Jan 08, 2015
Milken Institute announces ‘Best-Performing Cities 2014’
Success comes down to tech — with a strong role for energy
LOS ANGELES — The Milken Institute’s annual “Best-Performing Cities” index shows that technology and shale energy were the biggest factors behind America’s booming cities — especially technology. Tech titan San Francisco claimed the top spot, up two ranks from last year. Last year’s No. 1, Austin, Texas, dropped a slot. The rest of the top five boast thriving tech sectors as well: Provo, Utah (third, down from second last year); San Jose, Calif. (unchanged at fourth); and Raleigh, N.C. (fifth this year, up from 13th place).
“Many of the Best-Performing Cities of 2014 possess what we call the ‘innovation advantage,’” says Ross DeVol, chief research officer of the Milken Institute and one of the report’s authors. “Cities like San Francisco and San Jose are able to offset high costs, an unfavorable tax structure, and a burdensome regulatory environment, thanks to the clustering of talent and technology in an entrepreneurial ecosystem.”
Other top cities, DeVol points out, may not have quite the same ecosystem but provide a less onerous cost basis and fewer regulatory burdens. Austin, Provo, and Boulder, Colo., are examples. “These tech centers have a high employment multiplier,” notes DeVol. “That is, one tech position generates nearly four other jobs.”
Even with recent declines in the price of oil and natural gas, advances in horizontal drilling and hydraulic fracturing are changing the U.S. energy landscape. That’s lifted the economies of many cities, including Houston, the leading center of North American energy, which rose one rank to No. 7. Smaller cities such as Fargo, N. D. (the top U.S. small metro), and Victoria, Texas, continued to benefit from the shale boom. But the report warns that oil prices below $70 per barrel will moderate future advances.
Other highlights from “Best-Performing Cities 2014: Where America’s Jobs Are Created and Sustained” include:
- San Francisco achieved the top rank for the first time in the 15-year history of the index. Propelling the gains: the city’s No. 1 finish in wage growth over both the past five-year and one-year periods. “Young, technology-skilled workers are flocking to San Francisco, driving up wages and driving down unemployment in these sectors below 2 percent,” says DeVol.
- Texas is still a jobs machine, claiming five of the top 10 positions among large metros. A special Texas blend of tech, energy strength, and a favorable business climate revved up these urban economies.
- Technology centers captured 13 of the top 25, with metros containing both creative- and scientific-based industries performing best.
“2014 was a banner year for employment growth in the United States. During the year all 8.7 million jobs lost during the Great Recession were recovered — and then some,” says DeVol. “Yet our country’s significant financial and social challenges remain, and are best addressed by developing local strategies to foster high-quality jobs. Our Best-Performing Cities are showing the way.”
“Best-Performing Cities 2014” shows where jobs are being created and sustained in metros across the U.S. The index includes measures of job, wage and technology performance to rank the nation's 200 large metropolitan areas and 179 smaller metros. Unlike other “best places” rankings, it does not use quality-of-life metrics, such as commute times or housing costs. In the Institute’s index, employment growth is weighted most heavily due to its critical importance to community vitality. Wage and salary growth measures the quality of jobs created and sustained.
Data for all metros is available on the interactive “Best-Performing Cities” website, where you may also download the report: http://best-cities.org. Join the Twitter conversation at #bpcfor2014.
The Milken Institute is a nonprofit, nonpartisan think tank determined to increase global prosperity by advancing collaborative solutions that widen access to capital, create jobs and improve health. It conducts data-driven research, convenes action-oriented meetings and promotes meaningful policy initiatives.