
Iowa Ranks Second Worst for Entrepreneurs and Business Starters
50 out of 51 is pretty bad. I mean last year our state was ranked at 41, so not real great, but to drop another 9 places is rough. Iowa now ranks second worst in the nation for entrepreneurs and business starters in 2025, according to a new study from Simplify LLC.
The study analyzed key factors like job creation, consumer spending growth, inflation, corporate tax rates, and how many educated workers are moving in or out of the state. Unfortunately, Iowa is falling behind on just about all fronts.
What’s Going Wrong in Iowa?
The numbers paint a bleak picture:
- Job Creation: Iowa is dead last in the U.S., with a job creation rate of 13.3. For comparison, Nevada, one of the top-ranked states, has a rate of 21.1.
- Consumer Spending: Spending growth in Iowa dropped to just 0.4%, ranking 48th out of 51. That’s a sharp decline from last year’s 2.7%. Less spending means less opportunity for businesses to sell goods and services.
- Losing Educated Workers: Iowa saw a net loss of 6,519 educated adults in 2023 — 2,026 more than the previous year. That’s fewer people to fill skilled roles, launch businesses, or invest in the local economy.
How Does the Tri-State Area Compare?
If you’re curious how our neighbors stack up:
- Illinois ranked 29th. While not amazing, it’s at least middle of the pack.
- Wisconsin came in 43rd, struggling with its own challenges but still managing to outperform Iowa.
Why Does This Matter?
Entrepreneurship drives local economies, creates jobs, and brings new energy to communities. When a state ranks so low for startups, it’s a sign that conditions aren’t ideal for business owners—or for the people who depend on those businesses for work.
Things like stagnant job growth, fewer educated workers sticking around, and low consumer spending make it harder for new businesses to get off the ground and survive. Add in high inflation (prices are up 21% relative to early 2021), and it’s clear why Iowa is struggling to attract and retain entrepreneurs.
The Bigger Picture
This is happening at a time when entrepreneurship nationwide is booming. The Treasury Department reports that 430,000 new businesses opened each month in 2024, a 50% increase from 2019. Innovations like AI and remote work are making it easier than ever for people to start businesses.
But Iowa isn’t keeping up. The top-ranked states for entrepreneurs, like Washington (#1) and Texas (#2), are thriving because of strong job growth, booming consumer spending, and supportive policies like low corporate taxes. Unfortunately, Iowa also just recorded a rise in the unemployment rate of 3.2% in December of 2024.

What Needs to Change?
If the study is correct, Iowa could focus on these things to turn it around:
- Keeping Talent: Offer incentives to keep educated workers from leaving, like better-paying jobs, affordable housing, or student loan forgiveness programs.
- Boosting Local Economies: Invest in industries that drive consumer spending and job creation, like tech, construction, or health care.
- Supporting Startups: Provide grants or tax breaks to small businesses, especially in rural areas that are hit hardest by economic challenges.
It’s not all doom and gloom — I mean, there’s always room to improve... Right? But the numbers usually don't lie, and Iowa has some serious catching up to do if it wants to compete with the rest of the country. As it stands, we’re sitting 50 out of 51 (including D.C.), and that’s not where any of us want to be. Hopefully Iowa can find a way to encourage businesses — and people — to stay and grow here. We’ve got the heartland spirit; now we just need the conditions to match.
LOOK: Counties with the highest unemployment in Iowa
Gallery Credit: Stacker
LOOK: Fastest-growing jobs in Iowa
Gallery Credit: Stacker
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