2015 Thumbtack.

com Small Business Friendliness Survey:

Methodology & Analysis

Jon Lieber
Chief Economist, Thumbtack.com
jon.lieber@thumbtack.com

Lucas Puente, PhD

Economic Analyst, Thumbtack.com
lucas.puente@thumbtack.com

August 2015
Abstract
The 2015 Thumbtack.com Small Business Friendliness Survey polled over 17,000
small business owner-operators from across the country on their policy preferences and
evaluations of their state and local governments. With this survey data, we provide
three novel contributions. First, we grade 36 states and 95 metropolitan regions on 11
dimensions, ranging from overall business friendliness to more specific measures, like the
friendliness of an areas labor regulations. Second, we use econometric procedure known
as dominance analysis to determine what small businesses want most from their state
and local governments. This exercise revealed that providing helpful training programs
is the single biggest determinant of small businessess evaluations of their state and
local governments. Finally, we use regression analysis to determine how improving
along different policy measures affects perceptions of overall friendliness. These results
indicate that, among other things, requiring a service provider to hold a license is only
negatively correlated with friendliness evaluations if that license is also seen as being
difficult to comply with. With these results, we look forward to working with state and
local officials to help improve policy conditions for small businesses across America.

Introduction

The Thumbtack.com Small Business Friendliness Survey is an annual, nationwide survey that
asks owner-operators of small businesses about the policy environment where they operate.
The survey aims to learn what governments can do to create a healthy, vibrant local business
environment by asking the owner-operators of small businesses themselves about these issues.
This year we use the survey data to grade 36 states and 95 metropolitan regions according
to their performance along 11 metrics. This is the largest survey of its kind; so far as we
know, Thumbtack is the only organization in the United States that has had the necessary
access and motivation to produce such a large-scale survey of small businesses themselves
over the course of years.
This is the fourth annual release of the survey, which was originally developed with experts
from the Ewing Marion Kauffman Foundation.
Although the businesses that are surveyed by Thumbtack are small in size (90 percent have 5
or fewer employees), the perceptions of the local business environment by these entrepreneurs
matters for three reasons:
1. The United States is a service economy 80 percent of all workers today work
in service industries.1 The view of service providers, even very small ones, is critical
to understanding the environment for job creation as employment in manufacturing
continues its historical decline.
2. Entrepreneurship is a critical avenue for displaced workers research from
the Kauffman Foundation shows that entrepreneurial activity tends to increase when
the economy slows (Fairlee, 2014). The easier it is for an individual to start and run
a business, the faster he or she can get back to work. As more American middle class
jobs face the threat of automation and competition from overseas, self-employment
could become a viable path to make a living for millions of Americans.
3. Entrepreneurship is on the decline government statistics show a general decline
over the last 20 years in rates of self-employment and the rate of new business startups (Hathaway and Litan, 2014). This is happening across industries and across the
country. Understanding how policy choices affect very small, new businesses is critical
to understanding how to turn the tide on this crisis of small business ownership.
Policies that are friendly towards self-employed entrepreneurs may act as a proxy for the
regulatory climate for businesses generally states that did well in our survey have also seen
higher real output growth going back three years. As Figure 3 in Appendix D shows, states
with higher friendliness scores have substantially higher growth rates than their less friendly
counterparts. The bivariate regression displayed in that figure also indicates that a one unit
increase in a states friendliness rating is associated with a jump in real economic growth
per year of 27 basis points. Thats far from trivial since over 75% of states achieve annual
growth of under 2.7%.
1

The Department of Labor projects that 81 percent of workers will be in service industries by 2022
(Henderson, 2013).

There are many rankings and indices that designed to evaluate a particular city or states
appeal to business. The Thumbtack.com Small Business Friendliness Survey differs from
other such rankings in several meaningful ways:
1. The Thumbtack survey asks small business owners directly about their perceptions of their government many other studies of the same issue rely on the
perceptions of the researcher to determine which factors make a political environment
favorable or unfavorable.2 By prioritizing these other indices, policymakers may do
little to improve conditions on the ground, at least in the eyes of small businesses
(Motoyama and Hui, 2015).
2. The scale of the survey is nearly unprecedented this year we received over
17,000 responses from small business owners in every state. Not only do few other
outlets have the capability of asking that many entrepreneurs the same set of questions
on a regular basis, few other outlets are able to break down the results of survey in a
consistent fashion across state and metro areas. In addition to the large sample, the
scope of the survey, grading cities and states along 11 dimensions using a consistent set
of questions over multiple years, captures some nuance that may otherwise be lost from
simply looking at a handful of metrics and declaring an area friendly or unfriendly.
3. The survey is conducted with no preexisting agenda the purpose of the survey
is to present, without ideological bias, the views of the small business owners who use
Thumbtack. We are not pushing any particular agenda or advocating for any political
outcomes. Our goals are simply to understand what makes government work better
for small businesses, according to their own beliefs.

Survey Design & Methodology

The data were collected over a period of two weeks.3 A link asking business owners or
operators to take the survey was provided to business users of Thumbtack.com after they
had used the website to solicit business from potential consumers. Each of the 74,485 business
owners using the site during this time period was shown the prompt at least once, leading
to 17,633 completed responses, for a response rate of 24 percent. Roughly 1,500 incomplete
responses were thrown out.
The full text of the survey appears in Appendix A. Information on the demographic profile
of survey respondents, including how they compare to business owners nationally, can be
found in Appendix B. And full results for cities and states can be seen in Appendix C.
2

For example, the Best Performing Cities ranking done by the Milken Institute relies entirely on outputs
such as which city saw the highest job or wage growth. The State Business Tax Climate Index (2014) by
the Tax Foundation relies only on the Tax Foundations view of what makes a friendly tax code and not on
the view of local businesses. These rankings, while interesting to review, show little correlation to each other
and may end up revealing very little about the actual experience of businesses that operate on the ground
and the business environment (Fisher, 2005; Kolko et al., 2013).
3
The results were gathered from December 2, 2014 to December 17, 2014.

