“Perhaps the region’s main appeal is that it’s so diverse,” says Angelos Angelou, founder and principal executive officer at Austin-based Angelou Economics.

Enormous diversity is found in California alone, with its remarkable positioning in an array of markets and sectors including technology, finance, agriculture, food processing, business and professional services, entertainment and many more. Some of those industries, admittedly, are hurting.

Agriculture is wilting from four years of drought; the music business continues its shrinkage, and much of the state’s film and TV production industry has been lured away by incentive-laden government officials dispatched from every state in the union. The appeal of being near, but not in California continues to attract business to the neighbors.

“People love to throw a wrench at California because it is such an innovative and creative place.”

“A lot of states have been playing the ‘We’re Cheaper Than California’ relocation game for the last decade,” says Thomas Stringer, who heads the site selection and incentives advisory program at Ryan, a global tax services firm. “People love to throw a wrench at California because it is such an innovative and creative place,” says native Angelino John Rocca, who heads his own incentive consulting firm. “The state’s doing far better than you’d think from reading the news.” Indeed, local residents still launch businesses in California, or—as they always have—migrate west from around the country for a new start.

The road, of course, runs two ways. Every day, companies leave the Golden State in search of less regulated, less costly business environments, such as those found in neighboring states like
Nevada and Oregon, and beyond, in Washington, Utah and Colorado. Meanwhile, states like Wyoming, Montana and Idaho may attract relatively few migratory companies, but continue quietly
nurturing their own home-grown industries—crops, cattle, minerals, fuel, light manufacturing—while maintaining their traditional sense of independence and resistance to government
overreach and regulatory creep.

Western states are positioned for economic success in the latter half of the 2010s, thanks to continuing innovation, increasing exposure to global distribution patterns, Asian markets, Pacific trade routes, key infrastructure improvements and access to a young, well-educated work force.

NEVADA: #8 Diversification Through Incentives
It cost Nevada at least $1.3 billion last year to lure Tesla Motors to Reno to build the world’s largest lithium-ion battery plant. The winning package it offered was far and away the largest economic incentive deal of 2014, shoving Nevada to the center of the national economic-development main stage. The expanding alternative-fuel car manufacturer says it will invest $5 billion and create 6,500 jobs. Insiders say the full-court press to attract Tesla reflects a desire among state leaders to diversify the state’s wilting economy, long associated with casinos and construction.

Hammered by the Great Recession, Nevada’s gambling and construction industries remain well below pre-2008 peaks. Business advocates say that the state is rebounding. “The Silver State
has reemerged as one of the fast-growing states in the nation,” asserts Dr. Stephen Brown, director of the Center for Business & Economic Research at the University of Nevada at Las Vegas. Brown cites strong growth across most industries since 2012. However, much of Nevada’s labor market is transitory, and large numbers of workers continue to leave the state in search of jobs.

“We believe that the Nevada economy will continue to see improvement in 2015 and 2016,” he says. “The gains in 2016 should be stronger than in 2015.” Housing construction should rise 8.3 percent this year, and 11 percent in 2016, he forecasts; gambling revenues should rise 2 percent his year, and 2.5 percent next. Nevada’s population, formerly the fastest-growing in the nation, is slated to grow this year and next by a slow-but-sustainable 2 percent. Tourism is up, too. Nevada’s tax burden ranks eighth lowest out of 50 states, and it ranks third in the Tax Foundation’s State Business Tax Climate Index. Nevada spends over $33.4 million per year on incentives.

COLORADO #11 Labor Supply Continues to Grow
Colorado employment grew 3.3 percent in 2014, led by trade, transportation and utilities, construction, financial activities and professional and business services. All sectors of the state’s economy—save the information industry—are predicted to continue growing this year. According to economist Richard Wobbekind, executive director of University of Colorado Boulder’s Business Research Division, innovation and infrastructure development are driving economic growth across the state. Meanwhile, employers are resisting wage increases.

