best performing cities 2008 milken

8/8/2019 Best Performing Cities 2008 Milken

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Where Americas Jobs Are Created and Sustained

September 2008

Best-Performing Cities 2008

Ross DeVol, Armen Bedroussian,Kevin Klowden, and Soojung Kim

PROVO-OREM, Best-Performin


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Where Americas Jobs Are Created and Sustained

September 2008Best-Performing Cities 2008

Ross DeVol, Armen Bedroussian,Kevin Klowden, and Soojung Kim


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About the Milken Institute

Te Milken Institute is an independent economic think tank whose mission is to improve the lives and economic conditionso diverse populations in the United States and around the world by helping business and public policy leaders identiy andimplement innovative ideas or creating broad-based prosperity. We put research to work with the goal o revitalizing regionsand nding new ways to generate capital or people with original ideas.

By creating ways to spread the benets o human, nancial, and social capital to as many people as possibleby democratizingcapitalwe hope to contribute to prosperity and reedom in all corners o the globe.

2008 Milken Institute

About Greenstreet Real Estate Partners

Greenstreet Real Estate Partners is an investment and asset management company operating throughout the United Statessince 1983. Its principals apply creative, entrepreneurial strategies that consistently deliver strong operating results andnancial returns. Greenstreet has developed a streamlined approach to investment with an opportunistic ocus on high-growth markets and value creation acquisitions. Greenstreets principals possess extensive experience navigating volatile and

distressed markets that uniquely positions the rm to take advantage o market turbulence. Because the rm invests theequity and capital o its principals, it can execute transactions quickly and apply its investment strategies to a diverse range oproperty types.

Greenstreets prociency in asset management is an ideal complement to its investment expertise. Trough nancialstructuring, adroit leasing strategies, renovation, repositioning, or redevelopment, Greenstreet consistently optimizes propertyvalue within its hold periods. Greenstreets asset management portolio includes more than 800 educational acilities ownedby Knowledge Learning Corporation, operating as KinderCare and Knowledge Beginnings centers. Greenstreets principalsand executive team have completed more than $15 billion in transactional volume in public and private structures.


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Executive Summary ........................................................................................................ 1

Introduction ....................................................................................................................... 5

The Biggest Gainers........................................................................................................ 9

The Biggest Losers......................................................................................................... 11

The Best-Performing Large Cities .......................................................................... 13

Americas Ten Largest Cities: Performance........................................................ 29

The Best-Performing Small Cities .......................................................................... 39

Complete Results: 2008 Best-Performing Large Cities................................ 48

Complete Results: 2008 Best-Performing Small Cities ................................ 50

References......................................................................................................................... 53

About the Authors......................................................................................................... 55

Table of Contents


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Executive Summary

Over the past decade, the Milken Institute has regularly analyzed U.S. metropolitan areas to determine which

cities are most successul at creating and sustaining jobs. Global, national, and regional economic trends arereected in the annual rankings, shedding light on where businesses are thriving or struggling, and where wagesare growing or lagging. In the Milken Institute and Greenstreet Real Estate Partners Best-Perorming Cities2008index , we see a continuation o trends that were already becoming evident in last years gures, alongwith new developments that are aecting the outlook or communities across the country.

As regional growth rates diverge, human capital shits rom areas with weaker growth to locationsexperiencing more rapid gains. Cities with large concentrations o technology rms have been perormingquite well, as have metros that are highly dependent on export-intensive industries. Rising energy priceshave hindered the perormance o cities where industries with high energy use are the key drivers, whilebeneting those regions with signicant oil and gas production and exploration activities. Faced withweaker job and wage growth, along with losses in home equity and rising commodity prices, consumers

have cut back their expenditures on discretionary items such as cars, appliances, and other durablegoodsand metros that are heavily dependent on the production o consumer durables have seen theireconomies alter.

As businesses, labor, investors, and public ofcials plan their next moves, the Best-Perorming Citiesindexprovides important benchmarks or charting a course. Te combination o long- and short-term measuresprovides an indicator o whether each city is developing a prosperous, competitive economy and a stablesociety.

National Conditions

U.S. economic growth weakened in 2007. Real GDP rose 2.1 percent in 2007, down rom the 2.9percent increase achieved in 2006, and most o that growth occurred in the early part o the year. Jobgrowth slowed to 1.1 percent in 2007, a decline rom the 1.8 percent recorded in 2006. Internationaltrade kept the economy rom experiencing an even more dramatic slowdown in 2007, as the alling dollarand continued strong economic expansion abroad produced robust gains in exports and substantiallydiminished increases in imports. Business investment in structures (and, to a lesser extent, in equipment)was strong in 2007.

Te primary culprit behind the economic slowdown was the bursting o the bubble in the housingmarket. In 2007, existing home sales dropped 13.0 percent, new home sales declined 26.0 percent,housing starts plunged by 25.0 percent, and residential xed investment ell 17.0 percent.

Economic conditions deteriorated even urther in the rst hal o 2008 under the weight o multiplechallenges: the contraction o the housing market, rising agricultural and commodity prices, oil pricesabove $120 per barrel, overall ination exceeding wage growth, a continuing credit crunch, decliningemployment gures, and consumers acing excessive debt-servicing burdens. Te U.S. economy slowed toa crawl, at best, though it is more likely that the nation actually entered a mild recession in 2008. Teseactors will urther change the patterns o economic growth around the country and will surely impactnext years rankings.