Generally, survey questions fall into one of three categories:

1. Questions 3 through 16 ask about a state or localitys friendliness towards small business.
(a) Respondents provided subjective rankings from very friendly to very unfriendly
on topics including state and local governments overall support of small businesses, health insurance, regulations, training programs and online resources.
(b) Question 17 is a freeform question that provided the opportunity to give additional information on business owners interactions with their governments. 6,734
respondents answered this question.
2. Questions 18 through 22 ask about the situation of respondents businesses and general
economic conditions.
3. Questions 25 through 35 as about demographic information connected to each respondent and his/her business.
Because this is the fourth year of the survey and we have largely asked the same questions
over the years, we are able to assess how perceptions of the business climate in various cities
and states have changed over time.
To create the grades used for the cities and states in our survey, we converted the responses
we received into numerical scores for each question and averaged those scores in each category
to create a numerical score for each city or state. Since nearly every question was based on
a five-point scale, we assigned a score of 1 for answers that were very negative, 2 for answers
that were somewhat negative, 3 for neutral answers, 4 for answers that were somewhat
positive, and 5 for answers that were very positive.
We then computed weighted averages for each of the nine metrics that we observed directly,
and two composite scores were computed one is our Overall Small Business Friendliness
Score,4 and the other is a composite score of the regulatory environment.5
The ranked and graded metrics are:
1. Overall small business friendliness
2. Ease of starting a small business
3. Ease of hiring a new employee
4. Overall regulatory friendliness
4

The overall small business friendliness score was determined by combining the scores of three related
questions:
States: In general, how would you rate your state governments support of small business owners?
Cities: In general, how would you rate your local (county, city, or town) governments support of
small business owners?
Would you discourage or encourage someone from starting a new business where you live?
How difficult or easy is it to start a business where you live?
5

This is a simple average of the state or citys scores for questions 5 10.

5. Friendliness of health and safety regulations

6. Friendliness of employment, labor, and hiring regulations
7. Friendliness of tax code
8. Friendliness of licensing regulations
9. Friendliness of environmental regulations
10. Friendliness of zoning regulations
11. Availability of helpful training or networking programs
Grades were assigned based on a modified curve, with their performance depending on how
far they were from the average score along each metric. Any state more than 20 basis points
above the average was granted an A+, while any state less than 20 basis points below the
average was given an F. Each grade in between represents a 4 basis points band between
these upper and lower bounds.
Cities where we received 30 or more responses were eligible for a grade, while states had to
receive at least 50 responses to receive a grade. We chose to use a higher threshold for states
since those with fewer than 50 responses were typically coming from a single metropolitan
area (e.g. Omaha, Nebraska). Thus, we chose to rank those cities rather than the states
they are in.

Grading Results

For the fourth straight year, there is substantial geographic variation in the perceptions of
small business owners regarding the friendliness of their state and local governments. On one
end of the spectrum, survey respondents in Texas were the most likely to refer to their state
government as supportive, report that starting a business is easy, or recommend starting
a new business. Those in New Hampshire and Utah were also quite likely to express such
positive attitudes, earning these states the other two A+ grades we awarded this year. At the
opposite end, small business owners in Rhode Island expressed the most negative attitudes
about their states policy environment. Small businesses in Illinois, Connecticut, California
tended to feel relatively unsupported by their state governments as well, leading these four
states to also receive a F grade.
On the city level, Texas was also quite successful, with four of the top ten coming from
the Lone Star State: Dallas came in second, Austin fourth, Houston seventh, and San
Antonio tenth. However, the top spot went to Manchester, NH, the largest city in the
Granite State. Other cities in the top ten included: Richmond, VA (#3), Knoxville, TN
(#5), Fort Collins, CO (#8), and Boulder, CO (#9). On the bottom were Hartford, CT,
Albuquerque, NM, Buffalo, NY, New Haven, CT, Winston-Salem, NC, and Providence, RI,
all of which received an F grade. The state-level results are displayed in Figure 1 below
and in Table 1, while the city grades and ranks can be found in Table 2 (see Appendix

C). Additionally, an interactive visualization of all the ratings is available at https://

www.thumbtack.com/survey, while searchable and sortable tables are posted at https:
//www.thumbtack.com/blog/2015-results/.
Figure 1: Choropleth of Small Business Friendliness Ratings

Analytical Methodology

To determine what policy factors influenced these friendliness grades most, we conducted a
dominance analysis.6 The methodology behind this step is relatively straight-forward: using
the domin package in Stata (Luchman, 2014a), a multivariate regression is run for each
possible combination of independent variables to determine the proportionate contribution
each policy measure makes in explaining variation in the outcomes of interest: respondents
evaluations of the friendliness levels of their states (q3) and cities (q4).7
6

For more background on this methodology, see Budescu and Azen (2004) and Johnson and LeBreton
(2004).
7
Since the dependent variable is measured on a five-point scale, we relied upon an ordinal logistic regression
as our workhorse econometric model. See Luchman (2014b) for a discussion of how to best use dominance
analysis in the presence of multi-category dependent variables.

Importantly, in each regression model, we account for potential confounding variables that
are both respondent-specific, such as an individuals race, gender, age of business, and if
they are aligned with the dominant political party in their state, as well as others like the
strength of the economy in the respondents state at the time of the survey (both perceived
and actual). Since our dependent variables (friendliness evaluations) are perception-based,
we also control for the overall level of happiness in each state.8 By including this full set of
control variables, we are able to calculate the unique contribution of the 11 distinct policy
measures we ask about:
Health Regulations
Labor Regulations
Tax Regulations
Licensing Regulations
Environmental Regulations
Zoning Regulations
Tax Complexity
Tax Fairness
Government Website
Licensing Compliance
Training Opportunities
With the full sample of over 17,000 responses, we performed dominance analyses on both
the city and the state level to determine which policy measures matter most in those two
different jurisdictions.9 In addition, we ran dominance analyses for as many cities and states
as possible so we could learn what makes each of these cities and states unique from a policy
prioritization perspective.
To complement this set of analyses, we also conducted a series of ordinal logistic regressions.
The dependent variable was either the state or local friendliness rating for each individual
response, scored on a level from 1 (very unfriendly) to 5 (very friendly). In the baseline
equation we settled on (using various diagnostic techniques), the variables are the same as
in the dominance analyses: the 11 policy measures, plus the full set of control variables. To
account for possible intra-state correlation that isnt accounted for by the variables in the
regression, we cluster the standard errors by state.10
8

State-specific happiness scores come from Mitchell et al. (2013).

