Iowa has been ranked second-lowest nationally in the Milken Institute’s 2007 Cost-of-Doing-Business Index. The ranking is Iowa’s highest ever.

Iowa’s score was 79.7, bested by South Dakota, which has an index score of 70.2. Iowa’s index score means the cost of doing business in Iowa is 20.3 percent lower than the national average.

Hawaii is the most expensive state for doing business, with a score of 150.5 – 50 percent above the national average.

The index gathers information from all 50 states and compares both advantages and disadvantages in attracting and maintaining business. The rankings are based on five categories: the state’s tax burden, electricity costs, industrial rent costs, office rent costs and wages.

Each of the five categories is weighted, and the states are given scores that compare to the national average.

A state with a score of 100 would indicate that the cost of doing business in the given state was equal to the national average.

According to the Milken Institute’s report, Iowa’s wage cost is 19.6 percent lower than the national average, as is the electricity cost, at a difference of 19.8 percent.

Iowa’s tax burden costs are also lower than the national average by 5.1 percent, while industrial rent and office rent costs are below the average by 49 percent and 32 percent, respectively.

Although Iowa scored well on the index, Tim Kisgen, senior in marketing, is not so sure he would want to start his own business in Iowa.

“I might go elsewhere if I had a choice. It depends on the business,” he said. “For the type of business that I want to run, such as aviation, the market has already been tapped here.”

While cost is an important factor in starting or retaining any business, Joseph Folsom, district director of the U.S. Small Business Administration Des Moines District, said he believes there is more to Iowa than just low costs.

“One of the things that crosses my mind is the work force that we have in Iowa. From my perspective, we have a quality workforce with a strong work ethic,” Folsom said. “This would be a very strong reason to own a business in Iowa.”

Shawn Rolland, spokesman for the Iowa Department of Economic Development, agreed.

“Besides the fact that it’s affordable, Iowa also has a great work force for employers to utilize,” Rolland said. “The state also has a great quality of life and is consistently ranked in the top of the nation.”

While the index indicates that Iowa is an affordable state, business in Iowa does come with challenges.

“One of the challenges is keeping the younger generation in Iowa. As the baby boomers retire, we will need a big effort as a state to encourage younger generations to stay in Iowa and take those high-quality jobs,” Rolland said.

Kisgen also talked about decreasing numbers when looking to start a business.

“Most of Iowa is rural and slowly getting smaller, so I think it would be hard to start up a new business and have it be very successful,” he said.

Although Iowa received high marks in the study, it does not necessarily indicate a sudden boom in business. Both Folsom and Rolland agree that Iowa’s ranking is just the beginning of generating more business.

“It puts us on the radar as an affordable place to start a business and helps recruit some business to Iowa,” Rolland said.

“When looking at the big picture, there are many reasons why Iowa is a great place for business.”