It was a banner year for Connecticut in CNBC's 20th annual America's Top States for Business rankings. The Nutmeg State moved up five spots to 23rd place for its best ever finish.
"I guess that might suggest that there's been some improvement and/or that the competitive landscape has shifted to things that Connecticut does well," said Scott Cohen, CNBC's lead analyst.
But while the state's gains reflect improvements in business friendliness, Cohen says high costs and aging infrastructure continue to keep Connecticut from joining the nation's top tier.
Bureaucracy changes help Connecticut
Cohn said one of the biggest changes in this year's rankings was a new emphasis on how quickly states approve permits and move business projects through the regulatory process.
"We always looked at business friendliness in the 20 years that we've been doing this study, but what we're hearing from site selectors and companies is that speed to market is important," he said.
As a result, CNBC added what Cohn described as "essentially a measure of red tape" to its business friendliness category.
"Connecticut does pretty well in that regard," he said. "That helped in the business friendliness category, and that was the biggest improvement in Connecticut's ranking over the past year."
Connecticut's strengths
Cohn said Connecticut continues to earn high marks for several measures that businesses increasingly value when recruiting workers.
"Connecticut does really well for quality of life," he said, “things like health, which is incorporated into quality of life, inclusiveness, education.”
The education category measures everything from K-12 test scores to higher education funding and community colleges.
Costs continue to drag down the state
Despite the improved overall ranking, Connecticut remains one of the nation's most expensive states.
"The cost of doing business improved a little bit over the last year, but still the 40th rank in that category," Cohn said.
He added that Connecticut ranked 44th for cost of living.
"Things are expensive everywhere," Cohn said. "but particularly so in Connecticut."
Infrastructure remains the biggest challenge
Cohn said the state's greatest weakness is infrastructure, particularly as companies increasingly seek locations where new facilities can be built quickly.
"Right now, infrastructure is so important," he said.
He said companies want to build facilities fast.
“They need the space to do it. They need shovel-ready sites. They need strong basic infrastructure like roads and bridges and utilities," Cohn said.
CNBC also placed greater emphasis this year on what economic developers call "site readiness" — land that already has access to utilities, power, water and other infrastructure needed for rapid development.
"Connecticut could use some work on that," Cohn said.
He acknowledged that Connecticut's size limits the number of available development sites, but said the issue remains an important competitive disadvantage.
Is Connecticut improving?
Asked whether Governor Ned Lamont's administration deserves credit for the state's improved ranking, Cohn pointed out he considers himself more of an aggregator of data than someone versed in policy ideas.
"I'm not going to give any specific critique or praise to one administration or another," he said.
Instead, Cohn pointed to Connecticut's long-term trend.
"The proof is in the results," he said.
All three of Connecticut’s rankings inside the top 30 states in the CNBC annual report have come in the last 5 years: 2021 (24th), 2025 (28th), and 2026 (23rd).
A different picture than a decade ago
Connecticut's climb to 23rd marks a significant turnaround from 2014, when CNBC ranked the state 46th overall.
At that time, Cohn said, Connecticut's economy ranked 49th nationally, its workforce ranked 32nd and its cost of doing business ranked 47th.
"A lot of the focus at that time was on cost," he said.
Although Connecticut remains an expensive place to live, Cohn noted that one factor has helped improve the state's standing in recent years.
"We've started over the last couple of years looking closely at the cost of insurance," he said.
"There's a huge insurance crisis gripping much of the country, but Connecticut does relatively well by that measure,” he said. “So that brings up your cost of living score a little bit."
Even so, Cohn said Connecticut's path toward becoming one of the nation's top business climates will likely depend on addressing the same issues that continue to hold it back today: lowering business costs and improving the infrastructure companies increasingly demand.