Since our survey did not require answers to all questions, some respondents left some questions blank.
Since diagnostics deemed the data to be missing at random, we were reluctant to rely solely on complete
responses as doing so may have delivered biased results. Instead, we employed multiple imputation 25 times
to generate a more comprehensive dataset. More a review of this crucial pre-analysis step in applied survey
research, see Rubin (2004).
10
This relaxes the standard requirement that all observations in a given state are independent.
9

Analytical Results

Thumbtacks survey has consistently shown that the most important factors to small businesses are training and networking opportunities offered by a local government, and the
friendliness of complying with regulatory burdens, including, most importantly, the tax rules
and licensing laws. This year, the dominance and regression analyses offered simple conclusions on the national level. Highlighting this, we found that training is the most important
determinant of friendliness evaluations on both the state and local level. Similarly, for both
states and cities, regulatory burdens, led by those surrounding licensing and employment,
were among the most important drivers of friendliness ratings.
This year we also dug more deeply into several aspects of the survey that we had not examined
previously. We found that:
What matters at the city level differs from the state level although for both
cities and states, offering training and networking programs is the single most important
variable that informs overall friendliness, for cities ease of licensing compliance was the
second most important factor, and for states, ease of tax compliance was the second
most important factor.
Tax rates are less important than regulatory complexity for both cities and
states, tax rates still matter far less than either tax-related regulations or the burden
of complying with licensing regulations.
Licensing is not black and white respondents who werent required to have a
license judged their cities and states in a more favorable light; however, respondents
who said complying with licensing rules was very easy were just as favorable towards
their governments as respondents who werent required to have a license at all.
When the job market heats up, ease of hiring matters more labor rules have
become more important as the economy has rebounded and the unemployment rate
has dropped. This is particularly true on the state level, as business owners become
much less likely to evaluate their state government as very supportive when they
also report that labor and employment regulations are either somewhat or very
unfriendly.

Appendix A: Thumbtack Business Friendliness Survey

Questions
2015 Thumbtack Business Friendliness Survey
Thanks for participating in the Thumbtack Business Friendliness Survey!
This survey should take 5-8 minutes to complete.
This survey was developed in partnership between Thumbtack and the Ewing Marion Kauffman Foundation and seeks to provide insight into the friendliness of state and local governments towards small businesses.
The results of this survey will be used by Thumbtack and the Kauffman Foundation to
provide policymakers and researchers with valuable information on how small businesses feel
about their state and local governments.
Individual responses to the survey will not be released outside of Thumbtack and the Kauffman Foundation, and all publicly released analysis of the surveys results will reflect only
aggregate results.
Thanks again.
1. In which state do you primarily operate your business?
2. Which of the following best describes your business? 90% of my sales are made to
customers...
Within 10 miles of my companys primary location.
Within 25 miles of my companys primary location.
Within 50 miles of my companys primary location.
Within 100 miles of my companys primary location.
More than 100 miles from my companys primary location.
3. In general, how would you rate your state governments support of small business
owners?
Very supportive
Somewhat supportive
Neither supportive nor unsupportive
Somewhat unsupportive
Very unsupportive

4. In general, how would you rate your local (county, city, or town) governments support
of small business owners?
Very supportive
Somewhat supportive
Neither supportive nor unsupportive
Somewhat unsupportive
Very unsupportive
5. Would you discourage or encourage someone from starting a new business where you
live?
Highly encourage
Somewhat encourage
Neither encourage nor discourage
Somewhat discourage
Highly discourage
6. How difficult or easy is it to start a business where you live?
Very easy
Somewhat easy
Neither easy nor difficult
Somewhat difficult
Very difficult
7. How difficult or easy is it to obtain and keep health insurance at your business?
Very easy
Somewhat easy
Neither easy nor difficult
Somewhat difficult
Very difficult
8. How difficult or easy is it to hire a new employee at your business?
Very easy
Somewhat easy
Neither easy nor difficult
Somewhat difficult
9

 Very difficult
9. How unfriendly or friendly is your state or local government with regard to the following
types of regulations:
Very
friendly

Somewhat
friendly

Neither
friendly nor
unfriendly

Somewhat
unfriendly

Very
unfriendly

Does not
apply to
my business

Health and
safety
regulations
Employment,
labor and
hiring
regulations
Tax code and
tax-related
regulations
Licensing
forms,
requirements
and fees
Environmental
regulations

10. Does your profession require that you have a license, certification, or permit to do your
job?
Yes
No
10a. How difficult or easy is it to comply with the licensing, certification, or permitting
requirements of your profession?
Very easy
Somewhat easy
Neither easy nor difficult
Somewhat difficult
Very difficult
10b. Which of the following types of agencies require that you have a license, certification,
or permit to do your job?

10

City, town, or other municipal agency

County agency
State agency
Federal agency

None

One

More than one

10c. How poorly or well enforced are the licensing, certification, or permitting requirements
of your profession?
Very well enforced
Somewhat well enforced
Neither well enforced nor poorly enforced
Somewhat poorly enforced
Very poorly enforced
11. How difficult or easy is it to understand and file your businesss taxes?
Very easy
Somewhat easy
Neither easy nor difficult
Somewhat difficult
Very difficult
12. Do you think you pay your fair share of taxes?
I pay an unfairly high level of taxes
I pay the right share of taxes
I pay an unfairly low level of taxes
13. Does your state or local government offer helpful training or networking programs for
small business owners?
Yes
No
I dont know
13a. How helpful do you believe the training or networking programs offered by your state
or local government are?
Very helpful

11

 Somewhat helpful
Neither helpful or unhelpful
Somewhat unhelpful
Very unhelpful
14. Which entity are you most likely to turn to if you wanted to learn more about running
your business?
Local Chamber of Commerce or another business association
A local government entity
A state entity
Local chapter of SCORE or the Small Business Administrations Small Business
Development Centers
Other:
15. Have you used a state or local government website to comply with regulations on your
business (examples: starting your business, filing taxes, getting a license or permit,
etc.)?
Yes
No
15a. How difficult or easy was it to use the website(s)?
Very easy
Somewhat easy
Neither easy nor difficult
Somewhat difficult
Very difficult
16. How helpful or disruptive has implementation of the Patient Protection and Affordable
Care Act (Obamacare) been for your business?
It has helped me and my employees obtain health insurance with minimal disruption to my business
It has helped me and my employees obtain health insurance but was very disruptive to my business
It was disruptive to my business and has not helped me and my employees obtain
health insurance
It was neither disruptive nor helpful to my business or my employees

