US Site Selection and State Politics

In our previous blog post titled “7 Site Selection Criteria for Tech Scaleups Entering the US” we reviewed several of the classic site selection criteria tech companies typically consider when choosing a location for their initial US office including time zone, access to talent, and operating costs. One site selection topic that is often avoided and not very well understood from outside the United States is the politics of individual states and how the variance of state policies on a wide range of topics that may or may not align with a given company’s culture and values.

In the United States there are multiple layers of government that make policy including the federal government, state governments, and local governments (cities and counties). The federal government governs policies related to national defense, immigration, and federal taxes, while the states mostly govern policies related to family & criminal law, education, healthcare, transportation, and state taxation within their state, and the local governments mostly govern policies related to public safety, zoning, housing, and local taxation. However, there are many policy areas where the federal, state, and local governments are in conflict regarding jurisdiction and in many cases have conflicting policies. Some conflicting policy areas include policies related to the environment, anti-discrimination, gun control, cannabis, criminal justice, and welfare & social programs.

There are only two primary political parties in the United States, the Republicans who typically favor traditionally conservative policies and the Democrats who typically favor traditionally liberal policies. Several states in the US have all three branches of their government that create policy controlled by one party or the other (Republicans of Democrats). These states tend to have policies that are much more conservative or liberal leaning.

Some of the states in the US controlled by conservative state governments include Texas, Florida, Tennessee, Alabama, Louisiana, Wyoming, and Arkansas.

Some of the states in the US controlled by liberal state governments include California, Massachusetts, New York, Washington, Connecticut, Oregon, and Illinois.

In general, states controlled by conservative state governments typically have lower taxes and fewer regulations around operating a business, the environment, anti-discrimination, and gun control.

In general, states controlled by liberal state governments typically have higher taxes and more regulations around operating a business, the environment, anti-discrimination, and gun control.

To further complicate political policy considerations in the site selection process, some states and cities located in that state have very different political policy environments. The city of Austin Texas is a classic example. The city of Austin Texas has historically been governed by liberals, yet Austin is located in the state of Texas, which has historically been governed by conservatives.

CNBC in its annual rankings of America’s Top States for Business recently selected North Carolina as the best state for business for the second year in a row. CNBC cited in their selection criteria how North Carolina’s split government (a Democrat is Governor while state House and Senate are controlled by Republicans) has resulted in balanced approach to policy making that has led to strong economic growth.

Politics and policy in the US are tricky given the binary nature of only having two political parties who each have only one policy approach that so happens to be diametrically opposed to the other parties’ policy approach.

Understanding the basics of state politics and the variance of state policies will hopefully help you select a site in the US that will align with your company’s culture and values.

To assist tech scaleup companies entering the US market with their site selection process we recently launched this 10 question site selection assessment and quiz. Check it out and let us know what you think.