Geography of Corporate America

As my family gets set for a cross-country summer road trip, I thought it would be a useful exercise to survey the landscape of corporate America. Where are the headquarters of the most prominent U.S. companies located?

Taking the companies in three major 100-stock indices (S&P 100, NYSE 100 and Nasdaq 100) as proxies, below I list is the geographical breakdown by state, showing those states that are home to five or more corporate headquarters among the 100 companies in each index:

(The number of components of the respective 100-stock index with corporate headquarters in the various states is shown in parentheses after each state. The ordering of companies for a given state is by market capitalization.)

S&P 100
* New York (20): Citigroup, Pfizer, AIG, Altria, IBM, JPMorgan Chase, Verizon, Pepsico, Time Warner, Amex, Morgan Stanley, Merrill Lynch, Viacom, Goldman Sachs, Schlumberger, Bristol-Myers, Lehman Brothers, Colgate-Palmolive, Avon, Eastman Kodak
* Texas (11): Exxon Mobil, Dell, SBC, Texas Instruments, Halliburton, Burlington Northern, Baker Hughes, Clear Channel, Harrah's Entertainment, El Paso, Radioshack
* California (9): Intel, Cisco, Wells Fargo, Amgen, Hewlett Packard, Oracle, Disney, National Semiconductor, Computer Sciences
* Illinois (7): Boeing, Allstate, McDonald's, Exelon, Baxter, Sara Lee, Office Max
* New Jersey (6): Johnson & Johnson, Merck, Honeywell, AT&T, Campbell Soup, Lucent
* Pennsylvania (6): Comcast, ALCOA, CIGNA, HJ Heinz, Allegheny Tech., Unisys
* Connecticut (5): GE, United Tech., Hartford Financial, International Paper, Xerox

NYSE 100
* New York (22): Citigroup, Pfizer, AIG, Altria, IBM, JPMorgan Chase, Verizon, Pepsico, Time Warner, Amex, Morgan Stanley, Merrill Lynch, Viacom, Goldman Sachs, Schlumberger, Bristol-Myers, News Corp., MetLife, Lehman Brothers, Colgate-Palmolive, Bank of New York, Cendant
* Illinois (9): Abbott Labs, Boeing, Motorola, Walgreen, Allstate, McDonald's, Caterpillar, Exelon, Illinois Tool Works
* California (7): Chevron, Wells Fargo, Genentech, Hewlett Packard, Disney, Occidental Petroleum, DIRECTV
* New Jersey (7): Johnson & Johnson, Merck, Wyeth, Prudential, Honeywell, Schering-Plough, ADP
* Texas (7): Exxon Mobil, Conoco-Phillips, SBC, Texas Instruments, Kimberly-Clark, Sysco, TXU
* Georgia (6): Coca-Cola, Home Depot, UPS, Bell South, Southern, SunTrust Bank
* Minnesota (6): United Health, Medtronic, 3M, U.S. Bancorp, Target, St. Paul Travelers
* North Carolina (5): Bank of America, Wachovia, Lowes, Duke Energy, BB&T

Nasdaq 100
* California (41): Intel, Cisco, Amgen, Oracle, Qualcomm, eBay, Yahoo, Apple, Applied Materials, Gilead Sciences, Electronic Arts, Symantec, Adobe, Broadcom, Maxim Integrated Products, Juniper Networks, Marvell Tech., Sun Microsystems, Linear Tech., KLA Tencor, Network Appliance, Xilinx, Intuit, Autodesk, Altera, Chiron, Verisign, Sandisk, Pixar, BEA Systems, Invitrogen, Lam Research, Novellus, Ross Stores, Siebel Systems, Intersil, Mercury Interactive, QLogic, Sanmina-SCI, Synopsys, JDS Uniphase
* Illinois (6): Sears, CDW, Molex, Career Education, Tellabs, Smurfit-Stone
* Washington (6): Microsoft, Costco, Starbucks, Amazon, Paccar, Expeditors International
* New York (5): InterActive Corp., Paychex, Sirius Satellite, NTL, Comverse

As expected, the NYSE 100 is heavily weighted with companies headquartered in New York and New Jersey, while the Nasdaq 100 has a high concentration of technology companies in California and Washington State. The S&P 100 is a more diversified index, including 51 companies from the NYSE 100 and nine companies from the Nasdaq 100.