Executive Summary


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The Top 25 Best-Performing Cities

exas perormed particularly well in the 2008 index, with six cities placing in the top twenty-ve large

metros (more than any other state). Tanks to its heavy concentration o oil and gas operations, exaswas a clear beneciary o rising energy prices and renewed activity in the industry. Additionally, severalexas metros received a boost rom continued strength in technology hardware and services. While thehousing downturn has been severe in states such as Florida, Caliornia, Arizona, and Nevada, exas hasnot experienced a similar decline.

Metropolitan Statistical Area (MSA)

2008

rank

2007

rank

Provo-Orem, UT 1 8

Raleigh-Cary, NC 2 10

Salt Lake City, UT 3 18Austin-Round Rock, TX 4 20

Huntsville, AL 5 16

Wilmington, NC 6 2

McAllen-Edinburg-Mission, TX 7 7

Tacoma, WA* 8 50

Olympia, WA 9 37

Charleston-North Charleston-Summerville, SC 10 12

Orlando-Kissimmee, FL 11 5

Bakersfield, CA 12 17

Killeen-Temple-Fort Hood, TX 13 33

Lafayette, LA 14 24

San Antonio, TX 15 43

Houston-Sugar Land-Baytown, TX 16 32

Seattle-Bellevue-Everett, WA* 17 77Ogden-Clearfield, UT 18 42

Myrtle Beach-North Myrtle Beach-Conway, SC 19 11

Greeley, CO 20 29

Durham, NC 21 74

Nashville-Davidson-Murfreesboro-Franklin, TN 22 61

Dallas-Plano-Irving, TX* 23 59

Savannah, GA 24 34

Des Moines-West Des Moines, IA 25 58*Indicates Metropolitan Division

Source : Milken Institute

Table 1. Best-performing cities: top twenty-five large metrosRank in 2008 index

All three o Utahs largest metros ranked among the nations top twenty-ve perormers. In act, Utah

claimed two o the top three spots in the index, and Provo-Orem emerged as the best-perorming city o2008. wo other states, North Carolina and Washington, placed three metros among the top twenty-ve.Most o these cities witnessed strong growth in their technology industries. All the technology centers inthe top echelon improved their ranking rom last year. South Carolina was the only other state with morethan one metro in the top twenty-ve.

Te South had sixteen metros among the top twenty-ve in the nation, surpassing last years perormanceby one despite the allo experienced in Florida. Te West had eight metros in the top tier. (Only oneCaliornia metro, Bakersfeld, remains on the list.)

Executive Summary


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Te most improved metro, El Paso, Texas, climbed an impressive eighty-ve spots to place 37th overall.El Paso saw a boost in economic activity due to a major expansion o the U.S. Army base at Fort Blissunder the Pentagons Base Realignment and Closure (BRAC) program. Nearly 21,000 soldiers are

expected to transer rom other bases, with more than 7,000 having already arrived so ar.

The Best-Performing Small City

Midland, Texas, was the best perormer among the 124 small cities in our 2008 index, improving romlast years 3rd-place nish. (Note that last years small-city index ranked 179 metros.) In our one-yearindicator or job growth, which covers 2006 to 2007, employment increased by 4.3 percent in thisregion, outpacing the national average by 3.2 percentage points. Oileld servicesincluding the drillingo oil and gas wells and oil and gas operationsprovide almost 6,900 jobs (or 10.4 percent o total jobsin Midland); this industry recorded an 11.3 percent average annual increase between 2002 and 2007.

Executive Summary


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Introduction

Te Best-Perorming Citiesindexwas designed to measure which U.S. metropolitan areas are most

successul in terms o job creation and retention, the quality o jobs being produced, and overalleconomic perormance. Specically, it pinpoints where jobs are being created and maintained, wherewages and salaries are increasing, and where economies and businesses are growing and thriving.

Te index allows businesses, industry associations, economic development agencies, investors, academics,and government and public policy groups to assess, monitor, and gain insight into each metros relativeperormance. It also provides benchmarking data that can be used in developing strategies to improveand maintain a metros economic perormance. Moreover, it is a tool or understanding consumer andbusiness expansion opportunities. In todays economic slowdown, it helps determine which regionalmarkets may have the lowest risk. Te 2008 index applies the methodology used in previous indexes.

Te index employs geographic terms used by the Ofce o Management and Budget (OMB), which in

turn uses data rom the 2000 Census. Te OMB denes a metropolitan statistical area (MSA) as a regiongenerally consisting o a large population nucleus and adjacent territory with a high degree o economicand social integration, as measured by community ties.1 Using these parameters, the agency identies 361metropolitan statistical areas. County population growth accounts or the creation o new MSAs.

I specic criteria are met, an MSA with a single nucleus and a population o 2.5 million or more isurther divided into geographic areas called metropolitan divisions. Tere are currently twenty-ninemetropolitan divisions. For example, two metropolitan divisions (Dallas-Plano-Irving and Fort WorthArlington) make up the DallasFort WorthArlington MSA. We include the smaller metropolitandivisions in the index to reect more accurate geographic growth patterns.

Outcomes-Based, Not Cost-Based

Te components shown in the ollowing table are used to calculate our index rankings. Te indexmeasures growth in jobs, wages and salaries, and technology output over a ve-year span (20022007)to adjust or extreme variations in business cycles. It also incorporates the latest years perormance inthese areas. Lastly, it includes the latest twelve-month job growth perormance (March 2007 to March2008) to capture the relative recent momentum among metropolitan economies.2 Employment growth isweighted most heavily in the index because o its critical importance in determining community vitality.Wage and salary growth measures the quality o the jobs being created and sustained. echnology outputgrowth is also an important element in determining the economic vibrancy o cities.

