| Combined Overall Rankings
Rank State
1 North Carolina
2 Tennessee
3 South Carolina
4 South Dakota
5 Virginia
6 Florida
7 Georgia
8 Arkansas
9 Mississippi
10 New Hampshire
11 Nebraska
12 Indiana
13 Texas
14 Kentucky
15 Alabama
16 Missouri
17 Iowa
18 Maryland
19 Pennsylvania
20 Illinois
21 Wisconsin
22 Minnesota
23 Oklahoma
24 Kansas
25 Idaho
26 Colorado
27 Louisiana
28 Utah
29 California
30 Ohio
31 Arizona
32 Massachusetts
33 Vermont
34 New Mexico
35 New York
36 North Dakota
37 Oregon
38 Montana
39 Wyoming
40 New Jersey
41 West Virginia
42 Connecticut
43 Maine
44 Alaska
45 Delaware
46 Hawaii
47 Rhode Island
48 Michigan
49 Nevada
50 Washington |
Company executives can spend hours wringing their hands over property taxes, utility rates, telecommunications and intersections -- important issues to be sure.
But the factor that jumps to the top of the list for expanding and relocating companies has got to be the work force.
In this era of labor scarcity, the labor pool is even more critical.
Is it plentiful? Is it skilled? Is it effective? Is it affordable?
Expansion Management Magazine's Employment Cost Index focuses on the bottom line factors.
Although you'll eventually pay off the loan on your building, labor costs will never go away.
That means it's wise to pay attention to this permanent and expensive cost factor before plunking down a plant.
It may seem like a no brainer. Just look up average wage rates in the communities and states you're considering. True, wage rates are the largest piece of the labor cost puzzle, but not all of it.
The Employment Cost Index takes a comprehensive look at the bill manufacturers will foot for wages and the mandated benefits of workers' compensation and unemployment insurance in all 50 states.
By combining these factors, a more accurate estimate of employment costs can be made.
The study is based on a hypothetical manufacturing company with 150 employees. It's further broken down into three industries: industrial and commercial machinery and computer equipment (SIC 35); electronic and other electrical equipment and components, (SIC 36); and transportation equipment (SIC 37).
The five states providing the overall lowest employment costs are, in order: North Carolina, Tennessee, South Carolina, South Dakota and Virginia. Following right behind are Florida, Georgia, Arkansas, Mississippi and New Hampshire.
The top ranking states in each SIC code are: South Carolina, SIC 35 and 36; North Carolina, SIC 37.
That means that in South Carolina a 150 employee operation in SIC 35 would pay out a total of $3,393,376 in wages, workers' compensation premiums and unemployment insurance annually. The same-sized operation in South Carolina would pay $3,037,958 in SIC 36. In North Carolina, a company would pay a total of $4,347,216 in SIC 37.
Wages and salaries lead costs
The most significant financial component of labor is usually wages.
Although this factor is key to a company's bottom line, it shouldn't be looked at exclusively.
A location that offers low wages, but has high turnover rates, high absenteeism and low skill levels could still turn out to be a net loser for your company.
But bargains can be found. Quality, reliable workers who don't demand exorbitant wages are in the marketplace. By shopping around, your company can find significant savings in wage rates.
In addition to wages and salaries, expanding companies should consider mandated benefit costs, employee skill levels and the availability of worker training programs and incentives.
Examining the whole package will provide a more realistic look at the labor scene.
South Carolina provides the lowest wages and salaries for SIC 35 ($3,322,800), South Dakota in SIC 36 ($2,539,789) and Montana ($2,284,091) in SIC 37.
Keeping track of workers' comp
Workers' compensation is another universal expenditure that employers must pay for no matter where they locate. But premiums differ wildly throughout the United States.
Workers' compensation is a state mandated program to cover medical costs and replace wages that are lost due to job-related injuries.
Some states have seen their workers' compensation costs plummet in recent years, while others have held steady or even increased.
This mandated benefit is something that companies should carefully consider when they search for a new home. It may even be a good idea to get a history of rate increases to see if the momentum is moving forward or backward.
Workers' compensation can be complex due to the varying rates established in each state and within different SIC codes. The rates can be established by states or a national council.
It is typically more cost efficient to purchase workers' compensation insurance through a private carrier than through a state fund.
Virginia ($40,393), South Carolina ($42,608), and Arkansas ($76,185) each offer the lowest workers' compensation premiums in SIC codes 35, 36 and 37, respectively.
Unemployment Insurance
Unemployment insurance, which provides temporary replacement wages for unemployed workers, is also an expenditure that must be accounted for when hiring new workers.
The federal government determines who is covered, but states generally determine benefit amounts.
Nebraska ($4,200), New Hampshire ($4,800), South Dakota ($6,300), Virginia ($7,200) and Florida ($9,450) offer the lowest unemployment insurance premiums.
Labor pool
The Employment Cost Index doesn't factor in the number of workers in each SIC code as part of its study. But we include that information (page 48) for part of your overall research.
A large pool of workers already employed in your industry can give you a running start when you break new ground.
Shop around
| In unemployment insurance alone, the cost in the highest premium state is more
than 20 times that of the lowest. Wages and salaries can triple, depending on where you move. |
These comparisons speak loudly that location does matter when considering employment costs.
In unemployment insurance alone, the cost in the highest premium state is more than 20 times that of the lowest. Wages and salaries can triple, depending on where you move.
The bottom line: Look at labor costs with a fine-tooth comb, and make your move a smart one.
Don't examine only one cost factor. Take the comprehensive approach.
