For sixth time, Virginia is rated top state for business. Here are 10 takeaways from those CNBC ratings.

Gov. Glenn Youngkin is taking a victory lap after CNBC has named Virginia as the top state for business — and rightfully so.

Democrats criticized him his first year in office when the CNBC ratings dropped Virginia from first to third — although, as I pointed out then, many of the statistics the business network uses to compile its ratings dated from before he took office, so Youngkin couldn’t be faulted for that slide.

Last year, Virginia was back up to second. Now, it’s first, and we’re far enough into Youngkin’s tenure that all the statistics that went into compiling these data-driven rankings came under his governorship. Whether he’s responsible for all of them, well, that could be a matter of dispute. Still, he’s the governor, and Virginia just ranked first; so naturally, he gets to claim credit. Let’s take a closer look at how Virginia came in first.

1. The rules change every year

CNBC tinkers with its methodology each year, so a state may rise or fall in the rankings through no fault of its own, but simply because the rules changed. Here’s how much CNBC’s formula changes. When it started in 2007, CNBC used 40 different types of data to compute its rankings. By last year, it was up to 86. This year , it used 128 different measures. All those numbers are then poured into 10 broad categories, each one weighted differently year by year.

This is the sixth time that Virginia has finished first since CNBC started these rankings, more than any other state. (Texas has finished first four times.) Virginia has also finished second three times, third place twice and fourth place once, so that’s 12 top-four placements in 17 years. This kind of consistency against a backdrop of ever-changing measures makes Virginia look pretty darned good. It also makes me wonder how much any one politician makes a difference. Maybe Virginia’s fundamentals are simply so strong that the state is going to be a contender no matter who’s in charge or how CNBC scores things? That said, some political decisions the state makes do shape some of these numbers. Spoiler alert: There may be some things ahead that make things difficult for both parties.

2. Taxes aren’t as important as they once were

When CNBC started its ranking, the most important category was cost of doing business, which accounted for 22.2% of the points available. Now, the cost of doing business accounts for only 11% of the total points, so that measure is less than half as important as it once was. The “cost of doing business” covers taxes, utility rates and the cost of office space. CNBC doesn’t disclose the formula beyond that but, in general, it’s safe to say that the ratings put less emphasis on taxes than they once did. Youngkin has repeatedly made the case that Virginia needs to lower its income taxes to be more in line with other Southern states we’re competing with. He may still be right, but the CNBC ratings won’t help him make that case.

Or do they? Of those 10 categories CNBC uses, the one where Virginia scored worst was, yes, cost of doing business. In that category, we ranked 24th. Oklahoma ranked first, Ohio second. Our bête noire , North Carolina, finished 18th in the cost of doing business category. Virginia was named the top state for doing business despite its relatively high cost of doing business, not because of it.

3. Infrastructure is now the most important driver (and a lot of that infrastructure now deals with the internet)

When CNBC started these ratings, this category was simply called transportation and accounted for just 5% of the score. Over the years, it’s been broadened to infrastructure of all kinds. This year, CNBC made it the weightiest category, accounting for 17% of the total score. These changes account for how the nature of the economy is changing. Besides traditional transportation infrastructure, CNBC now measures lots of other things, including internet access. “With remote work here to stay, we also consider the quality, availability and price of broadband service in each state,” CNBC says. While broadband access in Virginia sure isn’t perfect — Broadband Now says just 35.2% of those in Greensville County have broadband access — all the money the state has invested in rural broadband is helping to make a difference. In the infrastructure category, Virginia ranked third-best in the nation, with Georgia first and Arizona second.

