Growing cities with diverse, stable economies — not the booming high-tech "new economies" of the 1990s — are the big winners in this year′s Milken Institute Best Performing Cities index.
The index measures where jobs are being created, economies are growing and businesses are thriving.
Unlike past years when technology-oriented metros dominated the top of the ranking, this year′s leaders have all earned their high marks the old-fashioned way — with traditional businesses like retail, a growing population, and reliable growth industries such as government and health care.
The top four metropolitan areas on this year′s ranking all follow that pattern: Fayetteville, Ark., home to retail giant Wal-Mart; Las Vegas, Nev, one of America′s fastest-growing cities; Fort Myers, Fla., a growing retirement community; and travel destination West Palm Beach, Fla. Of the top 10, only two cities — San Diego (#1 in 2002) and San Luis Obispo, Ca. — could be considered high-tech towns.
The top 10:
1. Fayetteville, Ark.
2. Las Vegas, Nev.
3. Fort Myers, Fla.
4. West Palm Beach, Fla.
5. San Diego, Calif.
6. San Luis Obispo, Calif.
7. Laredo, Texas
8. Brownsville, Texas
9. McAllen, Texas
10. Monmouth, N.J.
Of the top 10 most-populous U.S. metros, Washington, D.C. scored the highest, followed by Houston, Atlanta, Dallas, Philadelphia, Los Angeles, Boston, Chicago, New York and, lastly, Detroit.
As in past years, California cities retain many of the top spots in the Best Performing Metros ranking. Eight of the top 25 cities on the list are in California.
But this year′s ranking shows a continued decline in some of California′s most technology-dependent regions. San Jose, which was number one just two years ago and fell to number 61 last year, dropped 86 more places to number 147. San Francisco, another region hit hard by the tech turndown, fell 51 points to number 54 last year and dropped another 80 positions this year to 134th place.
The story of this year′s rankings is the dominance at the top of so many medium-sized cities that have seen steady growth in recent years. These include places like Anchorage, Alaska, Houma, La. and Fresno, Calif.
"With the recession and downturn in technology, the big winners this year are those regions that have seen steady growth in traditional areas such as retail and other mainstream industries," said Ross DeVol, Director of Regional Economics for the Milken Institute and author of the index. "Technology is still important, and some tech areas do very well, but it′s not how much of the current regional growth is taking place."
Another trend this year is the success of many cities where government and higher education — which are less susceptible to business cycles — play an important role in the local economy. Looking at the large metros that climbed the most in the ranking from 2002 to 2003, seven of the top 15 are state capitals. For example, Des Moines, Iowa, climbed 73 positions, from 160th to 87th, and Madison, Wis., went from 80th to 21st.
Those that dropped the most are mostly tech-oriented metros, such as Santa Cruz, Calif. (38th to 144th), Boston, Mass. (45th to 136th), and Boulder, Colo. (13th to 92nd).
On a separate list of the top 96 small metros, Iowa City, Iowa, was number one, followed by Tyler, Texas, Las Cruces, N.M., Billings, Mont., and Santa Fe, N.M.
The Best Performing Cities ranks 296 U.S. metro areas according to wage and salary growth, job growth and high-tech output growth. It measures actual performance versus future indicators of performance or subjective quality-of-life issues that some rankings include. The Institute used the most current data available in all measurement categories — primarily from the federal government — including job growth, earned income and technology output.
View Top 200 Metros ranking.
View Smaller 96 Metros ranking.