Bargains can be found. Quality, reliable workers who don't demand exorbitant wages are in the marketplace. By shopping around, your company can find significant savings in wage rates.
| SIC 35 Final Rankings (150 Employees)
|
| Rank |
State |
| 1 |
South Carolina |
| 2 |
Georgia |
| 2 |
Virginia |
| 4 |
Tennessee |
| 5 |
North Carolina |
| 6 |
Mississippi |
| 7 |
Indiana |
| 8 |
Florida |
| 9 |
Missouri |
| 10 |
Arkansas |
| 10 |
South Dakota |
| 12 |
Kentucky |
|
| Rank |
State |
| 13 |
Nebraska |
| 14 |
Texas |
| 15 |
Alabama |
| 16 |
New Hampshire |
| 17 |
Pennsylvania |
| 17 |
Louisiana |
| 17 |
Oklahoma |
| 18 |
Wisconsin |
| 21 |
Vermont |
| 22 |
Iowa |
| 23 |
Kansas |
| 23 |
West Virgina |
| 25 |
Maryland |
|
| Rank |
State |
| 25 |
Ohio |
| 25 |
Oregon |
| 28 |
Minnesota |
| 29 |
Colorado |
| 29 |
Illinois |
| 31 |
New York |
| 32 |
New Jersey |
| 33 |
California |
| 33 |
New Mexico |
| 35 |
Idaho |
| 35 |
Massachusetts |
| 37 |
Alaska |
| 38 |
Arizona |
|
| Rank |
State |
| 39 |
Maine |
| 40 |
Montana |
| 41 |
North Dakota |
| 42 |
Connecticut |
| 42 |
Delaware |
| 44 |
Michigan |
| 44 |
Utah |
| 46 |
Hawaii |
| 47 |
Wyoming |
| 48 |
Rhode Island |
| 49 |
Nevada |
| 50 |
Washington |
|
SIC 36
Final Rankings
| SIC 37 Final Rankings (150 Employees)
|
| Rank |
State |
| 1 |
North Carolina |
| 2 |
New Hampshire |
| 3 |
Nebraska |
| 4 |
Texas |
| 5 |
Arkansas |
| 5 |
South Dakota |
| 5 |
Tennessee |
| 8 |
Mississippi |
| 9 |
Florida |
| 9 |
Iowa |
| 11 |
Virginia |
| 12 |
South Carolina |
| 13 |
Kentucky |
|
| Rank |
State |
| 13 |
Maryland |
| 15 |
Indiana |
| 15 |
Utah |
| 17 |
Georgia |
| 18 |
Wyoming |
| 19 |
Colorado |
| 19 |
Montana |
| 19 |
New Mexico |
| 22 |
Arizona |
| 23 |
Louisiana |
| 23 |
Minnesota |
| 25 |
Pennsylvania |
| 26 |
Alabama |
|
| Rank |
State |
| 26 |
Illinois |
| 28 |
Kansas |
| 29 |
Idaho |
| 29 |
Missouri |
| 31 |
Oklahoma |
| 32 |
North Dakota |
| 33 |
California |
| 33 |
Vermont |
| 33 |
Wisconsin |
| 36 |
Nevada |
| 37 |
Oregon |
| 38 |
Ohio |
| 39 |
Washington |
|
| Rank |
State |
| 40 |
Connecticut |
| 40 |
West Virginia |
| 42 |
Massachusetts |
| 43 |
New York |
| 44 |
New Jersey |
| 45 |
Hawaii |
| 46 |
Delaware |
| 46 |
Maine |
| 48 |
Rhode Island |
| 49 |
Michigan |
| 50 |
Alaska |
|
| Unemployment
Insurance (all SIC codes, 150 Employees) |
| Rank |
State |
Avg. Annual Premium |
| 10 | Alabama | $14,400 |
| 49 | Alaska | $83,145 |
| 8 | Arizona | $13,650 |
| 27 | Arkansas | $27,000 |
| 33 | California | $31,500 |
| 15 | Colorado | $16,500 |
| 46 | Connecticut | $68,250 |
| 30 | Delaware | $29,325 |
| 5 | Florida | $9,450 |
| 6 | Georgia | $11,475 |
| 47 | Hawaii | $71,280 |
| 40 | Idaho | $44,100 |
| 37 | Illinois | $33,750 |
| 11 | Indiana | $14,700 |
| 20 | Iowa | $21,195 |
| 16 | Kansas | $16,800 |
| 19 | Kentucky | $20,400 |
| 17 | Louisiana | $16,800 |
| 38 | Maine | $37,800 |
| 24 | Maryland | $22,950 |
| 43 | Massachusetts | $48,600 |
| 41 | Michigan | $44,175 |
| 31 | Minnesota | $30,960 |
| 12 | Mississippi | $14,700 |
| 22 | Missouri | $21,675 |
| 35 | Montana | $32,175 |
| 1 | Nebraska | $4,200 |
| 39 | Nevada | $37,800 |
| 2 | New Hampshire | $4,800 |
| 44 | New Jersey | $60,795 |
| 29 | New Mexico | $28,665 |
| 36 | New York | $32,550 |
| 7 | North Carolina | $13,230 |
| 25 | North Dakota | $24,420 |
| 21 | Ohio | $21,600 |
| 9 | Oklahoma | $13,680 |
| 45 | Oregon | $66,150 |
| 42 | Pennsylvania | $46,800 |
| 50 | Rhode Island | $101,010 |
| 13 | South Carolina | $15,750 |
| 3 | South Dakota | $6,300 |
| 14 | Tennessee | $15,750 |
| 18 | Texas | $17,550 |
| 23 | Utah | $22,200 |
| 32 | Vermont | $31,200 |
| 4 | Virginia | $7,200 |
| 48 | Washington | $77,625 |
| 28 | West Virginia | $27,600 |
| 34 | Wisconsin | $31,500 |
| 26 | Wyoming | $26,250 |
For the Special 1998 Ratings Issue contact knichols@newhope.com.
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