Market Data

The 2.4x 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 2.4-to-one range, Tennessee 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 Tennessee at 88.1 to Hawaii at 215.3 as of May 2026. That is a 2.4-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 215.3 not because of labor, its labor index is 126.7, but because of energy, where it scores 481.1 against the national 100. Tennessee, at 88.1, pairs a labor index of 92.7 with an energy index of 74.1. 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 2.4-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 stayed inside a recognizable band, running 6.7¢ in May 2021 to 9.4¢ in August 2022 and sitting today in the upper third of its five-year range at 8.7¢. The absence of a trend is itself the planning input: in a series this steady, a move that would be noise elsewhere is a real signal, because the base rate of movement is so low.

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

Published 2026-08-06.