It is instructive to cross-reference the distribution of corporate headquarters with the populations of the various states. The most populous states are:

State: Population (July 2004)
1. California: 36 mil.
2. Texas: 22 mil.
3. New York: 19 mil.
4. Florida: 17 mil.
5. Illinois: 13 mil.
6. Pennsylvania: 12 mil.
7. Ohio: 11 mil.
8. Mighigan: 10 mil.
9. Georgia: 8.8 mil.
10. New Jersey: 8.7 mil.
11. North Carolina: 8.5 mil.
12. Virginia: 7.5 mil.
13. Massachusetts: 6.4 mil.
14. Indiana: 6.2 mil.
15. Washington: 6.2 mil.
16. Tennessee: 5.9 mil.
17. Missouri: 5.8 mil.
18. Arizona: 5.7 mil.
19. Maryland: 5.6 mil.
20. Wisconsin: 5.5 mil.
21. Minnesota: 5.1 mil.
22. Colorado: 4.6 mil.
23. Alabama: 4.5 mil.
24. Louisiana: 4.5 mil.
25. South Carolina: 4.2 mil.

We can proceed to extract a measure of the "corporate headquarters density per capita," which I define as: number of companies in NYSE 100 or Nasdaq 100 (omitting the S&P 100 to avoid double-counting) with headquarters in a given state, divided by the population of that state in millions. Restricting our discussion to those states with an over-representation of corporate headquarters (i.e., five or more, since the average is 200 companies in 50 states, or 200/50 = 4 per state) of companies in either the NYSE 100 or the Nasdaq 100, the ranking of states by corporate headquarters density is:

(For each state, the number of companies appearing in either the NYSE 100 or the Nasdaq 100 is shown in parentheses.)

State: Corporate Headquarters Density Per Million People

Minnesota (9): 1.8
New York (27): 1.4
California (48): 1.3
Illinois (15): 1.2
New Jersey (10): 1.1
Washington (7): 1.1
Massachusetts (7): 1.1
Colorado (5): 1.1
Virginia (6): 0.8
Georgia (6): 0.7
North Carolina (5): 0.6
Texas (9): 0.4

Interestingly, Minnesota has the highest corporate headquarters density among the states; however, none of the Minnesota companies have market capitalizations exceeding $70 billion. As might be expected, New York-New Jersey (NYC metro), Massachusetts (Boston) and California (especially the Bay Area with Silicon Valley) have high corporate headquarters densities; yet so do Illinois (Chicago metro), Washington State (dominated by Microsoft) and Colorado. At the other extreme, it is noteworthy that Texas, while being home to quite a few corporate headquarters, has a rather low corporate headquarters density.

An ongoing trend as the U.S. economy matures is a shift of manufacturing and programming, call center and other service sector jobs to overseas locations (e.g., China and India) where labor is cheaper and in abundant supply. Although such jobs are increasingly being outsourced to foreign countries, the corporate headquarters of international enterprises will likely remain in the U.S., so long as U.S. corporations maintain their dominance in the global markets.

As history indicates, the most vibrant metropolitan areas in the U.S. will continue to be those with financially strong and growing companies, since local economies feed off of spending power created by employment, which in turn allows cultural endeavors and the arts to flourish. As I drive across the U.S. over the next few weeks, I will be paying particular attention to those metros with an over-representation of corporate headquarters, since it is these locations that will surely play the most significant role in defining the character of the U.S. economy and culture in the years ahead.