12

17. Please let us know any experiences or thoughts you have regarding the ease of doing
business where you live.
18. Would you be willing to be quoted in the press about your views on doing business
where you live?
Yes
No
18a. Great - whats your name?
18b. And your email address?
18c. And your profession?
19. Over the past 12 months, did your companys revenues:
Increase a lot
Increase a little
Stay the same
Decrease a little
Decrease a lot
20. How do you expect the number of employees at your company to change in the next
12 months?
Increase a lot
Increase a little
Stay the same
Decrease a little
Decrease a lot
21. How would you rate the situation of the national economy over the past 12 months?
Very good
Somewhat good
Neither good nor bad
Somewhat bad
Very bad
22. How would you rate the situation of your state economy in comparison to the national
economy?
Substantially better

13

 A little better
The same
A little worse
Substantially worse
23. Thinking specifically about the economy, what issue should be the top priority of your
state or local government? Choose One:
Budge deficit / spending
Financial and banking system
Gas / fuel prices
Health care costs
Home values and the housing market
Inflation / rising prices
Personal debt
Social Security
Student loans
Taxes
Unemployment and the job market
Other
No opinion
24. Thinking specifically about the economy, what issue should be the top priority of the
federal government? Choose One:
Federal budget deficit
Financial and banking system
Gas / fuel prices
Health care costs
Home values and the housing market
Inflation / rising prices
Personal debt
Social Security
Student loans
Taxes
14

 Unemployment and the job market

Other
No opinion
25. How long has your business been operating?
Less than 1 year
1-2 years
3-4 years
5 or more years
26. How many people does your business employ?
1 I work alone at my business
2-5
6-10
11-20
21-50
51-100
101 or more
27. What type of company is your business?
Unincorporated or sole proprietorship
Limited liability company (LLC)
Partnership (LP, LLP, GP)
S-Corporation
C-Corporation
I dont know
28. Have you ever been an entrepreneur prior to your current company?
Yes
No
29. Is this business your primary employment, or is it a side job?
Primary employment
Side job, hobby, or secondary income
30. What is your gender?
15

 Female
Male
31. What is your age?
25-34
35-44
45-54
55-64
65 or above
32. What is your political preference?
Strong conservative
Lean conservative
Independent
Lean liberal/progressive
Strong liberal/progressive
Other
33. What is the highest level of education you have reached?
No high school
High school
Community college
Technical college
Undergraduate degree
Masters degree
Doctoral degree
34. What is your race or origin?
White (Caucasian)
Hispanic, Latino, or Spanish
Black or African American
Asian
Other

16

35. Are you currently serving or have you ever served on active duty in the US Armed
Forces, military Reserves, or National Guard?
Yes, I am an active duty member of the US Armed forces
Yes, I currently serve in the military Reserves or the National Guard
Yes, I previously served on active duty in the US Armed Forces, military Reserves,
or National Guard but I am now a civilian
No, I have never served on active duty in the US Armed Forces, military Reserves,
or National Guard
36. Would you like us to email you the results of the survey?
Yes
No

17

Appendix B: Survey Population

The sample of businesses included in this survey is concentrated in the professional and
nonprofessional services sector. In comparison, 81% percent of American small businesses
are in a service industry.11
NAICS
Code
11
21
22
23
31-33
42
44-45
48-49
51
52
53
54
55
56
61
62
71
72
81
99

% of
% of
% of
All Service Respondents
Firms
Firms
in Survey

NAICS Category
Agriculture, Forestry,
Fishing and Hunting
Mining, Quarrying,
and Oil and Gas Extraction
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation
and Warehousing
Information
Finance and Insurance
Real Estate and
Rental and Leasing
Professional, Scientific,
and Technical Services
Management of Companies
and Enterprises
Administrative and Support and
Waste Management
and Remediation Services
Educational Services
Health Care and Social Assistance
Arts, Entertainment, and Recreation
Accommodation and Food Services
Other Services
(except Public Administration)
Industries not classified

0.9%

0.5%

0.1%
9.9%
2.1%
2.7%
9.8%

10.6%

10.5%

16.1%
0.2%

0.5%

4.2%

4.5%

1.6%

1.5%
4.0%

1.6%
4.2%

1.3%
0.03%

9.1%

9.7%

1.1%

13.5%

14.4%

19.6%

0.2%

7.9%

8.5%

16.8%

2.3%
9.2%
4.5%
3.3%

2.5%
9.8%
4.8%
3.6%

8.4%
4.4%
5.8%
4.7%

14.1%

15.1%

19.6%

0.0%

All firms percentages calculated from 2012 Census data. Non-employer data come from the Non-Employer
Statistics data series found at http://www.census.gov/econ/nonemployer/; employer data comes from the
County Business Patterns found at http://www.census.gov/econ/cbp/. See the methodological notes at
the Non-Employer data series for why the County Business Patterns data series was chosen.

11

Here, we define small businesses as firms with fewer than 20 employees or non-employer establishments.

18

The sample comes from a wide range of American business owners that captures much of the
diversity of American businesses across geographic, racial and ethnic, gender, educational,
firm age, and firm size metrics. We believe the survey can therefore provide very useful data
for states and localities trying to determine what they can do better to make themselves
friendlier to small service businesses.
Gender
Female
Male

Businesses
Thumbtack
Nationally Survey Businesses
28.8%
37.8%
51.3%
62.2%

Age of Business Owner

Under 25
25-34
35-44
45-54
55-64
65 or above

2.1%
10.3%
20.9%
29.1%
23.6%
12.3%

3.7%
21.6%
26.3%
26.2%
17.6%
4.7%

Race or Origin
Asian
Black or African American
Hispanic, Latino, or Spanish
Other
White (Caucasian)

5.7%
7.1%
9.2%
1.3%
83.4%

2.4%
11.4%
10%
6.5%
69.8%

The responses to our survey paralleled closely the geographic density of small businesses in
the country as reported by the US Census Bureau (see Figure 2 to get a sense of where our
responses came from).12 The response rates of only four states varied from their expected
response rates by more than 1%, and New York was the only state to vary by more than
2%.13

12

Census Bureau data available at http://www.census.gov/econ/nonemployer/ and http://www.

census.gov/econ/susb/. Currently, the most recent Census data available is from 2012.
13
New York was under-sampled in this years survey by 2.25 percentage points, given its share of small,
service-based businesses according to the Census numbers. This pattern is consistent with previous Small
Business Friendliness surveys.

