Cost of Doing Business Highest in Northeast

May 9, 2005--A recent study shows that Boston has surpassed New York City as the costliest metropolitan area in which to do business--one of the rare occasions when surpassing its New York rival isn't cause for celebration.

The study, conducted by forecasting firm Economy.com, cites Boston's labor costs, which are the highest in the nation, as the primary cause. New York City now ranks fifth on the list, with San Diego, Los Angeles, and Sacramento ranked second, third and fourth, respectively. In fact, Boston and New York are the only two metropolitan areas among the top 10 that are not located in California.

Geographically, the Northeast retains its status as the nation's costliest region in which to do business. Five of the 10 costliest states in the nation are located in the Northeast, including Massachusetts, which ranks as the state with the highest business cost index for the second year running. The West had the second highest costs, while the South is the least costly region of the U.S.

The Economy.com study echoes some of the findings of Inc. magazine's recent rankings of the 274 best cities for doing business. Though Inc.'s survey used employment growth by business sector as its primary rubric, the two studies show some similarities. According to Economy.com, New Mexico is the least expensive state in which to do business. Inc.'s list includes two New Mexico cities in the top 75: Las Cruces at #58 and Albuquerque at #73. Likewise, the Inc. rankings are flooded with Southern cities, reflecting strong job growth in the area.

Economy.com's study was compiled using statistics for the costs of labor, energy, taxes, and office rents. The statistics were weighted with labor costs counting for 65%, energy costs for 15%, tax burdens for 10% and office rents for 10%.

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