We have incorporated other measures to reect the concentration and diversity o technology industries

within the MSAs. High-tech location quotients (LQs, which measure the concentration o thetechnology industry in a particular metro relative to the national average) are included to indicate ametros participation in the knowledge-based economy.3 We also measure the number o specic high-tech industries (out o a possible twenty-ve) whose concentrations in an MSA are higher than thenational average.

Te Best-Perorming Citiesindexis solely an outcomes-based measure. It does not incorporate explicitinput measures (such as business costs; cost-o-living components, such as housing; and other quality-o-lie measures, such as commute times or crime rates). Static input measures, although important,

Introduction


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are subject to large variations and can be highly subjective, making them less meaningul than moreobjective indicators o outcome.

Businesses choose to locate in particular areas or various reasons. Some, or instance, opt to remain in high-cost cities despite the availability o lower-cost locations. Te output measures used or this index includethe benets o situating in expensive locations. Teoretically, a prospering region will raise wages and rentsas its businesses tap into more human capital and available space. Nevertheless, holding all other actorsconstant (such as the productivity associated with being in one location versus another), a company willgenerally choose to locate where business costs are lower and employees enjoy higher living standards.

Component Weight

Job growth (I=2002) 0.143

Job growth (I=2006) 0.143Wage and salary growth (I=2001) 0.143

Wage and salary growth (I=2005) 0.143

Short-term job growth (Mar 07-Mar 08) 0.143

Relative high-tech GDP growth (I=2002) 0.071

Relative high-tech GDP growth (I=2006) 0.071

High-tech GDP location quotient 0.071

Number of high-tech GDP LQ>1 0.071Note: I refers to the beginning year ofthe index.Source : Milken Institute

Table 2. Components of the Best-Performing Cities index

National Economic Conditions

Te U.S. economy slowed substantially in 2007 and may have entered a recession by year-end. Real GDProse 2.1 percent in 2007, down rom the 2.9 percent increase in 2006, and most o that growth occurredearlier in the year. Job growth was 1.1 percent in 2007, a decline rom the 1.8 percent recorded in 2006.International trade kept the economy rom experiencing an even more dramatic slowdown in 2007 as aalling dollar and continued strong economic expansion abroad resulted in robust gains in exports andsubstantially diminished increases in imports. Business investment in structures was strong in 2007, aswas (to a lesser extent) investment in equipment.

Just as the end o the dot-com and technology bubble sparked the 2001 recession, today it is thebursting o the housing bubble that has precipitated a decline in economic activity.4 Te correction in

housing started to unold in 2006, with residential xed investment spending alling by 4.6 percent.Te correction accelerated in 2007, with existing home sales dropping by 13.0 percent, new home salesdeclining by 26.0 percent, housing starts plunging by 25.0 percent, and residential xed investmentalling another 17.0 percent. As the initial teaser rates on adjustable-rate mortgages (ARMs) reset andhousing prices plummet, oreclosure rates are skyrocketing, urther weakening prices. Many homes werepurchased with little or no down payment, and due to alling home prices, their loan-to-value ratiosare over 100, making it difcult or homeowners to renance mortgages. Housing market activity willcontract by an even greater percentage in 2008 and is unlikely to bottom out until sometime in 2009.Tis will cause dramatically disparate impacts on metros around the country.

Best-Performing Cities 2008Introduction


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Rising energy prices, especially in oil and rened petroleum products, is another strong headwind thatslowed economic growth in late 2007 and has taken a major toll in 2008. As higher crude prices lterinto downstream prices or gasoline, jet uel, home heating oil, and other rened-petroleum products,

energy costs are eating up a greater share o household income. Tis has orced consumers to cutpurchases o discretionary items such as autos, urniture, appliances, and other durable goods. Higherenergy prices have also harmed energy-intensive industries, such as airlines and chemical producers.Metros with a high concentration o energy-reliant industries have been harmed. On the other hand,metros with signicant oil and gas production and exploration activities have seen higher energy pricesacting as a stimulus.

Exports o goods and services were the strongest segment o the U.S. economy in 2007. Real exportso goods and services rose by 8.1 percent in 2007, a minor decrease rom the 8.4 percent gain o 2006.Rapid growth in exports has mitigated the impact o declining domestic sales o manuactured goods.Metros with high concentrations o exporters have beneted rom rising international demand or U.S.products.

U.S. economic conditions deteriorated even urther in the rst hal o 2008, as growth slowed to a crawl(at best) or, more likely, a mild recession took hold. Multiple challenges converged simultaneously: thecontinued contraction o the housing market, rising agricultural and commodity prices, a sharp spike inoil prices, overall ination exceeding wage growth, a continuing credit crunch, declining employmentgures, and a consumer increasingly squeezed by excessive debt-servicing burdens. Tese actors willurther impact the patterns o economic growth around the country in the months to come and willsurely impact next years rankings.

