S.C. Ties for 4th in Economic Freedom in North America; Ranks 32nd among U.S. States

Quality of Life
February 15, 2017


Columbia, S.C. – According to Economic Freedom in North America 2016, a report authored by the Fraser Institute and co-published by Palmetto Promise Institute and 27 other state-based research institutions, South Carolina ties for 4th place in economic freedom among all states and provinces in North America and 32nd among states in the U.S.

South Carolina’s 32nd place finish among the 50 U.S. States is due to a confluence of rankings on three specific aspects: government spending, taxes and labor market freedom. The research reflects the findings of 2014 data, which is the most recent data available.

Though weighed down by a relatively poor showing on the government spending metric, a relatively low union density in this right-to-work state and lower taxes than some of the larger states such as New York and California buoy the Palmetto State closer to the middle of the pack.

Among the four largest states, Florida was 2nd and Texas tied for 3rd. For the second year in a row New York was 50th and California was 49th. New Hampshire was first.

“Americans have been voting with their feet against the ‘big government’ approach of New York and California. Florida and Texas have experienced more than two-and-a-half times faster population growth in recent years, and they’re among the freest states in the country,” said Dean Stansel, economics professor at Southern Methodist University and co-author of this year’s Economic Freedom of North America 2016.

Rounding out the top five are South Dakota (tied for 3rd) and Tennessee. Alaska, New Mexico and Hawaii rounded out the bottom five least free states. North Carolina vaulted up the rankings from 25th to 13th after a large income tax cut.

The report also has an all-government ranking system, which adds federal government policy and includes the 50 U.S. states, 32 Mexican states and 10 Canadian provinces. On this level, South Carolina ties for fourth, though lags behind Alberta, British Columbia, and New Hampshire.

Since 2004, the average score for U.S. states has fallen from 8.26 to 7.70 out of 10 in 2014, driven largely by changes at the federal level.

In the most-free states, the average per capita income in 2014 was 4.7 per cent above the national average compared to roughly 3.3 per cent below the national average in the least-free states.

“The link between economic freedom and prosperity is clear—people who live in states that support low taxation, limited government and flexible labor markets have higher living standards and greater economic opportunity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.

The Economic Freedom of North America report, also co-authored by José Torra, is an offshoot of the Fraser Institute’s Economic Freedom of the World index—the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.

This year, Palmetto Promise Institute was proud to co-publish the report. The report is available for viewing HERE.

Detailed tables for each country and subnational jurisdiction can be found at www.fraserinstitute.org.


Founded in 2013 and based in Columbia, SC, Palmetto Promise Institute is an independent, nonpartisan educational foundation committed to researching and promoting public policies that allow every South Carolinian the opportunity to flourish and reach their full potential. Specifically, Palmetto Promise works in the fields of education, healthcare, state taxes, jobs and economics.

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being.