If you’re thinking about expanding your business to the United States (US) or hiring remote employees in other states, it is important to do your research on the top states for business. A data-driven approach will help you maximize profit opportunities and be strategically placed to access the best talent to build your business. That’s why we’ve put together the heat map above to give you an idea of where we saw the most, and the least employee onboards by state from our clients in 2021.

We’ve been an employer of record for over 20 years specializing in the US and Canada. This means we employ workers on our client’s behalf and know a thing or two about the best states to do business. Employee growth by our clients is a good indication of the popularity of states, so we’ll be going into detail on why you should keep these states on your radar.

1. California

Despite the high tax and living costs, heavy employment regulation, and high-profile companies like Tesla announcing they are leaving the state, California still ranks number one in PGC’s top states for business in 2021. Why is California still number one?

Top tech talent market in the US

California is by far the most populous state in the US, home to 39.7 million residents in 2020. The population is one of the main reasons why the state consistently ranks number one in terms of US employment numbers.

A considerable number of companies are still hiring within California, proved by CBRE ranking the San Francisco Bay Area as the top tech talent market in the US. The standard of research at higher education institutions in California also contributes to the state's success. For example, in 2020 California recorded almost four times as many patents as Texas.

The largest economy in the US

California is the fifth-largest economy in the world, yes you read that right... Representing 15% of the US economy, the state has been crowned the largest state economy. California alone produced more than $3 trillion of economic output in 2020, more than the gross domestic product (GDP) of the UK of $2,710 trillion US dollars.

These eye-watering statistics paint a profitable picture for companies considering doing business in California. High GDP rates are an indication of a strong economy, suggesting strong hiring rates, salaries, and profits.

Investment in Californian companies

California companies receive more venture capital investment than any other US state. For example, in 2020 $84.2 billion US dollars was invested in California. New York came in second place at $18.1 billion dollars and Texas in fourth place, at $4.8 billion. This resulted in California receiving over four times the amount of investment in 2020 than other popular states.

Beware of strict employment regulations and high taxes in California

Despite our data showing that California is one of the most popular states for business in 2021, we don’t usually recommend the state as a company's first choice when expanding. Lesser-known states have skyrocketed up our rankings in 2021, thanks to the lower cost of living, taxes, and less strict employment laws. So, keep reading to find out more favorable states for business.

2. New York

New York headlined high-profile news in 2020 and 2021 from the vast number of companies fleeing the state. However, the data shows that most of our clients are still employing workers in New York. Why?

Strategic international location

As we help companies from Europe and the UK expand into the US, New York is still one of the top choices when it comes to business expansion as it is one of the more straightforward locations to fly into.

New York City is the most connected city in the US, serving the most international air travelers. This makes it perfect for business owners who need to travel both internationally and internally for business. For example, from the UK, business owners can catch a quick 7-hour flight to New York City. The 5-hour time difference also makes an immense difference if you’re trying to manage a US office from the UK/Europe.

Size of New York economy

The GDP of New York State was worth over $1.6 trillion, the third-largest contributor towards the United States GDP in 2020, which has the largest gross domestic product in the world. New York City is deemed the financial and cultural capital of the world. Home to United Nations headquarters and Wall Street, it has a significant impact on international affairs and setting worldwide trends.

New York also has 53 Fortune 500 companies headquartered in the state, more than any other area in the US. The internationally recognized employers based in New York such as IBS, PepsiCo, American Express, and JPMorgan Chase lures ambitious graduates and professionals to the state every year. Companies often follow talent and New York offers them a large, diverse, and educated talent pool to tap into.

However, in terms of business friendliness, New York does not rank high. High operation costs in the form of taxation, wages, and rent increase the difficulty of doing business in New York. The state scored number 3 in our top states for business 2021 in terms of our client’s employment numbers, mostly due to the excellence of tech and financial talent in the state. To ease the burden of doing business in New York, the state does offer small business owners several incentives and tax relief. One program worth highlighting is START-UP NY, an incentive for new companies to locate on or near universities in New York to operate tax-free.

