The process for selecting the top states for business in America in 2024 is being revealed.

• Since 2007, the heaviest weighted category in CNBC's Top States for Business rankings has been Infrastructure.
• Despite being the top factor for a decade, the workforce remains crucial, with a shortage of skilled workers. However, the labor market has relaxed.
• New metrics reflect the rise of AI and the insurance crisis.

The transformation of the competitive landscape among the states is being driven by an influx of government funds and the evolving nature of work, as reflected in CNBC's America's Top States for Business for 2024, our 17th study of state competitiveness.

This year's research focuses on new infrastructure metrics, such as sustainability and site analysis. We are tracking the competition to lead the artificial intelligence revolution. Additionally, we are evaluating the cost equation, which includes factors such as housing affordability and the growing insurance crisis. Our research measures the influx of foreign investment in the states. While worker shortages are slowly decreasing as the economy stabilizes, the competition for talent remains a top priority.

Our Top States methodology, established in 2007, was designed to adapt to changes. Despite this, our objective has remained constant: identifying the states that are most successful in achieving what matters most to businesses.

Since our study began, the ten broad categories of competitiveness that companies consider when making site selection decisions have remained constant. However, the importance of each category varies yearly based on the factors that are most critical in the site selection process.

We measure the states based on the attributes they use to sell themselves by analyzing their economic development marketing pitches and determining the appropriate weight for each category. For instance, if more states emphasize their workforces, the Workforce category carries more possible points.

The more significant a category is, the more metrics it contains. This year's research utilizes a record 128 metrics across the ten categories. We create our metrics with input from a wide range of business leaders, policy experts, and states themselves. States can earn a maximum of 2,500 total points. The states with the highest scores are America's Top States for Business.

Since the start of our research, Infrastructure has been the heaviest weighted category for the first time in a decade. This change occurred because Workforce, which had held the title for the past ten years, was replaced by Infrastructure. According to Seth Martindale, chairman of the Site Selectors Guild, an industry trade group that provided some of the data for this year's study, this shift makes sense.

The combination of federal funds, risk mitigation, reshoring, and moving production capacity back to the US has resulted in a competitive situation for companies seeking limited pad-ready sites in the US.

This year, Access to Capital and Business Friendliness are generating more marketing buzz due to high interest rates and business costs, as well as companies' efforts to develop new sites.

"Can the state expedite the process of obtaining permits and approvals? Can you quickly secure easements and rights-of-way?" Martindale stated. "In a business environment where all necessary components align, things can move quickly."

Despite the decline in the number of job openings nationwide, the workforce remains crucial for companies seeking skilled employees. However, the importance of the workforce category has decreased slightly due to this decline. As a result, the quality of life, which is essential for attracting a strong workforce, has also decreased.

We collect the most recent figures available to evaluate the states' performance in each metric, and we calculate some metrics on a per capita basis to ensure fair competition between large and small states.

States receive a letter grade in each category to measure their performance relative to the competition. Grading is scaled, with the high score equal to 100 percent and the low score equal to 50 percent. However, each state's overall ranking, as well as its ranking within each category, is based solely on the number of points scored.

The explanation of each category and its weighting for this year is provided, along with the categories themselves.

Infrastructure (425 points – 17%)

To revitalize domestic manufacturing, rebuild supply chains, and redefine work, a reimagined infrastructure is necessary. We assess the vitality of each state's transportation system by evaluating the value and volume of goods shipped through air, waterways, roads, and rail. We examine the condition of highways and bridges, the availability of air travel, and the time it takes to commute to work. With remote work becoming more prevalent, we also consider the quality, availability, and cost of broadband service in each state. We evaluate access to markets by measuring the population living within 500 miles of each state. We assess the availability of vacant land, office, and industrial space. New in 2024, we measure state site readiness programs based on their overall funding and the number of certified sites. We evaluate each state's utility infrastructure, including the condition of drinking water and wastewater systems, the reliability of the electrical grid, and the availability of renewable energy. Additionally, we assess each state's sustainability in the face of climate change, considering the risk of flooding, wildfires, and extreme weather.

