Virginia is ranked fourth in the nation for business, according to the annual CNBC ranking of America’s Top States for Business. That’s down three spots from its perch at the top of the list just last year.
North Carolina overtook Virginia for the top ranking this year after the two were separated in 2024 by just three points in the overall ranking. Virginia’s fourth-place showing this year is its lowest since 2018.
The state’s drop in ranking comes largely due to federal job cuts under President Donald Trump’s administration. Last year, when Virginia claimed the No. 1 spot, it ranked 11th in the economy metric. This year, Virginia dropped to No. 14 in the economy category, the most heavily weighted in the rankings this year under revamped criteria.
Virginia, thanks to its proximity to Washington, D.C., saw a significant downturn in employment in the midst of cuts to the federal workforce early in the Trump administration.
In 2024, there were 144,000 federal jobs in Virginia, a number that grows to 300,000 when accounting for those who work for government contractors or who commute to work in Washington, according to CNBC. Job losses in the federal sector led to higher-than-average unemployment in Virginia, the outlet explained, landing at 3.4% unemployment in May, well below the national average despite some recent gains.
Republican Gov. Glenn Youngkin, who is term-limited out of office after this year, has been working to reemploy federal employees whose jobs were lost in the private sector, launching a campaign complete with its own website, VirginiaHasJobs.com. Youngkin previously told CNBC’s Squawk Box in April that there were 250,000 unfilled job opportunities in the state. That number, CNBC reported, has since dropped just below 200,000.
The study measured states across 10 competitiveness categories, using 135 different metrics for a total possible score of 2,500. Virginia scored 1,578 points, only 36 points behind North Carolina in first place, and just 10 points behind Florida at No. 3.
Texas was in second place with 1,601 points.
Virginia’s top ranking came in the education category, where it topped all other states. It landed in second place for infrastructure, while landing top 10 marks in business friendliness (No. 7), quality of life (No. 8), technology and innovation (No. 8), and access to capital (No. 10).
Other areas for improvement for Virginia include cost of doing business, which ranks 31st in the nation, and cost of living, which ranks at No. 21. Like the economy, the state landed at No. 14 for access to the workforce.
It’s worth noting that in the top five, all but one state — North Carolina — are led by Republican Governors. In the top 10, only three states are run by Democratic Governors.
At the bottom of this year’s rankings are Alaska (No. 50) and Hawaii (No. 49). Alaska’s bottom-of-the-barrel showing is largely due to its dependency on oil as its crude prices are down 12%, putting the state dead last in the economy category.
Hawaii, meanwhile, posted the nation’s highest cost of doing business and second-highest cost of living.