3. Texas

Employees hired in Texas nearly doubled in 2021

We talk a lot about Texas at PGC, mainly because we are living proof of one of the many companies that seized the benefits Texas has to offer and relocated to Austin during the pandemic peaks of 2021. The number of worker onboards at PGC nearly doubled in Texas year on year, making it one of our top states for business in 2021.

Texas has one of the lowest tax burdens in the US

One of the biggest reasons Texas ranks as a popular state for businesses expanding into or within the US is because it has one of the lowest tax burdens in the US. Businesses and employees can both benefit from more disposable income, thanks to no local, state, corporate, or personal income tax in Texas.

Everything is bigger in Texas, including the talent

The saying is true, everything is bigger in Texas. Texas is the second-largest state in the US, nearly three times the size of the UK. This size of the population means there is a huge talent pool to choose from, which isn’t short on quality.

Texas is home to over 170 colleges and universities, several of which rank highly as research institutions. The city of Austin has been making its mark as an award-winning tech hub, increasingly becoming home to tech companies all around the world.

4. North Carolina

Jumping up 5 places in our top states for business in 2021 by an impressive +381% year on year, North Carolina’s popularity has skyrocketed. North Carolina was some of our client’s destination of choice for employing workers in 2021, mainly due to its favorable tax incentives and the high quality of tech talent residing in the state.

Raleigh is often the most sought after area in North Carolina and became known as one of the main east coast tech hubs of choice for companies in the US in 2021. The proximity to renowned higher education institutions and research schools has been a big pull for employers who want access to an educated workforce, especially within the technology sector. In 2021 we highlighted the growing popularity of North Carolina when many of our clients were asking themselves, ‘Next stop, North Carolina?’

5. Massachusetts

Massachusetts shined as one of the top states for business in 2021, with our clients’ worker onboards increasing by an eye-watering 278% year on year. More specifically, business owners are choosing Boston as their home within the state - here are some reasons why.

Boston is the closest US city to London

Boston spearheaded the way for accessible and fast transport in the US with the country’s first subway system. This system is still effectively running to this day, with Boston’s public transport usage being the fourth highest in the US, making it extremely convenient.

Businesses expanding to the US from the UK are sure to feel at home in Boston in comparison to other US cities, as it is deemed a ‘walkable’ city. It is much smaller geographically, making it more manageable for corporate travelers and those living in the city to travel around.

In addition to this, Boston is the closest US city for UK business owners traveling from London. This makes Massachusetts an ideal state for those operating in the UK who need to travel to the US frequently for business.

World class universities in Massachusetts

Home to Harvard University, deemed the third best university in the world by Times Higher Education, followed closely by Massachusetts Institute of Technology at number 5, Massachusetts has some of the best brains in business. No wonder why huge companies like General Electric, Staples, and Liberty Mutual are headquartered in the state.

6. Florida

Florida made headlines in 2022 as businesses fled popular states like New York to reap the benefits the sunshine state had to offer. At PGC from 2020 to 2021, the number of worker onboards in Florida more than doubled, experiencing a 100% increase. Reasons more companies chose Florida as their top state for business in 2021 included:

World class transportation routes

If you have a global business, good transportation routes should be at the top of your agenda when selecting your office location. Whether you have regular client meetings, travel often internationally, or have goods to ship or access, a connected location enables you to easily travel by land, sea, or air. Florida’s strategic location enables you to easily access the east coast of the US and provides a gateway to Latin America.

Tax incentives

Florida boasts one of the lowest tax burdens in the US. It has no state income tax, 6% sales tax, and income tax exemptions for sole proprietorships and S corporations. However, the standard corporate tax in Florida on federal taxable income is 5.5%.

Fewer taxes create more disposable income for businesses and help stimulate more investment in the terms of hiring. Additionally, the lack of personal income tax in Florida incentivized an influx of talent to the state in 2020 and 2021, which resulted in an increase in worker onboards.

A brighter lifestyle in the sunshine state

The clue is the nickname, ‘The sunshine state’. Florida boasts 237 average days of sunshine per year, triumphing over the US average of 205 days. This tropical lifestyle has attracted talent and businesses alike, not only this, but Florida has a relatively low cost of living.

