(The Center Square) – Although Virginia often ranks as one of the best states in which to conduct business, a new report found the commonwealth is one of the worst states for starting a new business.
The report, published by the financial website Wallethub this week, ranked Virginia as the 10th worst state for starting a business in 2021. It ranked 25th for its business environment, but scored toward the bottom in the other two main categories – 30th for access to resources and 39th for business costs.
Virginia ranked toward the bottom in several subcategories, including second to last for industry variety, seventh to last for office space availability, eighth to last in availability of human capital and ninth to last for its high labor costs. The commonwealth also ranked 30th overall in its cost of living.
In some of the subcategories, the commonwealth did better. It ranked 15th for its average length of a work week, 16th for lowest COVID-19 positivity tests in the past week per capita and 17th for the average growth in the number of small businesses.
“[Virginia’s] five year business survival rate is one of the lowest, and the state ranks low in terms of industry variety and entrepreneurial activity,” Wallethub Analyst Jill Gonzalez told The Center Square. “Virginia also lacks human capital availability. In terms of costs, the state's office space is not affordable, and labor costs are among the highest."
The best states for starting a business were Texas, Georgia, California and Florida and the worst states were New Jersey, Connecticut, Rhode Island and West Virginia. The only neighboring state to perform worse than Virginia was West Virginia. North Carolina ranked ninth, Tennessee ranked 15th, Kentucky ranked 17th and Maryland ranked 35th.
Last week, CNBC ranked Virginia as the best state in which to conduct business. However, the news group received some pushback for its criteria, which bolstered Virginia’s rankings thanks to a new life, health and inclusion category, which punished states with voter identification laws and failing to pass certain anti-discrimination laws.
The status of Virginia’s economy has become a leading topic in the gubernatorial race between Republican businessman Glenn Youngkin and former democratic Gov. Terry McAuliffe. While Youngkin has said the state is falling behind its competitors under Democratic leadership, McAuliffe lauded his record as the former governor and has said Democrats are taking it in the right direction.