Introduction


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The Biggest Gainers

Te biggest gainers on the 2008 Best-Perorming Citiesindex rose or a variety o reasons, but they do

share some commonalities. Te majority o these metros didnt experience a drastic housing-price bubbleand an overbuilt market, so they havent seen a major correction in new home construction and theattendant loss o construction employment, along with the ripple eects on their economies. Some havebeneted rom increased energy-related activity, while others improved due to the continued strength inthe technology sector. Several rose courtesy o more aircrat production activity over the past couple oyears. Metros dependent on industries producing rising exports have improved in the rankings, courtesyo a depreciating dollar. Upward revisions to previous job gain estimates were reported in many o thesemetros as well.

Te most-improved metro, El Paso, Texas, climbed an impressive eighty-ve spots to place 37th overall.El Paso saw a boost in economic activity due to a major expansion o the U.S. Army base at Fort Blissunder the Pentagons Base Realignment and Closure (BRAC) program. Nearly 21,000 soldiers are

expected to transer rom other bases, with more than 7,000 having already arrived so ar.5


2008

rank

2007

rank

Spots

climbed

El Paso, TX 37 122 +85

Asheville, NC 46 117 +71

Wichita, KS 45 114 +69

Shreveport-Bossier City, LA 67 131 +64

New York-White Plains-Wayne, NY-NJ* 85 148 +63

Denver-Aurora, CO 44 106 +62Seattle-Bellevue-Everett, WA* 17 77 +60

Oklahoma City, OK 50 108 +58

Durham, NC 21 74 +53

Greenville-Mauldin-Easley, SC 68 121 +53

Syracuse, NY 127 174 +47

Spokane, WA 35 81 +46

Nassau-Suffolk, NY* 96 139 +43

Tacoma, WA* 8 50 +42

Bridgeport-Stamford-Norwalk, CT 93 135 +42

Augusta-Richmond County, GA-SC 121 163 +42

Amarillo, TX 49 89 +40

Pittsburgh, PA 136 176 +40

Nashville-Davidson-Murfreesboro-Franklin, TN 22 61 +39

Lynchburg, VA 71 110 +39Kansas City, MO-KS 77 116 +39

Indianapolis-Carmel, IN 81 120 +39*Indicates Metropolitan Division

Table 3. Biggest gainersChange in rankings


The Biggest Gainers


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The Biggest Losers

Most o the metros experiencing the most precipitous declines in the 2008 rankings were the epicenters

o the housing decline. Many experienced a rise in home sales and prices ar in excess o the underlyingundamentals earlier this decade. Some had a high share o sub-prime mortgage loan issuance over thepast several years, and as interest rates on ARMs adjusted higher, delinquency and oreclosure rates soared.Housing prices have plummeted in the majority o these markets and new home construction has groundto a halt. Additionally, several had a high concentration o mortgage originators and have experienceda dramatic decline in nancial services employment. Tirteen out o the twenty biggest decliners are inFlorida, Caliornia, or Nevada, reecting the severity o the housing downturn in those markets.

Vallejo-Fairfeld, Caliornia, saw the biggest plunge, alling a precipitous 123 spots to 145th. Tismetro area has taken one o the hardest hits in the nation rom recent housing woes. Te economicand nancial consequences have been so severe, in act, that the city o Vallejo was orced to declarebankruptcy.

Table 4. Biggest losersChange in rankings


2008

rank

2007

rank

Spots

down

321-22541AC,dleifriaF-ojellaV

311-72041AC,arutneV-skaOdnasuohT-dranxO

701-62331VN,skrapS-oneR

701-31021LF,sreyMtroF-laroCepaC

77-638LF,dnalsIocraM-selpaN

27-78951YN,nwotelddiM-hgrubweN-eispeekhguoP

07-8289LF,nevaHretniW-dnalekaL

96-63501*LF,hcaeBnotnyoB-notaRacoB-hcaeBmlaPtseW

66-957VN,esidaraP-sageVsaL

26-0329LF,hcaeBdnomrO-hcaeBanotyaD-anotleD

75-94601*AC,enivrI-miehanA-anAatnaS

65-84401LF,ellivsutiT-enruobleM-yaBmlaP

45-421871*JN-DM-ED,notgnimliW

45-0449IH,ululonoH

05-335AC,oiratnO-onidranreBnaS-edisreviR

94-101051LA,revooH-mahgnimriB

74-511261AC,otsedoM

74-26901*JN,nedmaC

64-65201AV,dnomhciR

14-17211VW-DM,grubsnitraM-nwotsregaH*Indicates Metropolitan Division


The Biggest Losers


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rising by an average o 15.8 percent over the last ve years. Construction generated more than 25 percento all jobs created in 2006 and 2007. A retrenchment in new home construction will reduce uture jobgrowth in Provo-Orem, but national business investment in inormation and communication technology

remains airly strong despite the economic downturn and should mitigate the extent o the slowdown inProvo-Orem.

Raleigh-Cary, North Carolina, leapt to 2nd place this year, up rom 10th in last years rankings. At 5.5percent, its job growth was 2nd in the nation in 2007. Despite some slowing this year, job growth overthe twelve-month period rom March 2007 to March 2008 was 1st in the nation at 3.6 percent. Likemany tech centers, its economy took a hit in the national tech implosion o 2001; however, Raleigh-Carys technology sectors have recovered and aided economic expansion. Proessional and businessservices have witnessed robust growth, and state government employment provides some stability. Stellareconomic growth was reinorced by high net migration, which rose to an estimated 36,000 in 2007.

