Maryland is one of the wealthiest and most educated states in the nation, but it is one of the worst states for starting a business, according to a recent study.
The WalletHub study was published on Tuesday. It said that Maryland ranked 35 out of 50 among the best states for starting a business. Texas was ranked the best state for starting a business, while New Jersey was ranked the worst state for starting a business.
The study also found that Maryland ranked among the top five states with both the highest labor costs and the most expensive office space. Maryland is the third most educated state, according to the study.
WalletHub based its findings on three criteria: “business environment, access to resources, and business costs.” The criteria were assessed across 28 metrics. Each metric was ranked on a scale of 0-100. WalletHub used data compiled by U.S. government agencies such as the Census Bureau, Bureau of Labor Statistics, and the FDIC, as well as private entities such as the Kaiser Family Foundation.
So why does Maryland rank below most states in terms of prospects for starting a business?
“The regulatory environment is tough, to get answers is tough, the taxes are higher. It is just a difficult place to operate,” Del. Brian Chisholm, R-Anne Arundel, told MarylandReporter.com.
Chisholm, who owns a gym, added: “It is difficult when you feel like you are constantly under regulatory demands and taxes. It is just not a cheap place to do business.”
And legal mandates for paid-time-off and a higher than average minimum wage do not help the situation, Chisholm said.
“It makes it very difficult to operate in this state.”
Howard County Chamber of Commerce President and CEO Leonardo McClarty, like Chisholm, said cost considerations play a key role in Maryland’s poor ranking in the study.
“I think the rankings certainly point to some of the challenges that those of us in business advocacy have stated for a number of years. As a state, we are very competitive in terms of talent, proximity to markets, and education to name a few. Unfortunately, we are a very high-cost state both in terms of cost of living, taxation, and labor cost. Sunbelt states have consistently outperformed other regions in most economic development reports due to labor costs and tax policy. Ironically, those same states are often near the bottom in terms of education.”
Sen. Cory McCray, D-Baltimore City, drew a parallel between the study’s findings and the struggles minority entrepreneurs often face.
“If it is that bad for a business to start in the state of Maryland, imagine how it is for Black folks that are in urban jurisdictions or surrounding counties to be able to come up.”
McCray, who owns a rental property business, said the state can play a constructive role helping in helping minority business owners succeed.
“I think that Commerce has a significant amount of tools. I think that the Department of Labor has a significant amount of tools. And we have to make sure that these are on the streets, and educate our businesses so that they can flourish and thrive.”
McCray emphasized that small business ownership “provides a real opportunity” for Marylanders who live in underserved communities and that everyone in society benefits from investment equity.
Additionally, more minority-owned businesses should be given a greater opportunity to “get to the top of the list,” McCray said.
Maryland’s economy appears to be lagging behind that of most of the states in the nation with an unemployment rate of 6.2%, while the national unemployment rate is at 5.9%.