19

Figure 2: Percent of Responses by State

We also compared the age and size of the businesses in our survey with those of the general
business population. Both revealed that the Thumbtack survey sample has a similar distribution to the American small business community in terms of age and size with a slight bias
towards younger businesses and a general exclusion of the largest-size businesses.
Firm Age
National Average Thumbtack Firms
Less than 1 year
8%
21%
1-2 years
11%
19%
3-4 years
10%
15%
5 or more years
70%
45%
According to US Census data, 75% of service businesses are non-employer firms.14 57% of
small businesses in the Thumbtack sample reported having no employees. A breakdown in
the percent of employer businesses by size is provided below.15
Number of employees All Firms Thumbtack firms
None
75%
57%
1-4
13%
34%
5-9
5%
5%
10-19
3%
2%
20-49
2%
1%
50+
1%
1%
14

Non-employer statistics are available at http://censtats.census.gov/cgi-bin/nonemployer/

nonsect.pl, accessed 5/27/14.
15
All data on employment size of US businesses comes from the Statistics of US Businesses program run
by the US Census bureau, http://www.sba.gov/advocacy/849/12162#susb and http://www.sba.gov/
sites/default/files/static_us_11_0.xlsx, accessed 4/14/14.

20

Appendix C: Ranks & Grades

Table 1: States

21

Overall
Friendliness
Rank/Grade
Alabama
17 B
Arizona
22 BCalifornia
33 F
Colorado
5 A
Connecticut
34 F
Florida
21 BGeorgia
9 A
Idaho
6 A
Illinois
35 F
Indiana
13 B+
Iowa
27 C+
Kansas
10 A
Kentucky
24 C+
Louisiana
4 A
Maryland
31 D+
Massachusetts
30 D+
Michigan
20 BMinnesota
25 C+
Missouri
16 B
Nevada
14 B
New Hampshire 2 A+
New Jersey
29 CNew York
32 D
North Carolina 23 BOhio
15 B
Oklahoma
12 AOregon
18 B
Pennsylvania
28 CRhode Island
36 F
South Carolina 11 A
Tennessee
7 A
Texas
1 A+
Utah
3 A+
Virginia
8 A
Washington
26 C+
Wisconsin
19 B-

Ease of
Starting a
Business
26 C+
22 B34 F
5 A+
29 D+
25 C+
8 A
2 A+
33 F
17 B
31 D
6 A+
15 A9 A
27 C
30 D
21 B14 A11 A12 A1 A+
32 D
35 F
24 C+
18 B
4 A+
20 B28 C36 F
19 B
10 A3 A+
16 B
7 A+
13 A23 B-

Employment,
Ease of Overall
Health &
Labor &
Hiring Regulations Safety
Hiring
2 A
16 B
16 B
14 B+
11 B
21 B
19 B23 C+
22 C
34 F
34 D+
34 F
24 C
24 C+
28 C
20 B30 C35 F
36 F
36 F
23 C
17 B
13 B
17 B
13 B
14 B+
17 B
12 B+
31 C11 B+
9 A15 B+
28 C33 D
35 D
35 F
26 C
10 A14 B
10 A36 F
2 A+
6 A
5 A+
1 A+ 1 A+
2 A+
1 A+
6 A- 15 B
12 B
16 B
15 B
5 A+
3 A+
2 A+
16 B31 D
30 C28 C21 C+ 32 D
32 D+
32 D
18 B23 B25 C+
22 C+
32 C30 D+
33 D+
29 D+
20 C+ 18 B
10 A18 B
25 C
12 B+
18 B
24 C+
19 C+ 13 B+
21 B21 B14 B
28 C29 C26 C
17 B25 C
24 C+
25 C
9 B+ 20 B
20 B11 B+
29 C19 B
15 B
13 B+
4 A
8 A
7 A
7 A+
34 D
26 C
23 C+
30 D+
27 C29 D+
31 D+
27 C7 A- 36 F
22 C+
33 D
8 A- 4 A+
1 A+
3 A+
12 B
9 A11 B+
8 A
10 B
3 A+
4 A
6 A+
3 A
6 A+
8 A
4 A+
5 A- 7 A
5 A
9 A
33 C27 C27 C
31 D+
35 F
22 B26 C+
19 B-

Tax
Code

Licensing

EnvironZoning
mental

Training &
Networking

24
19
33
23
35
7
14
8
34
15
6
1
17
13
30
32
22
31
16
3
4
28
26
20
21
11
25
29
36
5
10
2
12
9
27
18

15
17
34
19
29
21
13
10
35
14
5
1
24
2
31
33
22
32
20
25
3
30
28
16
18
6
27
26
36
7
8
4
11
9
23
12

17
20
35
25
36
16
13
12
26
9
1
3
11
2
34
32
19
31
18
7
21
29
24
22
15
10
27
30
33
8
14
6
4
5
28
23

28
24
26
7
36
21
20
2
27
13
25
34
22
12
8
29
14
9
32
23
17
35
18
15
11
19
1
31
16
5
33
6
3
10
4
30

C
B
F
C+
F
A
B+
A
F
B+
A+
A+
B
AD
F
C+
F
B+
A+
A+
D+
CBBACD
F
A+
A
A+
AA
D+
B

B+
B
F
B
CBB+
A
F
B+
A+
A+
C+
A+
D
F
BD
BC
A+
D+
C
B
B
A+
C
C
F
A+
A+
A+
AA+
C+
A-

B
B
F
C+
F
B
B+
B+
C
AA+
A+
AA+
F
D
B
D+
B
A
BCC+
BB+
ACCD
A
B+
A
A+
A+
CC+

6
14
31
24
35
22
13
21
29
9
1
5
11
20
34
32
18
25
19
4
17
30
28
15
16
12
26
33
36
7
8
3
2
10
27
23