Figure 2. Professional, scientific, and technical servicesRaleigh-Cary vs. United States

2007200620052004200320022001

10.0

8.0

6.0

4.0

2.0

0.0

-2.0

-4.0

Jobs, percent change from preceding year

Sources: Moody's Economy.com, Milken Institute

Raleigh-CaryUnited States

Raleigh-Cary has developed into one o the premier technology clusters in the nation. op-notchuniversities (North Carolina State and the University o North Carolina, Chapel Hill) serve as researchanchors and provide high-quality talent at moderate wage levels relative to other U.S. tech centers.8 Terelatively low cost o living is a major recruiting advantage or the area. Universities and other researchcenters interact with the business community to orm a closely integrated network that aids economicdevelopment. IBM has a major presence in the area, employing more than 13,000 workers.9 SASInstitute, the statistical sotware giant, is also headquartered here, while Red Hat is another major player.Te biopharmaceutical sector has been growing, with GlaxoSmithKline being the largest employer inthis eld. Overall, the region is more than 50 percent more dependent on the high-tech sector than thenational average. Te high knowledge content o the regions economy is reected in per capita incomeroughly $4,000 above the average or North Carolina as a whole. Raleigh-Cary wont escape the nationalhousing market correction, but it should avoid the steep declines in new construction activity and pricesthat other areas will experience.

The Best-Performing Large Cities


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Salt Lake City, Utah, improved to take the 3rd spotthis year, rising teen places rom its 2007 ranking.While it lands in the top ve in only one o the individual components that comprise the index, it consistentlyachieves upper-tier ranking. As with the top two metros, the high-tech sector played a role in propelling

Salt Lake City up the list, but in this case, energy operations actored into the outcome as well. Computersystems and related design is an important driver o economic growth in the areas economy. Salt LakeCity has become an important regional nancial center, with Zions Bancorporation employing 9,500and Discover Financial Services basing major operations in the area.10

Figure 3. Computer systems design and related servicesSalt Lake City vs. United States

2007200620052004200320022001

20.0

10.0

0.0

-10.0

-20.0



Salt Lake CityUnited States

Health care is an important component o the areas economy; Intermountain Health Care employsmore than 27,000 workers.11 Te University o Utah is an important player in medical research, and thestate has supported commercialization activities through its Centers o Excellence program unding. Testate government is the largest employerand while many state capitals are experiencing severe budgetshortalls, Utahs nances have been managed in a scally prudent manner. Tis should allow Salt LakeCity to avoid cutbacks in government employment. ravel and tourism activity is another vital sector orthe areas economy. Te local housing sector is slowing, with building permits running at approximatelyone-hal their peak level in 2005. Nevertheless, strong export markets and continued high levels obusiness investment in inormation technology leave Salt Lake City well positioned relative to other areaso the nation.



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AustinRound Rock, Texas, a thriving example o a 21st-century knowledge-based community, soarssixteen places rom last years ranking to stand at 4th overall in 2008. Its economy has recently gainedorward momentum as evidenced by two job growth indicators: one showing growth rom 2006 to 2007

and another measuring the twelve months rom March 2007 to March 2008. Austin placed 4th in thenation in both o these categories, while its ve-year job growth ranking rom 2002 to 2007 was 21st.

AustinRound Rock ranks 10th in the nation in terms o the importance o the high-tech sector to itslocal economy. Among high-tech industries, its highest concentration is in computer and electronicproduct manuacturing; it is our-and-a-hal times more dependent on this sector than the nationoverall. Dell is the major computer manuacturer, along with IBM; electronic component rms AppliedMaterials, Advanced Micro Devices, Flextronics, Samsung Austin Semiconductor, and others play amajor role in the areas economy.12 Even Google recently announced that it chose Austin or the site o anew satellite sotware engineering ofce that will be home to some 100 engineers.13 With the Universityo exas, Austin, producing high-quality science and engineering graduates, and the relative attractivenesso the area to talent rom other parts o country, many tech rms have established operations. GovernorPerry is even pushing harder or U-Austin to create more start-up rms and include commercializationo research as a criterion in granting tenure.

Figure 4. Computer and electronic product manufacturingAustin-Round Rock vs. United States

2007200620052004200320022001

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

Percent share of total employment


Austin-Round RockUnited States

Te Austin economy isnt built on high tech alone, but is based on a diverse group o industries. A wide

array o proessional and business services provide high-paying jobs to the areas residents. Austin is wellknown or its music scene, and its economy has a related travel and tourism component. New residentsar outnumber those who leave the area; Austins net migration total was more than 48,000 in 2007. Tiscauses a ripple eect in new home construction and related retail and other non-residential construction.Additionally, Austins role as the state capital positions state and local government as the largest employer.While the area wont escape the national slowdown, it is poised to remain among the top perormers.



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Huntsville, Alabama, climbs to 5th place this year, an improvement o eleven spots rom last yearsranking. Te Huntsville economy is among the most dependent on high-tech industries in the country,ranking 7th overall; the area is more than twice as tied to the sector as the nation overall. Computer and

electronic product manuacturing has the highest concentration o any industry in the metro, closelyollowed by transportation equipment manuacturing. Government employment is the third mostconcentrated in Huntsville, closely ollowed by another tech sector: proessional, scientic, and technicalservices. NASAs Marshall Space Flight Center is an important anchor or the area and will play a vitalrole in mankinds return to the moon on theAres 1.14 Many aerospace contractors are establishing orexpanding operations in hopes o securing additional work on the program. Aerospace giants Boeing andNorthrop Grumman have an important presence in the metro area.

