Connecticut ranked among least innovative states
Connecticut has some work to do when it comes to innovation, according to the Consumer Technology Association (CTA)'s 2016 Innovation Scorecard.
The CTA graded each state and Washington, D.C. in 10 categories:
- Right-to-work laws.
- Welcoming new business models.
- Tax friendliness.
- Attracts investment.
- Entrepreneurial activity.
- Internet speed.
- Tech workforce.
- Grants STEM degrees.
- Innovation-friendly sustainable policies.
- Drone support.
Each grade comprised 10% of each state's overall composite score, which CTA used to rank each state across four categories: I nnovation Champions, Innovation Leaders, Innovation Adopters, and Modest Innovators.
Connecticut, which fell under the Innovation Adopters category, had the 12th lowest composite score (2.109) in the nation. Utah had the highest (3.292) and West Virginia had the lowest (1.063).
Because there was no drone support data for Connecticut, the state received grades in only nine categories:
- Right-to-work laws: F
- Welcoming new business models: B
- Tax friendliness: C-
- Attracts investment: B+
- Entrepreneurial activity: B-
- Internet speed: B
- Tech workforce: B
- Grants STEM degrees: B
- Innovation-friendly sustainable policies: D
Connecticut’s lack of right-to-work laws, which allow workers to choose whether or not to join labor unions, earned the state its lowest grade on the scorecard.
According to the CTA, states with right-to-work laws report higher personal incomes and job growth and have quicker growing economies.
States with right-to-work laws automatically earned A+ grades in the scorecard category, while states without them automatically earned F grades.
New business models
CTA staff assigned grades to each state in this category based upon state and municipal laws and regulations that affect two new types of business models — ridesharing and homesharing.
Although not all states have enacted policies relating to every one of these business models, according to the CTA, “every state now has laws or regulations that affect at least one of the evaluated industries.”
Even though ridesharing service Uber won a case against taxi and limousine companies that sought to stop transportation network companies from operating in Connecticut, “the industry still isn’t safe from ill-conceived bills influenced by special interests,” according to the CTA.
To help make the state more innovative, the CTA recommends Connecticut lawmakers “work proactively toward a legal framework that explicitly allows ridesharing companies to operate freely.”
The CTA used the Tax Foundation’s 2016 State Business Tax Climate Index to determine each state’s tax friendliness. Grades were based on relative complexity, financial burden, and broad base of a state’s tax code on both individuals and corporations.
States with “simple, lean tax structures that offer attractive rates to new businesses and encourage job creation and investment” received higher grades in the category.
With an index score of 4.330, Connecticut earned a C- in the category.
Wyoming (7.540), South Dakota (7.420) and Alaska (7.340) each earned an A+, while New Jersey’s 3.360 index score earned it an F — the lowest grade in the nation.
The CTA measured per-capita venture capital investment and research and development dollars to determine how much each state attracts investment.
With $99.15 in venture capital investment per capita and $2,054.50 in research and development per capita, Connecticut earned a B+ and ranked among the top 10 states for attracting investment.
However, the scorecard notes, “more than $100 million of venture capital left Connecticut in 2015, causing the state to lose ground after earning an A- in the category in the inaugural 2015 Scorecard.”
CTA recommended that Connecticut “improve its tax code, which is among the least growth-friendly in the country, and reform regulations that stifle innovation.”
Massachusetts and California each earned an A+ in the category, while Arkansas, Louisiana, Montana, Mississippi, Alaska and Wyoming each earned an F.
The CTA noted that states with smaller pools of tech workers and poor Internet infrastructure like West Virginia, Mississippi and Arkansas had “a very hard time drawing venture capital and research and development dollars.”
For this category, the CTA used venture capital investment data provided by PricewaterhouseCoopers and the National Venture Capital Association, and research and development investment data provided by the National Science Foundation.
CTA measured each state’s entrepreneurial activity on the basis of “net job creation by small and young firms and the average number of small firms created per capita,” using U.S. Census Bureau’s September 2015 business dynamics statistics data.
Each state was graded according to a composite score based on the following 2009-2013 data:
- Each state’s per capita net job creation by firms of less than 50 employees.
- Each state’s per capita average number of new firms under 50 employees that have been in business fewer than five years.
With a 0.208 composite score, Connecticut earned a B- in entrepreneurial activity.
North Dakota (0.928) and Washington, D.C. (0.902) each earned an A+, while Alabama (0.032), Mississippi (0.020), and West Virginia (0.013) each received an F.
The CTA noted that “most of the states that attracted large amounts of venture capital and [research and development] investment also won favorable ratings with respect to entrepreneurial activity.”
Technical infrastructure plays a key role in the success and growth of companies nowadays, and high-speed Internet connections are crucial in order for innovative companies to thrive.
The CTA graded states on a curve using unpublished state-by-state detail data provided by Akamai that forms the basis for Akamai’s State of the Internet Report, Q2 2015.
In 2015, more than 70% of states either maintained or improved their average Internet connection speeds, according to the CTA, but Connecticut was not one of them.
With an average speed of 13059 kilobits per second (kbps) in 2015, Connecticut’s average Internet speed was 622 kbps slower than it was in 2014, earning the state a 2016 grade of a B.
At 18954 kbps in 2015 — an average one-year change of 5062 kbps, Washington, D.C. was the only jurisdiction to receive an A+ in the category. With a 47% decrease in Internet speed, Ohio and was the only state to receive an F.
The CTA used American Community Survey and U.S. Bureau of Labor Statistics data to determine which states attract and nurture vibrant tech workforces, giving them an advantage in creating “a culture of innovation.”
With 150,470 tech jobs — 42.1 tech jobs per 1,000 people — in Connecticut, the state’s tech workforce earned a B on this year’s scorecard.
With a population of about 658,000 and a tech workforce of 101,410, Washington, D.C. was the only jurisdiction to score higher than a B in the category. West Virginia and Mississippi each received an F.
The CTA used data from the National Science Foundation’s National Science Board to figure out which states grant the most STEM degrees.
With 21.6 STEM degrees conferred per 1,000 18- to 24-year-olds, Connecticut tied with Virginia and earned a B in the category.
Washington, D.C. earned an A+, with 46.9 STEM degrees granted per 1,000 people in that age group, while Nevada (9.1) and Alaska (9.0) each earned an F.
The CTA graded states based on their unique legislative, regulatory and marketplace realities to identifies those with policies that “promote sustainability without inhibiting the growth of new technologies and the companies that produce them.”
Although Connecticut’s state-run electronics recycling system is a “well-intended” policy, according to the CTA, it “overcharges residents and manufacturers of consumer tech products, who pay for recycling at twice the market rate.” Because of this, the state earned a D.
Texas and Utah, which have “model electronics recycling laws” that build on existing recycling efforts, were two of the four states that earned an A- — the others being Nebraska and Hawaii.
Click here to view the 2016 Innovation Scorecard.