. 4 slot, with CNBC noting that Hartsfield–Jackson Atlanta International Airport is the world’s busiest airport, but dinging the Peach State for “poor health care and limited worker protections,” rating it 43rd for life, health and inclusion. Minnesota came in fifth overall among states this year. While the North Star State ranked well for road infrastructure and its growing semiconductor industry, CNBC criticized it for higher tax rates and lesser economic development incentives.

CNBC based this year’s rankings on 86 metrics — down from 88 last year — across 10 categories: workforce; infrastructure; economy; life, health and inclusion; cost of doing business; technology and innovation; business friendliness; education; access to capital; and cost of living. Workforce is the most heavily weighted category and considers a state’s concentration of science, technology, engineering and math (STEM) workers, the percentage of workers with college degrees, and workers with associate degrees and industry-recognized certificates. 

Virginia Business Deputy Editor Kate Andrews and Associate Editor Katherine Schulte contributed to this story.