Best-Performing Cities: Where America's Jobs Are Created
Jun 01, 2003
Ross DeVol and Frank Fogelbach
Publisher: Milken Institute

The Best-Performing Cities ranking depicts those U.S. metropolitan areas that are recording the top economic performance and creating the most jobs in the nation.

The index is an outcomes-based measure as opposed to one that incorporates explicit measures of business costs, cost-of-living components such as housing, and other measures of quality-of-life, such as crime rates. While these static measures are important, they can be highly subjective in nature. If a metro has a high quality of life, it should be reflected in its firms' ability to create jobs and attract human capital.

The components of our index include job, wage and salary, and technology growth. We include both five-year and one-year performance. The five-year growth averages smooth out the business cycle impacts and don't penalize a metro too heavily for a weak performance in the latest year. The latest year's performance provides a sense of relative momentum of metropolitan economies around the country. We also include measures of concentration and diversity of technology industries in an attempt to quantify a metro's participation in the knowledge-based economy.

The top 20 Best-Performing Cities among the largest 200 metropolitan areas - including the top-ranked metro, Fayetteville, Ark. - reflect an assorted group of communities. A common key attribute among this year's list was diversity of economic base. Communities with a university presence, sizeable government employment, an array of service-based industries and population-driven growth, fared very well. Additionally, those with clusters of health care services and biotech/bioscience activities performed admirably. Most of the metros on the list are fairly steady, stable performers over the long term.

California has been in the national spotlight in recent months for its ongoing difficulties from the bursting of the tech bubble in Silicon Valley and throughout the Bay Area, and for its $35 billion budget deficit; still, the state had seven metros in the top 20. This was down from nine last year, but a noteworthy performance. The state of Texas placed four metros in the top 20 and Florida has two. The South had four other metros and the West had an additional two. There are no metros from the Midwest and only one from the Northeast, indicative of the extent of the downturn in manufacturing activity over the past couple of years and long-term competitiveness problems.

View the Best Performing Cities Index.