A+
B+
D+
C
F
BB+
BCAA+
A+
B+
BF
D
B
C
BA+
B
D+
CB+
B+
B+
CD
F
A
A
A+
A+
B+
CC+

D+
CCA
F
C
C+
A+
D+
B+
CF
C
B+
AD+
B
AF
C
BF
BB
AC+
A+
D+
BA
F
A
A+
AA+
D+

Table 2: Cities

22

Overall
Friendliness
Rank/Grade
Akron, OH
36 B
Albany, NY
88 D
Albuquerque, NM
94 F
Allentown, PA
74 CAnaheim, CA
75 CAnn Arbor, MI
44 BAsheville, NC
67 C
Atlanta, GA
20 B+
Austin, TX
4 A+
Baltimore, MD
86 D+
Birmingham, AL
16 ABoise, ID
18 B+
Boston, MA
72 C
Boulder, CO
9 A
Bridgeport, CT
48 BBuffalo, NY
93 F
Camden, NJ
79 CCape Coral, FL
61 C+
Charleston, SC
30 B+
Charlotte, NC
51 BChicago, IL
83 CCincinnati, OH
41 BCleveland, OH
62 C+
Colorado Springs, CO 29 B+
Columbia, SC
19 B+
Columbus, OH
15 ADallas, TX
2 A+
Dayton, OH
40 BDenver, CO
25 B+
Detroit, MI
24 B+
Durham, NC
14 AFort Collins, CO
8 A
Fort Lauderdale, FL
59 C+
Fort Worth, TX
12 AGrand Rapids, MI
49 BGreensboro, NC
26 B+

Ease of
Starting a
Business
29 B+
78 D+
73 D+
54 C+
69 C
60 C+
68 C
22 A9 A+
66 C
20 A8 A+
77 D+
13 A+
51 C+
86 D+
94 F
65 C
47 B40 B
81 D+
35 B+
67 C
6 A+
19 A14 A
7 A+
48 B23 A34 B+
58 C+
17 A
57 C+
20 A82 D+
24 A-

Employment,
Ease of Overall
Health &
Labor &
Hiring Regulations Safety
Hiring
84 C24 B+
6 A
34 B
83 C71 C
81 C92 F
48 B78 C92 F
81 D+
89 D+ 92 F
91 F
86 D
26 B
81 D+
72 C
82 D
48 B19 B+
43 B35 B
7 A
58 C+
66 C+
61 C+
45 B28 B
39 B
32 B
43 B36 B
44 B50 B54 C+ 88 D
80 C78 C1 A+ 11 A
8 A
5 A+
47 B54 C+
21 B+
60 C+
56 C+ 79 C84 D+
75 C65 C
51 B32 B
44 B34 B
64 C
77 C84 D
87 D+ 82 D+
68 C+
89 F
13 A- 69 C
58 C+
42 B71 C
50 B56 C+
56 B18 B+ 22 B+
9 A
12 A
57 C+ 49 B61 C+
40 B
52 C+ 83 D+
87 D+
80 D+
90 D+ 16 A17 A18 A
63 C
59 C+
55 C+
57 C+
46 B68 C
85 D+
71 C
6 A+ 8 A
5 A
4 A+
59 C+ 35 B
45 B26 B+
20 B+ 2 A+
4 A+
1 A+
85 D+ 41 B62 C+
37 B
64 C
47 B64 C+
45 B40 B55 C+
57 C+
43 B8 A
15 A27 B
6 A+
80 C53 B51 B38 B
55 C+ 44 B36 B
41 B51 B21 B+
28 B
25 B+
74 C1 A+
2 A+
16 A
10 A
29 B
38 B
13 A

Tax
Code

Licensing

EnvironZoning
mental

Training &
Networking

41
83
68
93
78
4
57
33
23
84
35
48
70
44
60
85
53
29
22
47
82
45
61
74
26
43
3
46
49
54
5
37
39
15
1
51

28
67
89
88
78
37
58
29
40
92
19
49
76
34
42
83
87
50
33
64
90
20
66
52
9
46
5
16
39
62
14
31
61
15
2
24

18
20
46
89
84
68
31
22
36
90
21
60
78
42
61
62
58
64
40
47
67
5
49
55
12
32
4
76
59
53
25
63
38
35
1
69

22
31
88
94
53
10
44
41
8
34
73
12
76
39
93
19
86
6
2
64
68
78
14
51
20
5
23
77
25
42
3
1
56
62
13
80

B
D
CF
D+
A+
C+
B+
AD
B
BCBC+
D
BB+
ABD
BC+
D+
B+
B
A+
BBC+
A+
B
B
A
A+
B-

B+
C
D
D
D+
B
C+
B+
B
F
ABD+
B
B
D+
D
BB
C+
F
AC
BA+
BA+
A
B
C+
A
B+
C+
A
A+
B+

AB+
BD
D+
C
B
B+
B
F
B+
C+
CBC+
C+
C+
C+
B
BC
A
BBA
B
A+
CC+
BB+
C+
B
B
A+
C

25
24
63
83
77
3
64
28
48
90
7
79
84
89
46
82
86
58
35
34
72
13
51
36
4
39
6
27
40
52
47
87
57
30
1
15

B+
B+
C
D+
CA+
C
B+
BF
A+
D+
D+
D
BD+
D+
C+
BBCA
C+
BA+
BA+
B+
BC+
BD
C+
B
A+
A-

AB+
F
F
C+
A+
BBA+
B
CA+
CBF
A
D
A+
A+
C
CD+
A
C+
AA+
ACB+
BA+
A+
C+
C
A+
D+

Table 2: Cities (continued)

23

Overall
Friendliness
Rank/Grade
Greenville, SC
27 B+
Hartford, CT
95 F
Honolulu, HI
63 C
Houston, TX
7 A+
Indianapolis, IN
21 B+
Jacksonville, FL
32 B
Kansas City, MO
22 B+
Knoxville, TN
5 A+
Lancaster, PA
33 B
Las Vegas, NV
53 C+
Lawrence, MA
73 CLos Angeles, CA
81 CLouisville, KY
35 B
Manchester, NH
1 A+
Memphis, TN
57 C+
Miami, FL
58 C+
Milwaukee, WI
52 BMinneapolis, MN
38 BNashville, TN
6 A+
New Haven, CT
92 F
New Orleans, LA
34 B
New York, NY
76 CNewark, NJ
43 BOakland, CA
77 COklahoma City, OK 11 AOmaha, NE
31 B
Orlando, FL
39 BOxnard, CA
78 CPhiladelphia, PA
68 C
Phoenix, AZ
42 BPittsburgh, PA
65 C
Port St. Lucie, FL
69 C
Portland, OR
37 B
Providence, RI
90 F
Raleigh, NC
23 B+
Richmond, VA
3 A+
Riverside, CA
80 C-

