Fifteen Best Cities for Starting a Business Have Right to Work in Common

A working paper released by three Harvard scholars shows that data from the popular online platform Yelp can predict “business growth, as measured by the [U.S.] Census Bureau, before official statistics are released.” And Yelp’s analysis shows Charlotte, located in Right to Work North Carolina, is ranked #1 among 50 major cities in the U.S. for entrepreneurs’ chances of success.  And you may have guessed; the other 14 highest-ranking cities nestle in Right to Work states. Image: Wikimedia Commons
“If you’re thinking about starting a business, you may want to move.”

So began CNBC journalist Catherine Campo a report regarding the popular online service Yelp’s new Local Economic Outlook program.

Yelp Data Editor Carl Bialik explained to Campo that Local Economic Outlook:

is an ongoing effort to surface insights from Yelp’s deep data stores to help businesses succeed and to arm policymakers with the information they need to make an effective change that will boost local economies.

“The Outlook centers around a list of 50 cities in the U.S. ranked by economic opportunity to show the current state of affairs in the American economy. We define ‘economic opportunity’ as the chance businesses have to stay open, and for new businesses to thrive.”

According to a recent Harvard working paper, would-be entrepreneurs have ample reason to pay heed to what Yelp’s Local Economic Outlook has to say. In Campo’s words, the working paper

“shows that Yelp data can predict business growth, as measured by the [U.S.] Census Bureau, before official statistics are released, with its predictive power increasing with population density, income, and education level. The site has amassed 135 million reviews and tens of millions of users, often making it a better source of information on the economy than government data .…”

The Local Economic Outlook findings are based on data compiled from July 2017 through September 2017.

The 15 top-ranking cities for “economic opportunity” are:

  1. Charlotte, N.C.
  2. Jacksonville, Fla.
  3. Omaha, Neb.
  4. Orlando, Fla.
  5. Charleston, S.C.
  6. Las Vegas, Nev.
  7. Tampa, Fla.
  8. Dallas, Texas
  9. Salt Lake City, Utah
  10. Houston, Texas
  11. Louisville, Ky.
  12. Memphis, Tenn.
  13. Tulsa, Okla.
  14. Miami, Fla.
  15. Phoenix, Ariz.

These cities are in 11 different states, demographically diverse, and scattered across the country except for the West Coast and Northeast.  These cities have but one obvious commonality: They all have state Right to Work laws, which prohibit terminating employees for refusal to pay dues or fees to an unwanted union.

On the other hand, the worst ranked cities lack Right to Work protections for employees.

It makes sense Right to Work states would typically be better locations for business start-ups. On average, they have more homebuilding, more rapid growth in consumer spending, and a substantially lower cost of living, all features that are highly beneficial for growing businesses as well as employees and their families.

“The fate of a business,” writes Campos, “ultimately depends on its individual characteristics,” but the data indicate Right to Work status is a key factor in determining whether or not a city is a favorable location from an economic perspective.