How much it costs to operate a business in each US state

Last updated: May 21, 2026

To compare how expensive it is to operate a business in one US state versus another, look at the two costs that move the most: labor and energy. LiveDataLink's cost_of_doing_business_index takes a state, pulls BLS QCEW average pay and EIA electricity prices, expresses each relative to the US national average, and returns a LOW, MODERATE, or HIGH cost banding with the numbers behind it.

Get a state's cost index

The only required argument is state, as a 2-letter code or a 2-digit FIPS. An optional metro code refines the local-context leg and label.

{
  "method": "tools/call",
  "params": {
    "name": "cost_of_doing_business_index",
    "arguments": { "state": "TX" }
  }
}

The response leads with a headline banding (LOW, MODERATE, or HIGH cost versus national) from a labor-weighted composite, then shows the labor and energy dimensions with each one's own index and banding.

What goes into the index

Labor cost. BLS QCEW private-sector average annual pay across all industries, for the state and the nation. This is keyless and carries the larger weight, since labor is the dominant operating cost for most businesses.
Energy cost. EIA retail electricity price for the commercial and industrial sectors, state versus national, in cents per kilowatt-hour.
Local context. US Census ACS median household income, per-capita income, and median gross rent. This is context only, not part of the cost banding, and it needs a Census API key.

Every dimension is expressed relative to the US national average, where national equals 1.00, so a labor index of 1.10 means pay runs about 10 percent above the national norm.

Compare two states side by side

Call the tool once per state and compare the composite indices. Because each number is anchored to the same national baseline, a state at 0.90 is genuinely cheaper to operate in on these dimensions than a state at 1.15, rather than the difference being an artifact of different units.

{
  "method": "tools/call",
  "params": {
    "name": "cost_of_doing_business_index",
    "arguments": { "state": "CA", "metro": "31080" }
  }
}

What it is and is not

This is a comparative index of two big operating-cost dimensions, labor and energy, not a full cost model. It does not include taxes, real-estate purchase prices, or regulatory burden, and the labor and energy figures are state-level even when a metro is supplied (the metro refines only the local-context leg and the label). A source that fails is noted, not fatal, so the index is computed from whatever responded. It is informational public-data synthesis, not a guarantee. See the full set of one-call decision tools at /decisions and provenance at /trust.

FAQ

Which costs does the banding include?

Labor (BLS QCEW average annual pay) and energy (EIA commercial and industrial electricity price), each relative to the national average. Labor carries the larger weight. Census income and rent are shown as context only, not part of the banding.

Does the metro argument change the labor and energy numbers?

No. Labor and energy are computed at the state level. A supplied metro refines only the Census local-context leg and the label.

Does it account for taxes?

No. The index covers labor and energy cost. Taxes, real-estate prices, and regulatory burden are out of scope, so treat the banding as one input among several.

Last updated: May 21, 2026 · LiveDataLink home