Market Data

The 2.3x Tax: Why the Same Factory Costs Twice as Much Across a State Line

The reshoring debate treats "the US" as a single cost. It is not. Our state cost index spans a 2.3-to-one range, New Mexico to Hawaii, and the gap between the cheapest and priciest states rivals the gap between countries.

The single most misleading phrase in the reshoring conversation is "manufacturing costs in the US," because there is no such number. Our state manufacturing cost index, which benchmarks 51 states against a national 100, runs from New Mexico at 86.4 to Hawaii at 195.7 as of Jul 2026. That is a 2.3-to-one spread inside a single country, and it means the decision that actually matters is not offshore versus onshore. It is which onshore, because the gap between the cheapest and priciest US states can rival the gap that sends work overseas in the first place.

The spread is mostly energy

Decompose the extremes and the driver is clear. Hawaii sits at 195.7 not because of labor, its labor index is 126.7, but because of energy, where it scores 402.6 against the national 100. New Mexico, at 86.4, pairs a labor index of 101 with an energy index of 42.6. Labor varies across states, but within a band; energy is where the extremes live, because an island or a remote grid pays multiples of what a state sitting on cheap generation pays. The geographic cost tax is, first and foremost, an electricity tax, which is why energy-intensive processes feel state choice far more sharply than labor-intensive ones do.

Why this reframes the reshoring math

A company deciding to reshore compares a foreign landed cost against a domestic one, but "domestic" is a range this wide, so the siting choice inside the US can matter as much as the reshoring choice itself. A product that does not pencil against a low-cost state might pencil against, or lose badly to, a high-cost one. The disciplined version of the analysis picks the specific state, weights the cost index by the product's own energy and labor intensity, and only then compares to the offshore alternative. Treating the US as one number throws away the single largest lever in the domestic-siting decision.

"Reshore to America" is not a plan. America is a 2.3-to-one cost range, and which end you land on can decide whether the move pencils at all.

Weight the index by your own process

The published index uses a general weighting, but a foundry and a software-defined assembly plant should read it differently. An energy-heavy process should weight the energy component hard, which widens the effective spread even further and makes low-energy states decisive. A labor-heavy process should lean on the labor index, which compresses the spread and lets other factors, logistics, workforce availability, incentives, tip the decision. The index is the starting map, not the destination; the right move is to reweight it for your own cost structure. For the full 51-state ranking, the state cost data keeps the live board.

The power bill over the full record

Over the five-year record industrial power has moved decisively rather than oscillated: from 7.1¢ at the close of 2021 to 9.8¢ today, up 38%, and now the highest in the five-year archive. A change of that size across a span this long is a level shift, not a cycle, and planning that assumes a return to the 2021 figure is planning against the whole record.

Compare all fifty-one states on the manufacturing cost index, decomposed into labor and energy. See the state ranking

Published 2026-08-06.