In its report on Virginia, CNBC praised the states for internet accessibility, but also noted that the explosive growth of data centers is “putting a strain on the power grid — one of the few weak spots in Virginia’s infrastructure due to reliability issues.” In an interview with CNBC, Youngkin agreed: “We needed to get on the power challenge. Virginia’s power needs are growing faster than the nation.” He pointed to the recent announcemen t that Dominion Energy is looking at adding a small nuclear reactor to its existing nuclear power plant in Louisa County as an example of how the state is responding. (Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our polic y.) Speaking of energy …

4. Renewable energy matters

Three years ago, in 2021 , CNBC added access to renewable energy as one of its criteria under infrastructure. Virginia has a lot of issues to grapple with when it comes to energy: The Clean Economy Act, which mandates a carbon-free electric grid, has driven solar development across Southside Virginia — and not everyone there is keen on having their rural landscapes turned into industrial ones full of solar panels. There’s been talk of the state taking away some powers from local government to make sure that planning commissions and boards of supervisors in rural areas don’t thwart solar development. Still, for anyone skeptical of renewables, I point you to the CNBC ratings of top states for business. Renewable energy is now considered an economic plus. The more we have, the better we look to business.

5. Site readiness matters

Here’s where Youngkin should take that victory lap: the Southern Virginia Megasite in Pittsylvania County, the Commonwealth Crossing Business Centre in Henry County, the Mid-Atlantic Advanced Business Center in Greensville County, the Sussex Megasite in Sussex County, or any of the state’s other so-called “megasites.”

That’s because another one of the metrics that CNBC added to the infrastructure category this year was consideration of “state site readiness programs in terms of their overall funding and the number of certified sites.” Virginia started to increase funding for site readiness toward the end of the Ralph Northam administration — after a state report found that the lack of prepared sites had cost the state up to 39,000 jobs — and site preparation has become a major focus of the Youngkin administration. Once Virginia spent $5 million a year on site preparation; the current budget allocates $20 million per year over the next two years. That’s less than the $225 million Youngkin wanted (he proposed $200 million for site development and $25 million for site acquisition over two years). That’s also less than what other states do. North Carolina has budgeted $97.8 million for the coming year. Still, the addition of this category gives Youngkin a good talking point for why this program matters.

Of course, an actual business announcement would be a better talking point yet. Youngkin famously nixed the state’s bid for a Ford electric vehicle battery plant to locate in the Southern Virginia Megasite out of concerns about Ford’s relationship with a Chinese battery maker. Instead, Ford went to Michigan. For what it’s worth, Ford has since scaled back the size of the plant, and Michigan recently reduced the amount of the incentives it had offered Ford to locate there.

6. Virginia consistently gets high marks for education

Virginia ranked first for the second year in a row in the education category. In 2022 and 2021, it ranked second. While there was no ranking system in the pandemic year of 2020, Virginia also ranked first in 2019. Before then, Virginia ratings bounced around, usually in or near the bottom of the Top 10, but falling to as low as 29th in 2014.

CNBC offers no explanation, but something seems to have happened to make Virginia’s education ratings more consistent over the past five years. This is an area where every politician who has ever voted for education funding gets to claim some credit, deservedly or not. This first-place finish also cuts two ways: Some can say we don’t need to increase education funding because we’re already the best; others can say we need more funding because we need to stay that way. For what it’s worth, Massachusetts finished second, Pennsylvania third.

Before we get too deep into that, note this: Education accounts for only 5% of the total score. However, workforce is the second-weightest category — 15% — and those workers didn’t magically acquire their skills simply by waking up one morning. They had to get educated somewhere.

CNBC also now notes that many businesses are seeking out Historically Black Colleges and Universities for partnerships, so Virginia’s funding of Norfolk State University and Virginia State University matters (as does the presence of private schools such as Hampton University and Virginia Union University).

When CNBC addressed Virginia’s support for education, it made a point of saying this may be a byproduct of a politically divided state: Bipartisan support for education funding “is one of many ways that a divided government has helped to moderate Virginia politics.”