Figure 5. Professional, scientific, and technical servicesHuntsville vs. United States

2007200620052004200320022001

16.0

14.0

12.0

10.0

8.0

6.0

4.0

Percent share of total employment


HuntsvilleUnited States

Te Redstone Arsenal, a major U.S. Army post, will benet rom the Pentagons Base Realignmentand Closure (BRAC) program over the next several years. Te Army Space Missile Deense Commandrecently completed its move rom Arlington, Virginia,15 and the Missile Deense Agency is slated torelocate more than 2,200 employees here over the next couple o years. Huntsville is also beginningto establish new growth in the lie sciences as the HudsonAlpha Institute or Biotechnology openedits doors late last year. Strong service sector growth has resulted in gains in consumer spending. Newofce construction has been driven by all o the business expansion activity; residential construction hasincreased demand or workers, but the number o permits has recently allen o. Nevertheless, Huntsvilleseems well-positioned or continued growth despite the national contraction.

Wilmington, North Carolina, ranks 6th this year, slipping just our slots rom 2007. Although itsmomentum has been slowing in recent months, the metro has recorded job growth rates that are amongthe highest in the nation. Wilmington was 8th in job growth measured over the last ve years and 5th in2007 alone, but ailed to place in the top orty or job growth as measured over the twelve months endingin March 2008. Increased port activity and the associated logistical support inrastructure have been asignicant source o growth. A new, deeper channel has allowed the port to handle larger container ships



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and establish a new shipping service with closer ties to Asia. Easy rail and interstate reeway access hasmade the area an important distribution center or big box retailers.16 Te tourism sector is another keydriver or Wilmington: Scenic and sightseeing transportation is the most concentrated industry in the

areas economy, while ull-service restaurants and limited-service eating places are the second- and third-largest employers ater state and local government.

Job growth in proessional and business services has bolstered the areas economy. Development ofcialshave adopted a strategy o growing knowledge-intensive industries that will diversiy the local economyand improve per capita incomes.17 In support o that eort, Verizon Wireless has been expandingoperations and now employs more than 1,200 workers. Over the past ve years, telecommunicationsemployment has risen by an annual average rate o 23.9 percent. Te revival o the nuclear energyindustry is creating opportunities or the regions economy, too. GE Energy is consolidating many o itsdesign operations in Wilmington. Rapid employment and population growth, along with strong demandor second homes, supported a high level o home construction, but Wilmingtons housing market isslowing and will remove this sector as a source o economic growth.

Figure 6. Jobs in wireless telecommunications carriers*Wilmington vs. United States

2007200620052004200320022001

120

100

80

60

40

20

0

-20

Percent change from preceding year


*Excluding satellite

Wilmington

United States

McAllen-Edinburg-Mission, Texas, is holding steady in 7th place, retaining the same ranking it receivedlast year. Although it has slipped somewhat in recent months, the metros job growth remains amongthe strongest in the nation. McAllen had the 3rd-highest job growth on a ve-year basis, while the mostrecent data one-year job momentum indicator places it 10th in the nation. Its economy is closely linked

to its sister metro across the border, Reynosa, Mexico.18 Burgeoning trade activity with Maquiladoraacilities has allowed the area to become a key distribution/logistic center. For example, increased U.S.-Mexican trade through McAllen is reected in the 14.4 percent annual average increase over the past veyears in truck transportation employment. Declining demand rom the Big Tree automakers due toweak sales has reduced imports o parts rom Maquiladora plants.



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Another key source o growth has been new call centers. Converges and -Mobile have establishedoperations in the area.19 Nearly 1,200 jobs have been created in telecommunications services over the pastve years, an average annual growth rate o 29.4 percent. Te area has become a regional health services

center with a strong position in home health care, now the second largest employment sector ater stateand local government. Health services provide a relatively stable source o job growth. McAllen hasdeveloped a major presence in retail trade, serving many consumers south o the border.

Tacoma, Washington, leaps to 8th place, moving up rom last years ranking o 50th. Te area hasenjoyed stable employment growth, coming in slightly above 3.0 percent or the period measured in ourve-year indicator. Although its housing and business costs are close to the national average, they areinexpensive relative to nearby Seattle. Low housing costs have attracted many young amilies, includingproessionals who work in Seattle. As more proessionals move into the area, rms have opened ofcesto tap into the labor pool.20 For example, Intel employs 1,100 in the metro division. Data processing,

hosting, and related services enjoyed average annual job growth o 17.2 percent over the past ve years.

Figure 7. Job growthTacoma vs. United States

2007200620052004200320022001

4.0

3.0

2.0

1.0

0.0

-1.0

-2.0



TacomaUnited States

International trade plays an important role in the areas economy as well. Te Port o acoma specializesin inbound containers rom Asia and has beneted rom capacity constraints at the ports o Los Angelesand Long Beach. Its largest exports are wood products and apples. Te industry category o support

activities or transportation has the highest concentration o employment in the metro economy, andmany other transportation-related categories rank among the leaders. Te military also has a largepresence in the acoma economy. Te U.S. Army base at Fort Lewis is the largest employer, with 37,000soldiers and workers; along with McChord Air Force Base, it provides a steady source o demand.21 Aslowdown in construction activity will curtail growth in the local economy, but nevertheless, acomashould remain among the best perormers in the country.