Workforce (375 points – 15%)

As advanced manufacturing becomes increasingly important, the definition of a qualified worker is expanding beyond those with college degrees. We now consider workers with associate degrees and industry-recognized certificates, in addition to measuring each state's concentration of STEM workers and the percentage of workers with college degrees. We evaluate which states are most successful in attracting talent at all levels, taking into account net migration of educated workers, state worker training programs, right to work laws, and worker productivity based on economic output per job.

Economy (350 points – 14%)

In uncertain times, companies are looking for states with stable finances and strong economies. To assess the economic strength of each state, we examine GDP and job growth over the past year, measure fiscal condition through credit ratings and outlook, budget picture, pension obligations, and residential real estate market health through multiple factors. We also consider the number of major corporations headquartered in each state and measure entrepreneurial economy through new business formations. New in 2024, we will measure foreign direct investment in absolute terms and as a percentage of state GDP.

Quality of Life (325 points – 13%)

To attract a diverse pool of talent, companies are prioritizing states with a high quality of life. We evaluate states based on factors such as crime rates, environmental quality, and healthcare. We also assess worker protections and inclusiveness in state laws, including voting rights and discrimination protections. In addition, we consider the availability and affordability of childcare facilities and the impact of reproductive rights on attracting younger workers.

Cost of Doing Business (275 points – 11%)

To assess the impact of stubborn inflation on company balance sheets, we evaluate each state's tax burden and the strength of its business tax climate. We also examine wage and utility costs, as well as the cost of office and industrial space. In 2024, with the nation facing an insurance crisis, we will measure increases in commercial property and casualty premiums. We analyze the incentives and tax breaks that states offer to reduce business costs, and we examine available incentives aimed at promoting development in disadvantaged communities.

Technology & Innovation (250 points – 10%)

Innovation is highly valued in competitive states, which encourage new ideas and provide resources to support them. We evaluate states based on their outcomes, such as the number of patents issued per capita, as well as their performance in health, science, and agriculture research. In the current technological landscape, we assess each state's role in the semiconductor research, development, and manufacturing sector. Starting in 2024, we will measure each state's contribution to the artificial intelligence revolution by examining where new AI models are being developed and where AI jobs are being created. Additionally, in 2024, we will assess how states performed in the Tech Hubs program authorized through the federal CHIPS and Science Act.

Business Friendliness (250 points – 10%)

We evaluate the legal and regulatory frameworks of each state to determine their suitability for businesses. We assess various areas such as trade, labor, and bureaucracy, as well as their overall friendliness towards emerging industries. In 2024, we will focus on states that are leading the way in creating a regulatory framework for artificial intelligence, as well as those with favorable land use regulations for infrastructure development.

Education (125 points – 5%)

The education system of a state is its primary source of talent and a driving force for innovation. It is also a crucial factor for businesses and families when deciding where to settle. We examine various indicators of K-12 education, including test scores, class size, and spending. We also assess the number of colleges and universities in each state, as well as long-term trends in state support for higher education. Additionally, we examine historically Black colleges and universities (HBCUs), which are increasingly sought after by companies for partnerships. With the growing demand for employees with specialized, industry-recognized skills, we evaluate each state's community college and career education systems.

Access to Capital (75 points – 3%)

To remain competitive, companies require prompt access to financing despite persistently high business expenses and interest rates. We analyze venture capital investments and traditional bank lending in each state, both in absolute and relative terms. Additionally, we examine state-sponsored capital assistance and loan guarantee programs. Starting in 2024, we will assess foreign direct investment in each state.

Cost of Living (50 points – 2%)

As inflation continues, companies and workers are looking for states with stable prices and affordable daily living. The cost of living influences the cost of doing business, and we evaluate states based on an index of costs for basic items, with a focus on housing affordability. In 2024, we will introduce a new measure that considers the cost of insuring a median-priced home in each state as the insurance crisis spreads.

Our sources

Our rankings are primarily based on publicly available data, and we also factor in real estate cost and availability data from CoStar Group, labor market data from Lightcast, sustainability data from First Street Foundation, and site readiness program data from the Site Selectors Guild in the Infrastructure and Cost of Doing Business categories.

We rely on federal government databases for most of our information, but in instances where federal statistics are unavailable, we look for neutral and/or diverse data sources.

We gather information from each state's primary economic development agency, as well as their most recent Annual Comprehensive Financial Report (ACFR), along with other sources.