Best-Performing Cities2021 Foundations for Growth and Recovery MISAEL GALDAMEZ, CHARLOTTE KESTEVEN, AND AARON MELAAS ABOUT THE MILKEN INSTITUTE The Milken Institute is a nonprofit, nonpartisan think tank. We catalyze practical, scalable solutions to global challenges by connecting human, financial, and educational resources to those who need them. We leverage the expertise and insight gained through research and the convening of top experts, innovators, and influencers from different backgrounds and competing viewpoints to construct programs and policy initiatives. Our goal is to help people build meaningful lives in which they can experience health and well-being, pursue effective education and gainful employment, and access the resources required to create ever-expanding opportunities for themselves and their broader communities. ABOUT THE CENTER FOR REGIONAL ECONOMICS The Center for Regional Economics produces research, programs, and events designed to inform and activate innovative economic and policy solutions to drive job creation and industry expansion. ©2021 Milken Institute This work is made available under the terms of the Creative Commons Attribution-NonCommer- cial-NoDerivs 3.0 Unported License, available at creativecommons.org/licenses/by-nc-nd/3.0/. CONTENTS 2 Executive Summary 6 Introduction 6 Emphasis on Outcomes 8 Breaking Down the Rankings 13 National Economic Conditions 16 Biggest Gains 18 Biggest Drops 20 Tier 1 Large Cities 34 Complete Results: 2021 Best-Performing Large Cities 42 Tier 1 Small Cities 56 Complete Results: 2021 Best-Performing Small Cities 64 Endnotes 72 Acknowledgments 72 About the Authors EXECUTIVE SUMMARY Here are the highlights of the 2021 Best-Performing Cities Index: ҉ The 2021 version of the index emphasizes jobs, wages, and high- tech growth while incorporating new measures of housing affordability and household broadband access. Cities drive economic growth nationwide. They are the primary locations where ҉ For the first time, the index includes the designation of five tiers across businesses create new jobs and workers earn the overall rankings. By grouping higher wages, keeping the United States cities with similar scores, we have competitive in the global economy. However, provided new benchmarks for city metro areas are also incredibly diverse. leaders to define objectives that can Each has unique characteristics generated help them become more competitive through a combination of investment and over time. Tier 1, containing 13 large policy choices that influence the community’s and 13 small cities, replaces the top economic outcomes. The Milken Institute’s 25 category used in previous years. Best-Performing Cities Index (BPC) provides a means for comparing metro areas’ recent ҉ Provo-Orem, Utah, takes the top spot performance. among this year’s Best-Performing Large Cities on the strength of job, wage, and high-tech GDP growth. ҉ Tier 1 Large Cities included metros in the Intermountain West and South that demonstrated wage and job growth levels far above the national median and concentrated high-tech sectors. They also had relatively affordable housing costs and very high levels of broadband access, indicating inclusive growth based on housing and infrastructure. BEST PERFORMING CITIES 2021 2 EXECUTIVE SUMMARY ҉ California’s usual standouts, including Overall, high-ranking and upwardly mobile No. 24 San Francisco and No. 22 San large cities performed better than the median Jose, dropped to Tier 2 of the index due on one- and five-year measures of housing to the high cost of housing and a strong affordability and short-term job growth. negative shift in short-term job growth. Notably, the center of gravity of the Best- This may indicate the outsized effect of Performing Large Cities—and many high-tech the coronavirus pandemic on so-called industries in general—has shifted from its “superstar cities.” traditionally dominant centers in California and Massachusetts to the Intermountain ҉ Idaho Falls rises to first in the 2021 West and the South (Figure 1). Best-Performing Small Cities. The Gem This is not to say that legacies of innovation State’s second-largest city experienced are irrelevant. A dynamic, concentrated short-term job growth of 4.7 percent high-tech sector is still very indicative of and includes the ninth-best high-tech economic success, and cities with histories GDP concentration among all small of innovation are more resilient to economic cities. shocks. In the context of the COVID-19 pandemic, however, cities’ capacity for ҉ Tier 1 Small Cities also included several economic recovery will rely on the alignment cities in the Intermountain West and between opportunities in high-tech industries the South that distinguished themselves and affordable costs of living. Cities that through high levels of job and wage support innovation as well as inclusion are growth over one- and