Low Costs of Doing Business and Living
The cost of doing business in Northeast Ohio is almost 10% lower when compared to the U.S. average, according to Moody’s Analytics. It costs less to do business in Northeast Ohio than in major markets such as Los Angeles and New York, but also in peer markets including Pittsburgh and Detroit.
“Cost of business,” as defined by Moody’s Analytics, takes into account four components: labor costs, energy costs, state and local taxes, and office rents. Northeast Ohio provides advantages in each of these areas:
- Labor Costs: Workforce costs are lower than in other markets, as Northeast Ohio businesses pay a median wage of $19.55 – far below New York’s $26.26. But not to worry, workers continue to live a comfortable lifestyle, as the region’s cost of living is 11.4% lower than the national average.
- Energy Costs: Northeast Ohio’s plentiful oil and gas reserves indicate a continuing downward trend in energy costs. With more than 25 trillion cubic feet of recoverable natural gas and 7 billion barrels of oil, the region has natural resource supplies to power businesses for the long term.
- State and Local Taxes: Ohio is among the top three states in the U.S. for favorable business tax rates, according to an Ernst & Young LLP and Council on State Tax Rates Report. In addition, Cleveland has one of the most favorable tax structures for businesses among U.S. cities/locations with populations exceeding 2 million, says the Competitive Alternatives: Focus on Tax report produced by KPMG International. Businesses in Northeast Ohio maximize their profits by paying zero tax on corporate profits; machinery, equipment and R&D investments; products sold to customers outside of Ohio; and tangible personal property.
- Office Rents and Real Estate: Northeast Ohio’s average cost for industrial property, $3.90 per square foot, is 33% lower than the national average of $5.83. It is less than half of the $9.17 businesses pay in Los Angeles and even beats out peer markets such as Buffalo ($4.68). Construction costs in Northeast Ohio are lower than the national average as well, providing cost breaks to businesses looking to build.
The low cost of doing business, combined with the low cost of living, makes Northeast Ohio an attractive place for businesses – and their employees – to thrive.