You may know the 1980s song “Bad Reputation” by Maryland native Joan Jett. This could be the theme song for Maryland’s reputation today in the business community. I base this on two annual surveys that assess how attractive a state is for doing business.
The first comes from the publication Chief Executive, which surveys CEOs and business leaders each year. Their recent ranking has Maryland ranked the 35th best state for business. The other is done by the publication Area Development. They survey business location consultants each year. They list only the top 20 states, and Maryland didn’t crack the list.
Area Development ranks states based on 14 different subcategories, such as access to qualified labor, energy availability and costs, logistics and infrastructure. Maryland did not crack the top 10 in any of those 14 categories.
So which states have good reputations? Nine states were in the top 15 of both publications’ rankings: Texas, Tennessee, North Carolina, Georgia, Indiana, Virginia, Arizona, Ohio and South Carolina. These reputational rankings matter if they influence decisions, which seems likely. The ability to attract and retain businesses is good for the residents of the state and the state’s fiscal health. Governors and legislators should recognize this.
Gov. Wes Moore, in his 2025 State of the State address, said: “This year, let us rededicate ourselves to helping more Marylanders become active participants in a growing economy — instead of being weighed down by a stalled economy.” Former Governor Larry Hogan echoed a similar sentiment in his 2015 State of the State address, saying: “Maryland’s anti-business attitude, combined with our onerous tax and regulatory policies, have rendered our state unable to compete with any of the states in our region. It’s the reason that businesses, jobs and taxpayers have been fleeing our state at an alarming rate.”
But lofty goals and statements don’t always match results or reality. This year, the state’s surprise budget hole of $3 billion revealed a weakness in the state’s fiscal health. But isn’t Maryland doing comparatively well based on objective measures? The state was ranked 15th in the country based on per-person gross domestic product in 2023, and number three based on median household income that year. Those are good numbers, so why pay attention to these reputational surveys? Looking at the growth rates of meaningful variables paints a less positive picture. For example, from 2015 to 2023, Maryland’s total GDP growth rate ranked 36th out of 50 states. Census estimates have Maryland’s population growth from 2020 to 2024 at 32nd out of 50.
In addition to reputation surveys, there are numerous rankings based on a combination of objective measures. One can cherry-pick from these to some extent to show higher or lower rankings. That said, the Tax Foundation ranks Maryland at 46th in its 2025 State Tax Competitiveness Index. New Jersey and New York rounded out the list at 49 and 50.
Individuals and businesses are not keen on high taxes, but they are keen on what taxes pay for, such as infrastructure, parks and education. So one needs to be careful in interpreting that ranking in isolation. Residents benefit from a healthy job market as they seek rewarding work to achieve their potential. This is especially true for recent high school and college graduates beginning their work life. A recent ranking of states with the best job opportunities by the website MyPerfectResume had Maryland at 34. WalletHub has Maryland at 46 in its ranking of best and worst states to start a business. These numbers are not good.
Social scientist Albert O. Hirschman, in his book “Exit, Voice, and Loyalty,” made the point that when facing an unsatisfactory situation, the options are to exit and seek out something or somewhere better, use our voice to express dissatisfaction in an attempt to improve the situation, or out of loyalty just accept the situation as it is. Some Maryland businesses and residents may feel that the voice and loyalty options are not for them, so they exit. I encourage those interested in making Maryland a place where businesses and residents can better prosper to take the voice path. Reputations are hard to change, but the state could do better with fresh ideas and learning from other states, and perhaps begin to move the needle in the right direction on its reputation.
Douglas Lamdin (lamdin@umbc.edu) is a professor of economics at the University of Maryland Baltimore County.
