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Provo, Salt Lake City — Provo has ranked second in The Milken Institute’s annual “Best-Performing Cities” index.
The index shows that technology and energy are the biggest forces behind America’s booming cities. Austin, Texas, reclaimed the No.1 spot based on a booming technology sector. Similarly, the rest of the top five all enjoy thriving tech sectors: Provo (second, up from seventh last year); San Francisco (third, up from 36th); San Jose (fourth, down from first) and Salt Lake City (fifth, up from sixth).
“Some of the leading tech metros were successful despite being high-cost, high-regulation locations,” said Ross DeVol, chief research officer of the Milken Institute and one of the report’s authors. “Cities like San Francisco, San Jose and Cambridge, Mass., have developed R&D facilities and other infrastructure so it’s easier to innovate there.”
Provo continued a steady climb, rising five places to second this year. It recorded the highest one-year job growth among its peers in 2012 and the seventh-highest job growth over the year ending in July 2013. Software, anchored by Novell, and computer system design have led the expansion. The backbone of the tech sector is Brigham Young University.
Salt Lake City edged up one position to fifth. Its success is based on targeted recruitment of large, high-value-added firms (it lured several hundred Goldman Sachs positions) and on startups emerging from local universities. Salt Lake’s economy shows no signs of slowing with recent job growth at fourth and five-year high-tech GDP growth at 10th.
Other cities in the top tier reflect how the surging U.S. energy sector is lighting up local economies. The shale oil and gas boom thrust nine metros into the Top 25, including Houston, San Antonio and Corpus Christi in Texas, as well as Bakersfield, Calif. In North Dakota, oil production has increased by more than 400 percent from 2007 to 2012, helping place both Fargo and Bismarck in the Top 5 small cities.
In contrast, the Washington, D.C., area plummeted from fifth to 45th, marking the first time since 2008 that the capital hasn’t made the Top 25. “Washington’s recent hothouse growth, fueled by stimulus spending, finally started to cool in 2013,” says DeVol.
Among the report’s findings:
“Best-Performing Cities” shows where jobs are being created and sustained in metros across the U.S. The index includes measures of job, wage and technology performance to rank the nation’s 200 large metropolitan areas and 179 smaller metros. Unlike other “best places” rankings, it does not use quality-of-life metrics, such as commute times or housing costs. In the Institute’s index, employment growth is weighted most heavily due to its critical importance to community vitality. Wage and salary growth measures the quality of jobs created and sustained.