7. Out-migration matters

Youngkin has been at the forefront of warning that, every year since 2013, Virginia has seen more people move out of the state than into the state. I’ve pointed out in my own columns that this out-migration began first with retirees, but now involves every age cohort. More to the point here: Virginia is exporting more college graduates than we import. It’s not just me and the governor who pay attention to this. So does CNBC. One of their criteria under the workforce category is “the net migration of educated workers to each state.” Once next year’s governor’s race gets up and going, we should be asking the candidates why they think the state is exporting these workers, and what can we do to reverse it? In a previous column , I called for an official state study of this phenomenon.

8. Virginia doesn’t rank as high for technology as we’d like

Virginia ranked 15th. That’s not bad. It’s a heck of a lot better than being North Dakota, which ranked 50th. Still, for a state that increasingly likes to emphasize its tech prowess, we’d probably like to be higher, right? Here’s one way to look at this: Virginia has consistently been in the Top 20 but only once cracked the Top 10.

The states ahead of us are the predictable ones, although once-perennial champion California has now slipped to fifth. This year CNBC has New York and Texas tied for first, with Massachusetts behind them. This matters because the economy is clearly headed in a technology-driven direction. Virginia may never supplant Silicon Valley, but that’s not really the problem. Why is Virginia behind, say, Oregon? Or North Carolina, for that matter? With that in mind, here’s a question for Virginia policymakers: What would it take for Virginia to become a regular Top 10 state in this category? And, of course, with Cardinal’s nest in mind, how can the western part of the state benefit more from that sector of the economy?

9. Virginia got dinged for “quality of life” and “cost of living”

As mentioned earlier, our lowest score was in cost of doing business, where we ranked 24th. In these two categories, though, we ranked 19th in each one. Of those, the more important one is quality of life, because it accounts for 13% of the score, while cost of living is just 2%.

As I sit here in the backwoods of Botetourt County, watching a cardinal flit around on the back deck while I write these words, I’m at a loss to explain why Virginia ranks so low on quality of life. CNBC’s explanation of this category covers so much territory it isn’t particularly helpful, although I do notice that many of the items tend toward the leftward side of the political spectrum: “we look at inclusiveness of state laws, including protection against discrimination of all kinds, as well as voting rights.” There’s also a reference to “worker protections.” The scoring in this category becomes clearer when we see who did score high: Vermont placed first, Maine second, New Jersey (!?!) third, Minnesota fourth, Washington fifth. The top 12 states are all ones that have voted Democratic in presidential years, so the measures for quality of life definitely seem left-leaning. Some of you may love that. Some of you may be disgusted. Consider that however you please. The states that ranked in the bottom five: Arkansas, Oklahoma, Alabama, Indiana and then, finally, in dead last, Texas.

10. Be wary of reading these rankings through a partisan lens

Despite what I just said about the quality of life ratings, there’s plenty here for conservatives to like. Four of the states in the top five have Republican governors — Virginia, Texas, Georgia, Florida — while the fifth, North Carolina, has a Republican legislature. If Republicans want to say that they do a better job of running business-friendly states, there’s your talking point.

However, when I read through CNBC’s methodology, what I see are a lot of criteria that skew in politically conflicting ways. Some categories clearly favor the left. Under quality of life, CNBC says “with surveys showing a sizable percentage of younger workers would not live in a state that bans abortion, we factor reproductive rights in this category as well.” Other categories favor the right: Under cost of doing business, it’s clear that low taxes lead to higher scores. Under business friendliness, CNBC favors states where state regulations don’t “overburden business.” My take: The world is a complicated place, and the economy doesn’t fit neatly into ideological pigeon holes. It often rewards practicality, not partisanship.

Does the overall CNBC rating system skew left or right? Hard to say. The obviously conservative state of Texas ranked third, even though it finished last in quality of life. If you’re a Texan, maybe you blame that “woke” CNBC survey from costing you the prize. On the other hand, if you’re in left-leaning Washington state, you can blame those conservative criteria under business friendliness for pulling down your final placement to 10th place when otherwise you’d have been higher, and just seven years ago you were in first place with a different scoring system. Meanwhile, Virginia’s Republican governor is rightfully crowing about the results, no matter what led to the specific numbers.

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