Business Climate and Economic Conditions

In an era of economic uncertainty and fierce competition for talent and investment, CEOs and entrepreneurs are constantly scanning the map for a genuine advantage. Look beyond the coasts, and you’ll find a compelling case in the Sunflower State. Kansas is crafting a powerful narrative of pro-business pragmatism, built not on flashy promises but on a foundation of a productive workforce, strategic cost management, and a focused approach to growth.

Look no further than recent mega-successes the state has recorded:

• Panasonic Energy’s $4 billion electric-vehicle battery plant in De Soto, the biggest economic-development deal in the state’s history. The site announcement came in 2022, and production started earlier this year—with 4,000 advanced-manufacturing jobs anticipated at full capacity. 

• A nearly $2 billion plant has been proposed—though federal funding remains in question—for a semiconductor assembly and testing site in the Wichita area. Federal CHIPS funding was originally offered to Integra, which was subsequently acquired by Micross Components, but the new owner has indicated to officials that it intends to proceed with the development.

• Merck Animal Health is pouring $895 million into its animal-health manufacturing plant in De Soto—an addition that has turned that suburban Johnson County community into the state’s hottest locale for development of larger industrial properties.

All three sites selected were grounded, in part, on the most compelling asset in Kansas’ portfolio: its people. Simply put, Kansans work. The state boasts a stellar employment-population ratio of 63.4 percent—a full 3.5 percentage points above the national average of 59.9 percent. This isn’t an anomaly; it’s a testament to a deeply ingrained work ethic that delivers a reliable and engaged labor pool for businesses. This drive is reflected in the state’s resilient unemployment rate, which has consistently held well below the national figure.

The economic advantages compound from there. For a business, operating in Kansas means significantly lower overhead. The state’s cost of living index sits at 86.5, far more manageable than the high-cost coasts and competitive within its region. This translates directly to the bottom line through reduced operational expenses and a lower required wage for a high quality of life. In fact, with a median household income of $75,979—surpassing neighbors like Missouri and Oklahoma—Kansans enjoy a robust standard of living that fosters satisfaction and loyalty.

Further enhancing its labor market flexibility, Kansas’ status as a right-to-work state is clear in the numbers: only 5.7 percent of its workforce consists of union members, less than half the 10.0 percent national average. This provides businesses with a predictable and streamlined operational environment.

Energy, a critical and volatile cost center, is another area where Kansas holds a commanding edge. Sitting atop the massive Hugoton natural gas field, the state can deliver this essential resource to local companies and power utilities at a substantial discount—often more than 40 percent less than customers pay in neighboring states like Missouri and Oklahoma. Comparable savings are found in electricity costs, providing a long-term competitive buffer.

This business-friendly ecosystem is actively curated by the state government. While other states drown in bureaucratic programs, Kansas has pursued a strategy of focus. The Department of Commerce promotes a streamlined suite of fewer than a dozen key economic incentive programs, a stark contrast to the dozens of overlapping initiatives found in some states. This legislative and regulatory clarity, combined with a competitive tax structure, is drawing targeted investment. The payoff is visible in the robust growth of high-potential sectors like life sciences—where the region is a global leader in animal health—as well as in logistics, advanced manufacturing, and aviation.

The state’s tax landscape has been a political battleground, seesawing between deep cuts under Republican Gov. Sam Brownback and subsequent increases under his successor, Democrat Gov. Laura Kelly. Through it all, the Republican-led Legislature has maintained a course toward fiscal responsibility. 

The most popular and impactful recent move is the phased elimination of the sales tax on groceries, a policy that directly benefits every household. It remains to be seen how this will impact the state’s standing in the Tax Foundation’s State Business Tax Climate Index, where it currently ranks a middling 26th. The foundation notes Kansas’ graduated individual income tax, which ranges from 3.10 percent to 5.70 percent, and a corporate income tax ranging from 4.00 percent to 7.25 percent. The state sales tax rate is 6.50 percent, serving as a base for potential local add-ons.

Key Insights

The collective data reveals a state eng-ineered for business competitiveness. Kansas’  primary advantage is its high-engagement, readily available workforce, evidenced by an employment-population ratio significantly outpacing the national average. This human-capital edge is powerfully amplified by a low-cost operational environment, from a cost-of-living index that reduces salary pressure to energy costs that are among the lowest in the nation, thanks in part to strikingly low housing costs in most of the state and to prolific local natural gas reserves. The regulatory and legislative framework is deliberately streamlined, with focused incentives and right-to-work laws that provide management flexibility. This synergy between a productive workforce, controlled overhead, and a pragmatic government creates a fertile ground for business stability and growth, particularly in targeted sectors like life sciences and advanced manufacturing, offering a compelling alternative to the high-cost, high-complexity environments of coastal states.