Austin, Raleigh, Boise, Salt Lake City, and Provo, Utah, lead the Milken Institute’s most recent yearly ranking of the Best Performing Cities, which was unveiled exclusively to Axios. These urban areas are significant due to their high wages, job availability, reasonable cost of living, and successful tech industries, serving as economic examples for the entire country.
Here’s the latest update:
The Milken Institute, a nonpartisan nonprofit organization, evaluated 403 U.S. metropolitan areas by analyzing 13 economic indicators using data from January 2022 to August 2023. The report categorized cities into large metros (more than 275,000 people) and smaller ones.
Here are the top 10 large metro areas:
Nashville, Northwest Arkansas, Dallas, Olympia in Washington, and Charlotte in North Carolina.
- Idaho Falls ranked first among smaller cities, followed by Coeur d’Alene in second place, Twin Falls in fifth place, and Pocatello in seventh place.
- Three more small cities in the top seven included Gainesville, Georgia at number three, St. George, Utah at number four, and Bend, Oregon at number six.
- When selecting top-performing smaller cities, Milken decided to categorize the best seven cities instead of the top ten due to their significant performance compared to the others.
- Notable: The rankings for this year included two additional factors: income inequality and a city’s resilience to severe weather and economic turmoil.
Check out the complete report and learn more about the methodology here.
Maggie Switek, an author of the Milken report, emphasizes that the rankings focus on growth, according to Axios. “Top-performing cities are those experiencing the fastest growth.”
“When we consider cities like New York or San Francisco, they have experienced growth in the past and are now staying stable. On the other hand, the top-performing cities are the ones where jobs, wages, and the high-tech sector are expanding.”
Austin/Round Rock, Texas, is at the top of the list for large metropolitan areas due to its significant job growth, rising wages, and strong high-tech sector, supported by the University of Texas at Austin.
It rose from its second-place position last year, surpassing Provo/Orem, Utah (which experienced decreases in job and wage growth following recent tech layoffs). Idaho Falls emerged as the top choice among smaller cities for the second year in a row due to strong job growth, economic diversity, and the presence of a leading employer, the Idaho National Laboratory.
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The top performers in this year’s rankings were Philadelphia, Elgin, Illinois, Houston, Richmond, Virginia, and Wichita, Kansas. The report discovered that these cities experienced significant employment growth between 2021 and 2023. The most significant job increases in leisure and hospitality were observed in three cities: Elgin, Richmond, and Houston.
Top decliners:
Out of the five cities that experienced the largest drops in the rankings, four are located in California (San Luis Obispo, Modesto, Merced, and Oxnard), while one is in North Carolina (Greensboro).
According to the report, the cities that experienced decline showed lower one-year wage growth and struggled with city resilience and income inequality metrics.
Let’s face it:
Many of the best-performing metropolitan areas are located in states without coastlines, which is important given the increasing coastal flooding.
Idaho’s impressive performance is attributed to its strong five-year job and wage growth, supported by a small yet expanding high-tech sector and high rankings on resilience and income distribution metrics, according to the report. The lower-ranked cities correlated to “the least resilient metropolitan areas” and also tended to be “highly exposed to extreme heat.”
Here are the top cities in terms of income inequality based on the Gini coefficient: Ogden, Utah; Provo, Utah; Clarksville, Tennessee; Olympia, Washington; and York-Hanover, Pennsylvania.
New York City was ranked at #199 in terms of inequality among some of the nation’s biggest cities, followed by Miami at #196, San Francisco at #192, Los Angeles at #188, and Chicago at #177.
Amid the pandemic, metropolitan areas have seen a shift towards becoming “donut cities,” with a decrease in population and workers at the core. The “donut effect” is clearly visible in some of our most successful cities like Dallas, Houston, and Austin, according to Switek, the senior director of the Milken Institute’s research department. This is resulting in high commercial vacancy rates in these major areas.
Take a step back: In 2022, over 6 million jobs were added to the U.S. labor market, with 90.7% of them being in metropolitan areas. The geographic distribution of this growth has shifted from mega-cities like New York and Los Angeles to Texas and the Sun Belt. Out of the 403 metropolitan areas in the Milken ranking, just 52% had returned to or surpassed their pre-pandemic employment levels by the end of 2022. As of July 2023, the percentage had increased to 71%.
What comes after this: Anticipate that climate change, the movement of high-tech jobs, and the changing nature of remote work will keep influencing the fates of cities throughout America.
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