Colorado “remains a magnet for young, college-educated adults, helping attract more technology firms to the area,” says Mark Vitner, senior economist at Wells Fargo. For example, Lockheed Martin has completed a new commercial space headquarters just outside Denver and is slated to hire 500 new employees. Panasonic Enterprise Solutions is building a new hub near Denver International Airport that will employ 300 people. Other leading job growth sectors for 2015 include the leisure and hospitality sector, which is expected to add 11,200 jobs, and the education and health services sector, which is expected to add 9,300 jobs. A state filing-fee holiday possibly helped accelerate new business registrations and renewals, up nearly 14 percent in 2014 over 2013. Initial high expectations for a legalized marijuana industry have largely been dialed back, after initial tax receipts proved underwhelming; advocates say give it time.

Efforts by the Colorado Association of Commerce and Industry to get the legislature to act on such issues as transportation funding, K-12 education testing reform and local healthcare finance were tabled due to what the association called partisanship and politicking. Colorado’s tax burden ranks 31st out of 50 states, and it ranks 20th in the Tax Foundation’s State Business Tax Climate Index. Colorado spends over $995 million per year on incentives.

UTAH #15 Continued Moderate Growth
The Utah Economic Council called 2014 “a good year” overall for Utah’s economy, and predicted “continuing moderate growth and improving economic conditions” in 2015. Utah’s job-creation rate, 3 percent in 2014, will taper off to 2.5 percent this year, according to the Utah Economic Council.

Driven by a strong technology sector, employing one out of five state workers, Utah companies hired at well above the national average, and unemployment continued to trend down, reflecting the Beehive State’s long-standing position as one of the country’s top states by employment; currently Utah boasts the nation’s second-lowest unemployment rate. Still, graduates talk about the difficulty of finding jobs, while employers declare filling jobs is problematic.

“We see the labor market continuing to improve,” says CBRE research analyst Joseph Farrell. “There is room to grow.” The ongoing expansion of Salt Lake City International Airport continues at a rate of nearly $20 million a month, pumping multiplier dollars into the economy.

In April, the American Legislative Exchange Council ranked Utah the nation’s top state based on its performance on three key variables: state gross domestic product, absolute domestic migration and non-farm payroll employment.

Living and working in Utah is not for everyone; the prominent role of the Mormon Church deters significant numbers of potential relocators. “I think church/state is an issue,” says site
selector James Renzas, principal of the RSH Group. “This is especially so for people considering relocating from places like California. They will not mesh with prevailing values.” Utah’s tax burden ranks 23rd lowest out of 50 states, and it ranks 9th in the Tax Foundation’s State Business Tax Climate Index. Utah spends over $207 million per year on incentive programs.

WYOMING #17 Lowest Tax Burden
Extraction of natural resources has been driving the Wyoming economy for decades. Increasingly, a combination of expanding regulations and softening commodity prices are causing investment to sift to other sectors, including technology, manufacturing, tourism and infrastructure. Cheyenne is emerging as a data center hub with deals inked by Microsoft, EchoStar and Green House Data. Last year, a gun manufacturer, Magpul, relocated to Cheyenne from Colorado after Colorado passed gun-control legislation.

Last year was a strong year for the hospitality industry, and 2015 has continued the pace. Both the Eastern Shoshone Tribe and the Northern Arapahoe Tribe are expanding their casinos, near Lander and Riverton respectively, to include convention centers, water parks and other amenities. Several regional hydration projects are underway, including the Gillette Regional Water Supply Project and an addition to the Cumberland Rail Spur. A slate of community college, undergraduate education and professional training programs, some housed in new or nearly complete construction, is in progress.

Wyoming’s tax burden ranks lowest out of 50 states, and it ranks first in the Tax Foundation’s State Business Tax Climate Index. Wyoming spends over $89 million per year on incentive

IDAHO #28 Agriculture Is Still the Story
Agriculture continues to drive Idaho’s economy. Farming has expanded at 5.5 percent annually since 1980, with roughly three times greater than the U.S. as a whole. Most job growth, however,
is non-farm. Healthcare and social assistance jobs are expected to pace job creation through at least 2022, followed by growth in retail, hospitality and professional and business services, according to the Idaho Labor Department. Last July, Idaho introduced a new tax reimbursement incentive program that provides a tax credit as high as 30 percent for up to 15 years on sales, payroll and income taxes.

