Virginia no longer the top state for business

Virginia has dropped from first to fourth place in CNBC’s ranking of top states for business.

North Carolina is now in the No. 1 spot for 2025, with Texas in second place and Florida coming in third.

“Virginia, America’s Top State for Business in 2024 and a top-three finisher in each of the past five years, slips this year to its worst showing since 2018,” CNBC reports. 

Among the categories CNBC used in determining the 2025 list, it ranks Virginia in 14th place in economy, second in infrastructure, 14th in workforce, 31st in cost of doing business, seventh in business friendliness, eighth in quality of life, and eighth in technology and innovation.

The Trump administration’s efforts to slash the federal workforce “hit the Old Dominion where it lives,” the report states. Nearly 300,000 Virginians work for the federal government, federal contractors, or commute to federal jobs elsewhere in the D.C. metro area.

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“Federal job cuts disproportionately affect Virginia’s economy, a major factor in this year’s competitiveness study,” according to CNBC. “Gov. Glenn Youngkin, who said he supports the cuts, has launched an initiative to connect displaced government workers with private sector jobs. Some economists are skeptical.”

Virginia’s 3.4 percent unemployment rate in May was still below the national average, but is slowing down. Many of the federal job cuts aren’t yet reflected in the official numbers.

A forecast by UVA’s Weldon Cooper Center for Public Service predicts Virginia will lose 32,000 jobs this year, mostly in the federal sector. But that will have a ripple effect, leading to reduced spending on leisure, accommodations, and retail.

Virginia’s federal workforce is different from that in other states, says economist Eric Scorsone, executive director of the Weldon Cooper Center. “Our workforce tends to be highly educated, professional executive level. Many of the jobs that are open may be in different sectors, like healthcare. You can’t just easily move into a healthcare job if that’s not your area of expertise.”