7. Georgia

If Georgia hasn’t been on your radar for business previously, it should be. Experiencing a booming 258% increase year on year in worker onboards, resulted in the state being one of our top states for business in 2021. So why are more businesses expanding to or hiring workers in Georgia?

A favorable business climate in Georgia

The favorable business climate and government commitment to strengthening local workers’ skills and companies development are just few of the many reasons that landed Georgia the number 1 spot for business from 2013 - 2022 by Site Selection. The corporate state tax is also a reasonable 5.75%, after being lowered from 6% in 2019.

The Georgia Department of Economic Development is committed to helping companies grow within the state, having a project manager presence in the 12 regions. The project managers are available for consultancy services including:

Help with international trade to reach global markets
Tax credits and exemptions to reward growth
Research and market information to guide decision making.

Georgia’s commitment to workforce development

No state does it better than Georgia when it comes to workforce development. Evidence of their commitment to helping businesses grow is the internationally acclaimed workforce training program - Georgia Quick Start.

The program provides free customized workforce training to qualified new, expanding, or locally based businesses to help them compete in the global economy. The large skilled workforce and quick start program is a win-win for companies hoping to grow by expanding to Georgia.

Georgia’s skilled workforce

Georgia has the 8th largest population in the US, providing companies access to a large talent pool. The state has low unionization and at-will employment which explains why it has sailed up PGC’s ranking.

Many of our clients are international staffing agencies that engage contractors for clients across the US. Many companies need contractors for short term projects with quick turnaround times, so Georgia’s employment laws allow things to move fast.

Georgia has a young working population, the median age lower than the US average at 36, with Atlanta being a top 5 market for millennials. With a steady stream of graduates, and home to over 52,00 software developers, information analysts, and 44,000 plus engineers, Georgia is especially appealing to tech companies.

Coca-Cola, Delta Air Lines, and The Home Depot, are some of the 18 fortune 500 companies headquarters based in Georgia, who are sure to be capitalizing on the young and educated talent available.

8. Pennsylvania

Pennsylvania experienced a huge 533% year-on-year increase in worker onboards cementing its place in our top states for business in 2021. Pennsylvania is chosen by many businesses thanks to its strategic location in the heart of the East Coast. Here are some other reasons why companies chose to do business in Pennsylvania in 2021.

Pennsylvania is globally competitive

Pennsylvania has the 19th largest economy in the world and ranks 6th in the US worth $780 billion US dollars. Home to 24 fortune 500 companies, the high caliber of higher education institutions based in the state, ensures the talent pool does not dry up for companies requiring top talent.

Stay internationally connected in Pennsylvania

Located halfway between New York City and Washington, DC, you can easily reach these business powerhouse states via a quick drive or flight, while taking advantage of one of the lowest costs of living in the Northeast.

With the 6 international airports, 8 foreign trade zones, and 3 ports providing access to the Gulf of Mexico and the Atlantic Ocean, companies have confidence in the ability to trade and compete internationally when based in Pennsylvania.

A ‘One-Stop Shop’ for developing business

Companies based in Pennsylvania can benefit from the business incentives they have to offer. Some incentives on offer include:

The Pennsylvania First Program - Upfront grants or loans at a maximum of $5,000 per job for large-scale competitive “targeted industry” projects that will provide significant capital investment.
Pennsylvania Industrial Development Authority (PIDA) Loan: Businesses that commit to creating or retaining jobs may qualify for low-interest loans up to $2.25 million to help finance eligible project expenditures.

Job Creation Tax Credit (JCTC) - Businesses that create at least 25 new jobs or grow current employment by 20% are eligible for a corporate income tax credit of $1,000 per year (up to 3 years) for each new job created.

A key government support resource worth highlighting is the Pennsylvania Business One-Stop Shop. Launched in 2018 also serves as a guide to help businesses at all stages of development in the state and connect them with all the resources they need. Their team can help you with:

Planning - Anything from business advice, writing a business plan, and choosing your structure.
Registering your business
Operations - Hiring workers in Pennsylvania and state taxes.
Growing - Business resources and state funding.