A dozen companies have tapped the program so far, including Skywest Airlines, which is building a new facility in Boise, and Amy’s Kitchen, which produces organic foods in Pocatello.

The Gem State’s seasonally-adjusted unemployment continued to fall this spring, reaching a seven-year low of 3.8 percent in March. Meanwhile, total employment jumped 5,400—the largest
one-month increase on record—to exceed 757,000 for the first time. Still, business leaders would like the state to invest more in infrastructure upgrades. Backlogged bridge and highway projects—valued at over $260 million and with no funding in sight—concern business leaders, says Roy Eiguren at Eiguren Fisher Ellis Public Policy, a lobbyist in Boise. He says business leaders support a fuel tax to pay for the projects, but have not found the political support to make it happen.

Idaho’s tax burden ranks 24th out of 50 states, and it ranks 19th in the Tax Foundation’s State Business Tax Climate Index. Idaho spends over $338 million per year on incentives.

MONTANA: #29 More Sustainable Growth
Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research, calls the first half of the current decade “something of an economic miracle” in Montana. Thanks to the Bakken oil boom, rural communities that had been depopulating for decades have revived and are growing again. Tumbling crude prices late last year have dashed cold water on the miracle talk—mining earnings were down in 2014, and will drop lower this year—but forecasters like Barkey call the current situation more sustainable.

Economic growth is occurring more evenly across the major industries, with healthcare, professional business services and retail trade adding workers and paying higher wages. Tourism is counting on gains during the decade’s second half, as well, but other key industries face less cheery paths. Metal prices have been in retreat for three years running, and the state’s ranchers and farmers face a slowdown in the growth of global demand.

Says Barkey: “It all adds up to… more balanced, but possibly slower, economic growth.” Montana’s tax burden ranks 37th out of 50 states, and it ranks 6th in the Tax Foundation’s State Business Tax Climate Index. Montana spends over $101 million per year on incentives.

WASHINGTON STATE: #33 Picking Up Speed
A slowing Chinese economy, concerns about Greece exiting the Euro zone and geopolitical instability in the Middle East and Europe constitute “vital threats” to Washington State’s economy, according to the Washington State Economic and Revenue Forecast Council. Washington’s sluggish economy is expected to “pick up speed” and sync up with the rebounding national economy, forecasters at JPMorgan Chase said last spring. Job cuts announced last year by Boeing and Microsoft will likely be offset by hiring at Amazon, helping prod the state’s efforts to at least keep pace with national job recovery, according to business analyst Dick Conway, writing in Seattle Business magazine this winter.

“Washington is a great alternative to California,” says Renzas, “it just hasn’t been effectively promoted.” Executives should take the state more seriously, he says. “They have a great location, a great workforce, and a super-duper airport” offering nonstop flights around the world.

Washington’s tax burden ranks 24th lowest out of 50 states, and it ranks 11th in the Tax Foundation’s State Business Tax Climate Index. Washington spends over $2.4 billion per year on incentives.


WHO Michael Gasparenas, CEO and founder, Trusted Few

SITE HISTORY In 1997, Michael Gasparenas immigrated with his family from Lithuania to Chicago, and from there to Seattle. Gasparenas started the contractor referral service, Trusted Few, in the West Lake Union neighborhood, then took office space in downtown Seattle. His staff of eight now occupies about 2,000 square feet on the 21st floor of a 25-story downtown building.

WHY WASHINGTON “Washington is great for business because it has many startups, startup support groups, investors and conferences. A huge pool of talent has been attracted here by industry giants like Amazon, Microsoft, Starbucks, Boeing and T-Mobile. Washington’s amazing schools attract creative and talented individuals that further boost local entrepreneurship and economy.”

BOTTOM LINE “In Seattle I find myself surrounded by entrepreneurs. The talent, the transportation, and the taxes work in favor of what I am doing right. I would not relocate to another city at this point.”

OREGON: #42, Turning the Corner
One day this spring, an individual who started a new job somewhere in Oregon restored the state workforce to its 2008 footprint. The employment news came as a relief to a state clawing
for signs it had finally rounded the corner on economy recovery.