five-year periods more likely to provide a foundation for broad- and generally had some degree of high- based economic growth. tech specialization. Figure 1. Tier 1 Large and Small Metros Concentrated in Several Regions Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions by 2021 Rank BPC Tier, 2021 1 2 3 4 5 Note: MSAs in Hawaii and Alaska, not shown here, scored in Tiers 4 and 5. Source: Milken Institute analysis (2021) BEST PERFORMING CITIES 2021 3 EXECUTIVE SUMMARY Best-Performing Large City PROVO-OREM, UTAH Provo-Orem, Utah, which ranked second in 2020, reclaims the top spot among this year’s Best-Performing Large Cities. Provo ranked first in both one- and five-year job Best-Performing growth while also ranking highly in high- tech GDP concentration and the number Small City of high-tech industries. Provo-Orem is a recipient of the tech sector’s out- migration from the expensive West Coast. It is a relatively new innovation center but IDAHO FALLS, offers a high quality of life and amenities in the mountain region. With significantly IDAHO lower costs than Silicon Valley, Provo- Orem has attracted such tech giants as Idaho Falls, Idaho, gained six ranks to Qualtrics, Vivint, and SmartCitizen. claim the title of Best-Performing Small City. It experienced significant short- term job growth from October 2019 to October 2020 and performed well on the one- and five-year job growth indicators (ranking sixth and fifth, respectively). High-tech industries play an important role in the city’s dynamism, including scientific research and development services. High-profile regional employers include the Idaho National Laboratory and Battelle Energy Alliance, LLC. BEST PERFORMING CITIES 2021 4 EXECUTIVE SUMMARY Table 1. Tier 1 Large Cities Metropolitan Statistical Area 2021 Rank 2020 Rank Change 2020 Tier Provo-Orem, UT 1 2 1 1 Palm Bay-Melbourne-Titusville, FL 2 10 8 1 Austin-Round Rock-Georgetown, TX 3 3 - 1 Salt Lake City, UT 4 25 21 1 Raleigh-Cary, NC 5 11 6 1 Boise, ID 6 7 1 1 Phoenix-Mesa-Chandler, AZ 7 12 5 1 Nashville-Davidson-Murfreesboro-Franklin, TN 8 14 6 1 Ogden-Clearfield, UT 9 22 13 1 Huntsville, AL 10 49 39 2 Denver-Aurora-Lakewood, CO 11 18 7 1 Fort Collins, CO 12 21 9 1 Seattle-Bellevue-Kent, WA Metro Division 13 8 -5 1 Source: Milken Institute analysis (2021) Table 2. Tier 1 Small Cities Metropolitan Statistical Area 2021 Rank 2020 Rank Change 2020 Tier Idaho Falls, ID 1 7 6 1 Logan, UT-ID 2 3 1 1 The Villages, FL 3 5 2 1 St. George, UT 4 4 – 1 Daphne-Fairhope-Foley, AL 5 14 9 2 Coeur d'Alene, ID 6 5 -1 1 Sioux Falls, SD 7 24 17 2 Sebastian-Vero Beach, FL 8 9 1 1 Gainesville, GA 9 8 -1 1 Charlottesville, VA 10 11 1 1 Punta Gorda, FL 11 39 28 2 Bellingham, WA 12 10 -2 1 Bend, OR 13 1 -12 1 Source: Milken Institute analysis (2021) BEST PERFORMING CITIES 2021 5 EXECUTIVE SUMMARY INTRODUCTION Cities are the engines of economic growth. Nonetheless, BPC’s highest-ranking cities are not They are the primary locations where all located in states with the strongest knowledge businesses create new, high-paying jobs that economies. Several metro areas stand out from ensure the US remains competitive in the their surrounding regions as magnets for high- global economy. However, each metro area’s tech investment. Others have relatively lower unique characteristics, which stem from a levels of high-tech activity but rank highly on the mix of investments and policy choices, affect index because they are attractive destinations their economic outcomes. for companies in other industries to locate their operations and for workers to live. The Best Performing Cities (BPC) Index uses an outcomes-based set of metrics—including job While the process of ranking cities on the creation, output growth, and wage gains especially index continues to rely on outcomes-based in high-technology sectors—to evaluate the measurement, we incorporated several new relative performance of metropolitan statistical indicators this year that show how the best- areas (MSAs) and metropolitan divisions (MDs) in performing cities generate economic gains the United States. The goal of the index is to help accessible to all their residents. Another readers evaluate how well these cities promote important modification to the index this year was economic vitality relative to their peers. the designation of five tiers across the overall rankings. By grouping cities with similar scores, National and global forces can affect a city’s we have provided new benchmarks for cities to economic performance, as they have throughout compare their economic performance with their the COVID-19 pandemic. However, the top- peers. performing metro areas leverage their assets to remain competitive places for businesses to As in previous years, BPC 2021 separately operate and workers to live, regardless of the ranks large and small metros. This year, we used nation’s overall economic trajectory.