The Milken Institute recently released Best-Performing Cities 2017: Where America’s Jobs Are Created and Sustained. The Institute has released the report annually since 1999 using an index they created that is derived from outcome-based measures such as employment gains, wages and high-tech growth to track economic strength of metropolitan areas. The 401 metropolitan areas it tracks are divided into two different lists – the 200 largest metropolitan areas (for Arizona this includes Phoenix and Tucson) and another for the 201 smaller metro areas, which represents most of Arizona metros included in the report.
What Goes Into the Index
The index uses outcome-based measures to rank cities, such as indicators for employment growth, wages and salaries, and growth in technology to show where jobs are being created and maintained. There are nine indicators used relating to job growth and high tech concentration, for which job growth receives the higher weight. The measures include growth in jobs, wages and salaries, and technology output (high-tech GDP) over a one year span, as well as a five year span to adjust for business cycles. It also looks at the latest 12-month job growth to account for recent vitality in the area. The final measures are comprised of high-tech location quotients. It does not look at any input factors such as housing, business costs or quality of life measures.
The good news for Arizona in this year’s report is that every metropolitan area in the state improved in the respective rankings. The two large metropolitan areas had modest gains while those on the small cities list, which really reflects metropolitan areas, ranged from a slight one-position change for Sierra Vista-Douglas to a leap of 72 places for Lake Havasu City-Kingman. This tied Ithaca, NY for the 6th largest gain for small cities. Prescott was the highest-ranked metropolitan area in Arizona, at 26 on the small cities list, thanks to solid job growth over the last several years.
Table 1 shows the total ranking for Arizona metropolitan areas, how they ranked last year, and how they rank within each component of the index. Steady employment gains in Arizona helped to buoy rankings for nearly all Arizona metropolitan areas. There is a respectable concentration of high-tech in several Arizona metropolitan areas, though according to the rankings growth in this area has been uneven.
Neighboring Utah cities Provo and Salt Lake City bookended the top 10, with Provo taking the number one spot in the nation this year and Salt Lake City rounding out the top of the list at 10. High tech continues to be a major driver for economic growth and is spreading to areas outside of the typical big technology hubs such as Seattle or San Jose, which fell from first place last year to eleventh this year.
Areas reliant on mining and natural resources took a hit because of falling oil and gas prices in the last year. Many of them had steep drops in the rankings for this year, including Bakersfield, CA which fell 102 places. Several Texas metropolitan areas didn’t fare much better.
Bend, Oregon maintained the top spot for small cities. There were four metropolitan areas in the small cities list that moved 30 places or more to make it onto the top of the list – Wenatchee, WA (up 31); Elkhart-Goshen, IN (up 39); Yuba City, CA (up 45); and rising the most, Bellingham, WA, which moved up 76 places. High tech was a presence in smaller metropolitan areas as well, though many also centered on tourism-related and health care sectors. Table 2 shows the top 10 for both the large cities and small cities lists.
The report indicated that infrastructure and education are key to long-term success, placing these two things high on the list of investments communities should make in order to build, or maintain, economic vitality. Many of the areas that have risen to the top of the lists for this year attest to that.
To see the entire rankings and full report, go to: http://www.best-cities.org/.