“The economy is not healed,” acknowledged Josh Lehner, Oregon’s chief economic analyst. But, it’s a start. “We’re starting to see strong wage growth in the last six months, and that’s a good sign,” he said. Another good sign is seen in the technology sector, which absorbed over 30 percent of the state’s available real estate space in 2014, according to the commercial real estate company JLL. Expanding aerospace and drone-manufacturing sectors, including names like Boeing, Cloudcap Technologies and Precision Castparts, are leading the way. Business leaders have staked out proposed mandatory paid sick leave and proposed minimum wage hikes as key legislative bills they’re keen on defeating, says Shawn Miller, president of Miller Public Affairs, a lobbyist in Portland.

Oregon’s tax burden ranks 16th out of 50 states, and 12th in the Tax Foundation’s State Business Tax Climate Index. Oregon spends over $865 million per year on incentive programs.


WHO Haralee Weintraub, CEO of Haralee.com

The women’s clothing manufacturer moved into converted private home in Oak Grove, a mixed-use neighborhood in Southeast Portland, in 2005.

WHY OREGON “So many people are former employees of Nike, Columbia Sportswear or Adidas going out on their own, starting their own companies or looking for contract work. Pattern designers, small sewing companies, sample sewers are all plentiful.”

BOTTOM LINE “Everything for my company is made here in Portland. Small companies here are used to meeting the high standards of companies like Nike. It isn’t hard to find one that can do a good job, even though my fabrics are difficult to sew.”

CALIFORNIA: #50, A Tale of Two States
Which is the real California? The state that’s been leaking corporate employers such as Toyota, Raytheon, Nissan and eBay? Or the state that added more jobs in 2014 than anyone anticipated, surpassing Texas as the country’s biggest job creator? The state besieged by drought and high taxes, or the state whose economy is booming?

California is “a tale of two states,” says site selector Renzas, based in Orange County. “We’ve got urban areas doing great, offering six-figure-plus salaries and more jobs than they can fill. And, elsewhere, we have rural areas with low wages and high unemployment.” Silicon Valley continues to thrive, and a surging biotech industry is bolstering San Francisco and San Jose. Less happily, the state’s epic drought is desiccating the state’s enormous, water-intensive agricultural industry. While the outmigration of corporate headquarters seems to be lightening up, CEOs are still launching spin-offs and new divisions in neighboring western states. Native companies like Apple and eBay have recently built high-speed networking centers in Arizona and Nevada, respectively, bypassing the Golden State.

California’s tax burden ranks 4th highest out of 50 states, and it ranks 48th in the Tax Foundation’s Business Climate Index. California spends over $4.17 billion per year on incentives. Gov. Jerry Brown has streamlined several earlier programs, including the flagship California Enterprise Zone, into a new tax credit program called California Competes. The initiative has gotten early mixed reviews, but says consultant Rocca: “Give the governor credit for coming up with a way to reward job creation.”


WHO Adam Xavier, CEO and co-founder, RoadLok

SITE HISTORY Adam Xavier co-founded RoadLoK, a motorcycle aftermarket wheel lock manufacturer, with his identical twin, Eric, in 2006, near their home in Newburgh, New York. The company manufactures what it says is the world’s only motorcycle antitheft immobilizer. In 2011, Adam stepped down as CEO, moved to Santa Monica and founded a second company using an unrelated technology (in the fashion industry). In 2013, he returned briefly to New York in order to relocate RoadLok to Santa Monica, leasing machine shop space a few blocks from the beach.

WHY CALIFORNIA “Success out here has been setting up distribution networks and meeting partners and potential partners. People are a lot easier to reach out to than they were out East. There is a feeling of collaboration. The majority of motorcycle manufacturers are located here. We’re near our partners and our prospective partners, our vendors and potential vendors. And people are happy. If you’re not feeling happy, go sit outside a few minutes or go to the beach. You’ll feel better and you’ll deal with customers better.”

BOTTOM LINE “My incentives to relocate here were all quality of life. I live a block from the office. I walk to work and I walk to the gym. I come to work feeling good. I have a sense
of balance, environmental consciousness and human connection. I feel what I have here is unmatched anywhere else. There is no other place I can truly call home.”

" Warren Strugatch : Warren Strugatch is a writer, speaker and consultant based in Stony Brook, NY. He covers economic development, global business, management and marketing.."