Ease of
Starting a
Business
16 A
74 D+
88 D
4 A+
26 A36 B
12 A+
1 A+
30 B+
39 B
87 D
84 D+
53 C+
2 A+
64 C
85 D+
41 B
18 A11 A+
93 F
37 B
92 F
55 C+
83 D+
3 A+
28 A49 B71 C70 C45 B42 B76 D+
44 B90 D
32 B+
5 A+
80 D+

Employment,
Ease of Overall
Health &
Labor &
Hiring Regulations Safety
Hiring
30 B
40 B
50 B20 A95 F
95 F
95 F
95 F
91 D
77 C69 C
91 F
19 B+ 6 A+
10 A
11 A
72 C
17 A20 B+
22 A66 C
39 B
35 B
54 B28 B
20 B+
23 B+
29 B+
17 A- 4 A+
7 A
2 A+
82 C87 D+
74 C
85 D
58 C+ 42 B63 C+
58 C+
68 C
91 D
86 D+
87 D
35 B
67 C
67 C+
64 C
22 B+ 43 B37 B
23 B+
15 A- 3 A+
14 A19 A67 C
13 A30 B
15 A
23 B
30 B
42 B31 B
73 C
57 C+
71 C
59 C+
70 C
76 C73 C
69 C
16 A- 14 A18 B+
23 B+
37 B
70 C
52 B62 C+
24 B
25 B+
12 A9 A+
25 B
33 B
25 B
28 B+
32 B
52 B47 B48 B86 D+ 73 C
53 C+
63 C
11 A
5 A+
3 A+
3 A+
4 A+ 31 B
59 C+
17 A
38 B
26 B+
24 B+
36 B
69 C
93 F
94 F
93 F
27 B
56 C+
65 C+
33 B
33 B
37 B
40 B
51 B88 D+ 66 C
70 C
72 C
39 B27 B
10 A
46 B81 C62 C+
48 B73 C21 B+ 75 C31 B
66 C
5 A+ 18 B+
26 B
21 A2 A+ 7 A+
1 A+
7 A+
60 C+ 90 D
89 D
88 F

Tax
Code

Licensing

EnvironZoning
mental

Training &
Networking

31
87
75
6
25
21
20
13
66
18
92
63
30
2
14
32
42
76
12
91
58
36
55
80
11
34
19
89
59
38
69
28
64
77
24
10
90

45
95
55
10
30
36
18
4
77
70
91
68
71
1
7
54
26
73
12
25
27
41
56
74
2
11
32
94
42
38
65
59
63
82
17
8
85

65
95
79
13
15
43
19
8
83
24
86
73
29
6
25
17
74
75
16
71
2
33
48
70
14
34
27
91
57
41
56
29
66
80
28
11
92

40
69
24
26
15
36
87
84
9
74
32
75
11
28
92
70
49
21
71
91
29
35
72
52
47
81
85
82
54
59
63
57
16
37
30
4
43

B+
F
D+
A+
AAAA
C
AF
C
B+
A+
A
B+
B
D+
A
F
C+
B
C+
D
A+
B
AF
C+
B
CB+
C
D+
AA+
F

BF
BA+
B+
B
AA+
D+
CF
C
CA+
A+
BB+
CA
B+
B+
B
BCA+
A
B+
F
B
B
C
C+
C+
D+
A
A+
D

C+
F
CAABB+
A
D+
B+
D+
C
B+
A
B+
AC
CAC
A+
B
BC
AB
B+
F
C+
B
BB+
C+
CB+
A
F

49
93
76
8
14
60
32
2
94
23
88
59
66
5
11
26
62
68
17
70
79
45
54
61
16
78
29
92
65
33
56
21
42
81
22
19
75

C+
F
CA+
A
C+
B
A+
F
B+
D
C+
C
A+
A+
B+
C+
C
AC
D+
BC+
C+
AD+
B+
F
C
B
C+
ABD+
B+
AC-

BCAB+
A
B
F
D
A+
CB
CA+
B+
F
CC+
ACF
B+
B
CC+
C+
D+
D
D+
C+
C
C
C
A
B
B+
A+
B-

Table 2: Cities (continued)

24

Overall
Friendliness
Rank/Grade
Rochester, NY
84 D+
Sacramento, CA
85 D+
Salt Lake City, UT
13 ASan Antonio, TX
10 A
San Diego, CA
89 D
San Francisco, CA
66 C
San Jose, CA
64 C
Santa Rosa, CA
55 C+
Sarasota, FL
28 B+
Seattle, WA
47 BSpringfield, MA
87 D+
St. Louis, MO
60 C+
Syracuse, NY
82 CTacoma, WA
71 C
Tampa, FL
54 C+
Tucson, AZ
70 C
Tulsa, OK
56 C+
Virginia Beach, VA
17 AWashington, DC
46 BWest Palm Beach, FL 45 BWinston-Salem, NC
91 F
Worcester, MA
50 B-

Ease of
Starting a
Business
79 D+
89 D
27 A25 A91 F
72 D+
62 C+
75 D+
38 B
15 A
59 C+
56 C+
31 B+
52 C+
63 C+
61 C+
33 B+
10 A+
46 B43 B95 F
50 C+

Employment,
Ease of Overall
Health &
Labor &
Hiring Regulations Safety
Hiring
53 C+ 84 D+
78 C83 D
92 D
94 F
93 F
94 F
9 A
12 A15 A14 A
44 B10 A
16 A10 A+
77 C80 D+
79 C77 C48 B65 C
22 B+
68 C
62 C
72 C
75 C
79 D+
76 C45 B29 B
52 B36 B
38 B
34 B
55 B42 B61 C+
60 C+
76 C12 A- 85 D+
88 D+
89 F
75 C48 B33 B
49 B3 A+ 89 D
90 D
65 C
79 C86 D+
82 C70 C
78 C34 B
41 B30 B
29 B
32 B
49 B47 B41 B60 C+
76 C
39 B
14 A- 9 A
13 A8 A+
31 B
46 B46 B53 B61 C
23 B+
19 B+
27 B+
94 D
63 C+
83 C74 C93 D
74 C54 C+
67 C