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Olympia, Washington, joins its neighbor acoma on the list o the nations top ten best perormers,ranking 9th this year. In previous years Olympia was categorized as a small metro, but steadyemployment and population growth have pushed it onto the list o the 200 largest metro areas. Because

it is the capital o Washington, state and local government is the key driver o Olympias economy. Stateand local government employs 36,200 workers, which is nearly 36.0 percent o total employment in theregion. Since Washingtons economy has seen brisk growth in recent years, Olympias state governmenthas beneted rom this largesse. Te current state budget gap will curtail growth in this sector, but isunlikely to cause a decline in overall economic activity in the area.

Business and housing costs are low relative to nearby Seattle, and Olympia has probably beneted evenmore than acoma rom this cost advantage.22 Olympia has been gaining more residents rom acomaand Seattle than it has lost, with net migration estimated at over 4,300 in 2007. Tis population growthhas resulted in airly strong housing construction. Inormation services have been the astest-growingjob sector over the past ve years, with average annual growth o 38.0 percent. Te main limit on long-term economic growth is the absence o large private-sector employers. Nevertheless, as other metroareas experience signicant declines due to the deterioration o ormerly high-ying housing markets,Olympias government sector should immunize it rom a similar ate.

2007200620052004200320022001

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20.0

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-10.0

-20.0



Figure 8. Information services employmentOlympia vs. United States

OlympiaUnited States



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CharlestonNorth CharlestonSummerville, South Carolina, moves up two places to rank 10ththis year. ourism has been a catalyst o job creation or the regional economy, as increasing numberso tourists rom the Northeast and Midwest have been drawn here to discover Charlestons history,

architecture, and rich cultural scene. Although it has recently experienced slower growth in inboundcargo due to the low value o the dollar and the national economic contraction, the Port o Charlestonhas witnessed remarkable growth in recent years. It is consistently ranked among the most efcient portsin North America. A large transportation/logistics industry has developed, supporting thousands o jobsin the regional economy.

Another key source o growth is its expanding aerospace manuacturing sector, with specializations inadvanced composite materials, precision metal parts, and systems integration. Dupont is building a $500million Kevlar production acility as commercial aircrat producers are turning to Kevlar as a lightweightsubstitute or aluminum.23 Employment in data processing, hosting, and related services has achievedaverage annual growth o 10.9 percent over the past ve years. Te health-care industry, anchored by theMedical University o South Carolina, is an important component o the economy, while biosciences area target or investment as the sector attempts to leverage its medical research assets.

Figure 9. Aerospace product and parts manufacturingCharleston-North Charleston-Summerville vs. U.S.

2007200620052004200320022001

40.0

30.0

20.0

10.0

0.0

-10.0

-20.0

-30.0



Charleston-North Charleston-SummervilleUnited States

Even as the housing downturn worsened throughout 2007, Orlando-Kissimmee, Florida, maintained astrong showing, coming in at 11th overall. Although it dropped six places rom its ranking in last yearsindex, it has consistently achieved high growth. otal employment and wages in the metro area have

grown 15.0 and 17.0 percentage points, respectively, above the national average in the period examinedin our ve-year indicators. Orlando-Kissimmees emerging health-care cluster is broadening the areasindustry base. Te development o the Burnham Institute or Medical Research and a new medical schoolbased at the University o Central Florida will expand the industrys R&D capacity and attract morehigh-tech rms to the area. Recently approved plans or the Nemours Childrens Hospital Orlando willurther enhance the metros growing health-care sector.24 In the last year alone, roughly 4,000 jobs wereadded to this sector.



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Growth in recent months has been suppressed by the real-estate market, as high oreclosure rates anda dearth o buyers have sent inventories soaring. Tis has placed a damper on construction activity;employment in the industry declined 7.0 percent between 2006 and 2007. Additionally, weakness in

the national economy has strained the areas leisure and hospitality sector, the primary driver o growthin the region. But the negative impacts on Orlandos tourism industry may be oset by an inux ointernational travelers, who can take advantage o the weaker U.S. dollar to enjoy the areas resorts andtheme parks at bargain prices.

Bakersfeld, Caliornia, gained some ground, moving up rom 17th to 12thplace in this years index.Over the last ew years, the metros growth has been ignited by housing and a burgeoning population. Asa result, the metro has beneted rom increased demand or services such as education and health care.Natural resources such as oilelds have created opportunities or growth. Te mining and petroleummanuacturing industries in particular have been largely responsible or the underlying growth in the

region. otal non-arm employment and wages grew 10.0 and 14.0 percentage points aster, respectively,than the national average in the ve-year span we examined. Administrative and support services alongwith ood and drinking places added 6,300 jobs between 2002 and 2007, a period that still reectedsome o the positive ripple eects rom the housing boom. oday, however, Bakerseld is being hit hardby the housing crisis, posting one o the nations highest oreclosure rates. Te same industries that drovegrowth in the past ew years are now bracing or deterioration.