9. Illinois

Despite Illinois being one of the top 3 states people are leaving according to moving companies in the US, due to tax rates and the state’s fiscal strain, Illinois was still one of PGC’s top states for business in 2021. Why?

Chicago is an economic powerhouse

Illinois still ranks high for worker onboards simply because of the size of the economy. Illinois ranked as the fifth largest economy in the US in 2020 worth $863.5 billion dollars.

Chicago produces most of the state’s economic output, with GDP amounting to $593.97 billion US dollars in 2020. Chicago’s economy alone is bigger than most countries, a key indicator of its economic power. A healthy economy indicates that there is plenty of business to be done in Illinois.

First class transportation routes

Home to Chicago, the third-largest metropolitan area in the US, companies based in this city have a large customer and labor base to choose from. Chicago is centrally located and connected to almost every major city across the US and internationally. Many businesses often cite location as their main reason for doing business in Illinois. If you need to travel frequently for business, it could be the destination for you.

Business incentives in Illinois

A competitive range of business incentives is available to companies expanding to Illinois. Loans and grants businesses can avail of include assistance with equipment, working capital, tax credits and exemptions, and land acquisition.

10. Washington

Washington state was one of our top states for business in 2021 due to a high concentration of workers being placed by our clients. Here are some reasons why businesses choose Washington.

Washington has a pro-business climate

Starbucks, Amazon, and Microsoft are some of the world-renowned brands built in Washington state. No income or corporate income tax means as profits increase, states taxes remain the same, giving companies room to invest in their growth.

Washington is also one of the few states that offer industry specific incentives to combat the costs of growth associated with business expansion, equipment, and other related expenses.

Access STEM professionals in Washington

A report by WalletHub named Seattle as the number 1 area for science, technology, engineering, and math (STEM) professionals in the US in 2022, due to the large concentration of workers residing in the state. According to the Washington State Department of Commerce, the tech sector accounts for more than 20% of the state's total economy. CompTIA backs this up, ranking Washington second for the percentage of the workforce in tech, contributing to over $121 billion in revenue.

For businesses hoping to hire talented professionals in STEM fields, Washington’s commitment to building strong education systems dedicated to these subjects means the talent in this state shows no signs of running out. The state’s AP exam pass rates consistently exceed national averages, for example, in 2019 79% passed computer science AP in comparison to 69% nationally. In the same year, 55 Washington high schools offered AP computer science courses up from just 21 schools in 2011.

Other sectors that stand out in Washington include Aerospace and Life Sciences. The presence of major research organizations such as the Fred Hutchinson Cancer Research Centre and the Bill & Melinda Gates Foundation makes the state an attractive location for ambitious researchers.

Washington has an internationally competitive economy

Washington's economy was worth $618.7 billion dollars in 2020, making it the 10th largest economy in the US. Tucked in the most northwestern corner of the US, Washington’s location connects exporters to Canada and the Pacific Ocean. The state is a thriving export hub that helps businesses compete and connect internationally.

Growing US States for Business

What the heatmap doesn’t show is the growth potential of states such as Maryland, Connecticut, VA, Tennessee, and Colorado. All of which have nearly doubled in their concentration of workers from 2020 to 2021. For example, Colorado's worker concentration shot up a staggering 400% year on year in 2021, Virginia increased by 233%, and Maryland by 61%. If US expansion is on your mind, these states are upcoming key contenders for the best states to do business in 2021 and beyond and should not be ruled out.

Ready to Select a State to do Business in?

Each state in the US varies in terms of taxes, employment laws, living costs, wages, time zones, and much more. To ensure you are positioned to grow, you must do your research to see what state will best support your requirements.

The above states aren’t an overall reflection of the workforce in the US, but a high-level view of PGC’s workforce. If you plan to expand your business into or within the US, we’re happy to talk you through the best states for employing workers and help with your payroll needs to ensure you remain compliant.

PGC’s Top States for Business 2021