Tax
Code

Licensing

EnvironZoning
mental

Training &
Networking

88
94
27
9
79
72
67
52
7
65
81
50
95
86
17
40
62
16
56
8
71
73

86
93
22
13
69
75
72
79
51
35
84
60
21
81
47
23
57
6
53
48
44
80

85
93
10
9
88
45
72
7
52
54
82
51
94
87
50
44
37
3
39
23
81
76

38
58
33
7
66
65
89
27
60
18
90
83
79
55
46
61
48
50
17
45
95
67

F
F
B+
A+
D
CC
BA+
C
D
BF
F
AB
C+
AC+
A+
CD+

D
F
AA
C
CCD+
BB
D+
C+
AD+
BB+
C+
A+
BBB
D+

D+
F
A
A
D
BC
A
BBD+
BF
D
BBB
A+
B
B+
CC-

44
91
9
10
74
73
36
43
69
55
50
53
95
85
41
20
67
18
38
31
12
71

BF
A+
A+
CCBBC
C+
C+
C+
F
D+
BAC
ABB
A
C

BC
B
A+
C
C
F
B+
C
A
F
D+
D+
C+
BC
C+
C+
A
BF
C-

Appendix D: Full Analytical Results

Figure 3: Relationship Between Friendliness Scores & State Growth Rates

25

Table 5: Dominance Analysis: Local Support

Rank
1
2
3
4
5
6
7
8
9
10
11
12

Type
Dominance Score
Training Opportunities
0.0192
Set of Controls
0.0119
Licensing Regulations
0.0108
Government Website
0.0099
Tax Regulations
0.0097
Health Regulations
0.0096
Labor Regulations
0.0094
Zoning Regulations
0.0081
Environmental Regulations
0.0073
Tax Fairness
0.0069
Licensing Compliance
0.0067
Tax Complexity
0.0053

Table 6: Dominance Analysis: State Support

Rank
1
2
3
4
5
6
7
8
9
10
11
12

Variable
Dominance Score
Set of Controls
0.0270
Training Opportunities
0.0160
Tax Regulations
0.0146
Labor Regulations
0.0140
Licensing Regulations
0.0123
Government Website
0.0113
Health Regulations
0.0110
Environmental Regulations
0.0087
Zoning Regulations
0.0075
Tax Fairness
0.0074
Licensing Compliance
0.0068
Tax Complexity
0.0061

26

Table 7: Ordinal Logistic Regression Results

Dependent Variable:
Heath & Safety
Employment, Labor & Hiring
Tax Code & Tax-Related Regulations
Regulatory
Friendliness

Licensing Forms, Requirements & Fees

Environmental
Zoning

Tax
Complexity
Perception of
Tax Burden
(Baseline = Pay
Right Amount)

Ease of Understanding The Tax Code

Pay Excessive Amount
Pay Insufficient Amount
Very Difficult
Somewhat difficult

Government
Website
(Baseline =
None)

Neither easy nor difficult

Somewhat easy
Very easy
Unhelpful

Training
Opportunities
(Baseline =
None)

Neither helpful or unhelpful

Helpful
Very Difficult
Difficult

Licensing
Compliance
(Baseline =
None)

Standard
Easy
Very Easy

27

Local Support
0.161***
(0.0323)
0.0957***
(0.0347)
0.0837***
(0.0276)
0.152***
(0.0283)
0.0158
(0.0284)
0.0901***
(0.0260)
0.0928***
(0.0168)
-0.202***
(0.0334)
-0.561***
(0.149)
-0.429***
(0.144)
-0.0761
(0.0470)
-0.110**
(0.0453)
0.140***
(0.0307)
0.234***
(0.0607)
0.205
(0.178)
0.219***
(0.0689)
0.780***
(0.0391)
-0.556***
(0.164)
-0.126**
(0.0595)
-0.0753
(0.0679)
-0.0452
(0.0549)
0.102*
(0.0544)

State Support
0.132***
(0.0304)
0.176***
(0.0326)
0.172***
(0.0312)
0.141***
(0.0286)
0.0595**
(0.0288)
-0.0126
(0.0248)
0.104***
(0.0183)
-0.252***
(0.0315)
-0.517***
(0.161)
-0.556***
(0.144)
-0.0685
(0.0536)
-0.0228
(0.0564)
0.204***
(0.0367)
0.330***
(0.0673)
0.0704
(0.194)
0.217***
(0.0611)
0.677***
(0.0478)
-0.513***
(0.130)
-0.149**
(0.0712)
-0.0388
(0.0616)
-0.0354
(0.0503)
0.0263
(0.0649)

Table 7: Ordinal Logistic Regression Results (Continued)

Company Revenue

0.0645***
(0.0151)
Perception of State Economy
0.175***
(0.0211)
State Unemployment Rate
-0.0499**
(0.0255)
Control
Business Age
-0.0609***
Variables
(0.0141)
State Happiness Level
-0.616
(0.532)
Political Contiguity
0.146***
(0.0439)
Female
0.0608*
(0.0352)
Asian
-0.0296
(0.138)
Black
-0.125**
Race
(0.0491)
(Baseline =
Hispanic
-0.0479
White)
(0.0515)
Other
-0.0646
(0.0626)
Cut 1
-4.409
(3.250)
Cut 2
-3.094
(3.247)
Constants
Cut 3
-1.329
(3.244)
Cut 4
0.741
(3.250)
Observations
17,164
Robust standard errors, clustered by state, in parentheses.
*** p<0.01, ** p<0.05, * p<0.1

28

0.0465***
(0.0151)
0.248***
(0.0204)
-0.117***
(0.0352)
-0.0605***
(0.0111)
-0.767
(0.639)
0.293***
(0.0500)
-0.0437
(0.0433)
0.0825
(0.120)
0.0940
(0.0594)
0.0630
(0.0548)
-0.0457
(0.0900)
-5.065
(3.861)
-3.745
(3.859)
-1.877
(3.863)
0.333
(3.872)
17,215

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