In the current digital age, the workplace and the very concept of the American capitalistic society are being re-evaluated and deconstructed before our eyes daily. As far back as the economic recession of 2008, the writing seemed to be on the wall for the American economy: things needed to change. The issues that led to such drastic falling outs were only exacerbated across the 2010s, with pressure building to head at the turn of the decade. And then, in March of 2020, besieged by the pandemic, the American workforce effectively shut down and forced the nation as a whole to pause.
For the first time, people stepped back and began to consider the worth of preserving the methodology of work that America had been so protective of for decades. Was this kind of in-office work, complete with commuting, elongated hours, and wasteful mundanity the only kind of work available to us?
The Rise of Remote Work and Its Challenges
The pandemic and its resulting lockdowns ultimately led to many jobs pivoting to allowing at-home or remote work. And much like Pandora’s Box, that’s the kind of thing that once it’s out, it’s nigh impossible to put back in the box. As remote, digital work has boomed in popularity and viability throughout the past few years, it has brought many new questions. Every state has adapted differently, with some providing better incentives and opportunities for online workers and digital business growth.
One key trend for 2024 is the growing importance of tax efficiency in driving business success, especially for small and medium enterprises (SMBs). High tax burdens can stifle growth, while states with more favorable business tax climates create environments ripe for digital expansion. For instance, Minnesota’s heavy tax load has caused it to lag behind other states despite its high ranking in general business potential, as recent studies have shown.
Tax Efficiency and Digital Business Potential
In a study conducted by DesignRush, Minnesota was revealed to have one of the lowest digital business potential scores. This finding is significant as it challenges traditional rankings that don’t account for the digital landscape. As Anonta Khan from DesignRush notes, “While many states rank highly for business, our research shows a different reality for digital businesses. High taxes and low demand for digital services make it difficult for small businesses to thrive in certain regions.”
Minnesota is the worst U.S. state for digital business growth, with the lowest business potential score in 2024. Minnesota earned the lowest score of 55.7 based on three key indicators—Business Opportunity, Tax Efficiency, and GDP. The state has 534,397 small businesses and 1,144 digital agencies, yet demand for digital marketing services is below national trends. Minnesota’s digital businesses pay 82% more in taxes than the national average, ranking 44th in the Tax Foundation’s 2024 Business Tax Climate Index.
State Variations in Digital Business Growth
In stark contrast, the states that have proven to be the best for digital business growth include West Virginia, Mississippi, Kansas, Alabama, and California. These states rank so highly for numerous reasons, including the high number of online business opportunities, each state’s taxes on digital work, and the sheer acceptability of online work as a profession. For many of the “Rust Belt” states, online or remote work was a temporary solution to a momentary problem during lockdowns. Once they were done, people returned to the office, striving (consciously or subconsciously) to preserve the traditional American way of work.
For states like California and Kansas, this was not the case. Much of the work that pivoted to online during lockdowns has stayed there, to some capacity, in the years since. Perhaps nowhere is the degree of change in the American workforce more apparent than it is in New York City, which ranks highly on the scale of locations best for digital business growth. So many in-office jobs in New York City have pivoted so fully to online roles that many of the city’s oldest and most storied office buildings have had to close altogether because there are simply not enough day-in-day-out workers to sustain that model anymore.
For years leading up to 2020, the signs were there that digital business was the way of the future and that the traditional American workforce needed a change. In 2020, lockdowns provided a real opportunity for that change. Some states have continued to resist the shift. Still, others have fully embraced the potential of digital business, leading to many states having incredibly promising opportunities for substantial digital business growth.
