Baton Rouge Most Cost-Friendly Business Location Among Mid-Sized U.S. Cities: KPMG Study

Baton Rouge Most Cost-Friendly Among Mid-Sized Cities

New Orleans, Nashville Close Behind; Omaha, Albuquerque, Memphis also seen as highly cost-competitive.

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Baton Rouge, La., is the most cost-friendly city to do business among the 18 mid-sized U.S. metro areas (those with populations between 750,000 and 2 million), according to the 2016 Competitive Alternatives study by KPMG LLP, the audit, tax and advisory firm.  

Baton Rouge’s favorable costs for industrial facility construction, property taxes, natural gas, electricity and labor all contributed to its first place ranking in the study, which compares 18 mid-sized U.S. cities across a range of costs and other factors related to doing business. The full report is available here.  

New Orleans was the second most cost-competitive location in the mid-sized category, followed by Nashville, Tenn., Omaha, Neb., Albuquerque, N.M., and Memphis, Tenn. Other locations ranked among the top 10 mid-sized U.S. cities included Indianapolis, Oklahoma City, Salt Lake City, and Raleigh, N.C.  

“KPMG’s Competitive Alternatives study provides insight into business location costs in cities across the United States and serves as a valuable benchmark for business executives, economic developers and policymakers considering sites for their business operations,” said Ulrich Schmidt, a managing director in KPMG’s Global Location and Expansion Services practice, which helps companies that are expanding, relocating or consolidating their facilities. “Many factors go into site selection decisions, and a study such as ours helps businesses, city leaders and economic development teams begin to consider investments that should ultimately be good for the community and good for business,” he added.   

The 2016 KPMG Competitive Alternatives study measured 26 key cost components in each market, including costs associated with taxes, labor, facilities, transportation and utilities, as they apply to seven different business-to-business service sector operations and 12 different manufacturing sector operations. 

Cost Index Results by City
The KPMG study revealed that Baton Rouge had a cost index of 92.8, representing business costs 7.2 percent below the U.S. national baseline of 100.0. New Orleans followed at 93.1, Nashville at 93.8 and Omaha at 93.9. Contributing factors to the top ranked mid-sized U.S. cities follow: 

  • Baton Rouge’s top ranking results primarily from its low property taxes and low costs for industrial construction and natural gas, coupled with the second lowest electricity costs and moderately low labor costs. Various state incentives help give Baton Rouge the second lowest effective corporate income tax rate. 
  • Relative to nearby Baton Rouge, New Orleans has higher labor, electricity and property tax costs and ranked second for industrial construction costs. However, New Orleans has the lowest effective corporate income tax rate among the group of mid-sized cities compared, as well as low transportation and office lease costs. 
  • Nashville has the lowest total labor costs among the mid-sized cities, the third lowest costs for salaries and wages, and second lowest statutory plans and benefits costs. Nashville also has the lowest transportation costs, and together these help it to achieve the lowest total operating costs. Facility costs are also moderately low ranked third for office leasing and fifth for both industrial land and industrial construction costs. 
  • Ranked fourth overall, Omaha was fourth for electricity, natural gas, industrial leasing and effective corporate income tax rate. Omaha also shows strong results in most aspects of labor costs, and ranked second for salaries and wages and fifth for total labor costs. Albuquerque, at 94.4, showed strong results in all aspects of labor costs. While it ranked third for total labor costs, Albuquerque’s costs are only 0.6 percent higher than first-placed Nashville for this factor.
  • Albuquerque also ranked third for its effective corporate income tax rate. 
  • Memphis ranked sixth overall, at 94.4, with strong advantages in costs related to industrial facilities. The city was also first for both industrial land acquisition and industrial facility leasing, and fourth for construction costs for new industrial facilities. Very competitive transportation costs, together with relatively low statutory and benefit costs and natural gas costs all help Memphis achieve the second lowest level of operating costs among the mid-sized cities, behind only Nashville. 
  • Indianapolis, at 94.6, has the lowest statutory plan costs (as a percentage of wages) and third lowest costs for industrial land, office leasing and sales taxes, contributing to the city’s seventh rank overall. The city also has relatively low costs for transportation. 
  • Oklahoma City, at 94.7, has the lowest costs for wages and salaries, and electricity. Higher costs in other areas such as statutory labor, transportation and taxes limit Oklahoma City’s overall cost ranking to eighth. Property taxes represent the most competitive tax component for this location, ranked fifth for this factor. 
  • With a cost index of 95.0, Salt Lake City ranked ninth overall. The city enjoys the lowest costs for statutory plans and benefits among mid-sized cities and also has relatively low costs for electricity, sales tax and office leasing. 
  • Raleigh ranked tenth overall among the mid-sized U.S. cities in the study, with an index of 95.1. Relative advantages for Raleigh exist in areas such as electricity costs, sales taxes and statutory plans.  

In contrast to the most cost-friendly cities, Trenton and Honolulu represent the most expensive mid-sized U.S. cities to do business, with cost indexes of 101.8 and 103.9, respectively. Despite cost disadvantages in most areas, including the highest labor costs among the mid-sized cities, Trenton ranked second for industrial lease costs and fifth for transportation costs. High costs in all utility and transportation cost categories limit Honolulu’s rank. Honolulu also has the highest effective corporate income tax rate among this group of mid-sized cities. 

Cost indexes for the 18 mid-sized U.S. cities follow. The baseline cost index (U.S. = 100.0) is defined as the average business costs in the four largest U.S. metropolitan areas: New York, Los Angeles, Chicago and Dallas-Fort Worth.

(U.S. Cities with population of 750,000 to 2 million)

Rank City Cost Index
1 Baton Rouge, LA
2 New Orleans, LA 93.1
3 Nashville, TN 93.8
4 Omaha, NE 93.9
5 Albuquerque, NM 94.4
6 Memphis, TN 94.4
7 Indianapolis, IN 94.6
8 Oklahoma City, OK 94.7
9 Salt Lake City, UT 95.0
10 Raleigh, NC 95.1
11 Richmond, VA 95.5
12 Austin, TX 96.2
13 Providence, RI 96.7
14 Wilmington, DE 97.7
15 Hartford, CT 98.2
16 Rochester, NY 98.3
17 Trenton, NJ 101.8
18 Honolulu, HI 103.9

These results are part of KPMG’s global 2016 Competitive Alternatives study, which measured business operating costs in more than 100 cities in 10 countries. The complete 2016 global study is available online at

KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 174,000 professionals, including more than 9,000 partners in 155 countries.

Ann Marie Gorden/Robert Nihen
201-505-6288/201-307-8296 /

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