Hawaii, New York and Massachusetts are the most expensive states in the nation in which to do business, according to the 2005 Milken Institute Cost of Doing Business Index.

Hawaii, which was also number one on last year’s index, has business costs that are 43 percent higher than the national average. Second-place New York’s costs are 30 percent higher, and third-place Massachusetts has costs that are 25 percent greater than the U.S. overall. California is fourth, with costs more than 24 percent greater, and Connecticut is fifth, with costs greater than 22 percent.

The states with the lowest costs of doing business are South Dakota, 50th, with costs 28 percent below the national average, North Dakota, 49th (23 percent lower), Iowa, 48th (19 percent), Montana, 47th (19 percent) and Idaho, 46th (16 percent).

The Cost-of-Doing-Business Index, released annually by the Institute, indicates each state’s comparative advantages or disadvantages in attracting and retaining businesses. Those states with a low cost of doing business have, on average, greater job growth than those with high costs.

The Index measures wage costs, taxes, electricity costs and real estate costs for industrial and office space. Each state is measured on the five individual categories, and those weighted scores are compiled to make the overall index.

View Index (pdf).
View data (pdf).