Figure 10. Non-farm employmentBakersfield vs. United States

2007200620052004200320022001

6.0

4.0

2.0

0.0

-2.0



Bakersfield

United States

In the long term, Bakerseld will rely on its strategic location between northern and southern Caliorniaand its proximity to Nevada, actors that will continue to support its transportation and logistics sector.Te presence and operations o Edwards Air Base and Chevron will help stabilize the metros economyduring the downturn.25



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Killeen-TempleFort Hood, Texas, moved sharply higher in this years index, rising rom 33rd to 13thplace. Wages and salaries grew by 5.0 percentage points above the national average between 2005 and2006. Te strong military presence in Fort Hood has been the primary driver o growth in the area.26

Killeens solid perormance also reects the act that it has not been as severely aected by the housingdownturn as most metros in the nation, sparing the area rom urther ripple eects in related industries.In act, most sectors in the metro area have experienced growth in the past ew years. Proessional,business, and scientic services grew by an average o 6.0 percent annually in the ve-year period weexamined, adding more than 1,200 jobs. elecommunications employment grew by 14.0 percent averageannually (creating nearly 800 jobs) in the same period, driving high-tech output growth in Killeen to10th highest in the nation. Te areas low cost o doing business has provided incentives or rms innearby larger cities.

Te biggest gainer in last years index, Laayette, Louisiana, improved its position by another ten spots

to claim 14th place this year. Last years dramatic climb was largely attributable to the population inuxo hurricane evacuees. Tis sharp growth in population consequently led to increased demand in variousservice-driven industries. With the current housing crisis and slowdown in related sectors o the economy,growth in the metro has begun to subside. Interestingly, a shortage in health-care and education serviceshas led to a dramatic increase in wages and salaries in those industries.27 Between 2005 and 2006, overallwages and salaries in the metro experienced the astest increase in the nation, growing 8.0 percentagepoints above the U.S. average.

2007200620052004200320022001

3.0

2.5

2.0

1.5

1.0

0.5

0.0



Figure 11. Population growthLafayette vs. United States

Lafayette

United States

Energy exploration in the nearby Gul o Mexico will continue to support local manuacturing andmining industries, helping to mitigate some losses in other sectors. Machinery and abricated metalproduct manuacturing added more than 600 jobs in the last year, while support or mining generatedan additional 1,000 workers. Tese sectors have contributed to overall job growth o 2.8 percent in thetwelve months ending with March 2008.



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San Antonio, Texas, climbed twenty-eight spots in this years ranking to place 15th. Te indicator orrecent job momentum (comparing March 2007 and March 2008) shows robust growth o 2.3 percent.It appears that the metros housing market has been relatively stable as compared to other parts o the

country. Construction employment actually increased by 4.5 percent between 2006 and 2007, and ianything, a strong military presence and proposed renovations and modernizations within the local baseswill help to sustain employment in the industry. Te presence o a oyota plant has positively contributedto the transportation equipment manuacturing industry, which has generated more than 4,000 jobs inthe last ve years (an average increase o 14.0 percent annually). Proposed deense spending will generateadditional economic activity in the metro and help sustain viable growth in the long run.28

Anotherexas metro, HoustonSugar LandBaytown, has climbed up in the rankings, rising rom32nd to 16th place. Among the nine measures used to compile the overall index, Houstons most recentjob momentum perormance (comparing March 2007 and March 2008) was most notable. Te metro

area expanded its job base by a whopping 3.2 percent, the second-largest increase in the nation. Teindicators or one-year job and wage growth also showed robust gains, rising 3.0 and 4.0 percentagepoints aster, respectively, than the national averages. Opportunities stemming rom the energy industry,specically with respect to oil exploration in the Gul, have been a key engine or growth. Industriessupporting oil exploration have also been perorming well. Heavy and civil engineering constructionrecorded an increase o 5,700 jobs, while specialty trade contractors added another 7,800 jobs in theone-year indicator we examined (20062007). Support activities or mining also contributed 3,700 jobs.In terms o high-tech, machinery manuacturing grew 5.0 percent between 2006 and 2007, generating3,800 high-paying jobs. Te presence o key players in the region (namely Exxon-Mobil, Shell, Chevron,and BP) will help sustain the industrys growth.29

Figure 12. Mining, quarrying, and oil and gas extractionHouston-Sugar Land-Baytown vs. United States

2007200620052004200320022001

15.0

10.0

5.0

0.0

-5.0

Employment, percent change from preceding year


Houston-Sugar Land-Baytown

United States



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Te metro division oSeattle-Bellevue-Everett, Washington,jumped an impressive sixty spots toclaim 17th place in this years index. Te indicator or recent job momentum (comparing March 2007with March 2008) showed a healthy 2.0 percent employment growth. ransportation equipment

manuacturing, which encompasses the aerospace sector, was responsible or generating 5,600 o the jobsmeasured in our indicator or one-year growth between 2006 and 2007. In the same period, proessionalR&D services added another 6,200 jobs. Most o the growth can be attributed to the vast presence oBoeing and Microsot (and the secondary impacts o these two behemoths throughout the region).Increased global demand or more uel-efcient commercial aircrat has sweetened Boeings outlook.30Te metros high-tech sector produces 1.3 times the national average or output. In addition, this sectordepends on highly skilled labor, resulting in above-average wagesso it is no surprise that the indicatoror one-year growth in wages and salaries was 3.2 percentage points above the national average.

2007200620052004200320022001

15.0

10.0

5.0

0.0

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-10.0

-15.0



Figure 13. Transportation equipment manufacturing jobsSeattle-Bellevue-Everett vs. United States

Seattle-Bellevue-EverettUnited States

Ogden-Clearfeld, Utah, moved up rom42nd to 18th place in the rankings. Te indicator or ve-year job growth between 2002 and 2007 shows the metro area outpacing the national average by 7.4percentage points. Although it has since slowed, the construction industry grew by more than 10 percentbetween 2006 and 2007. Strong population growth in the area has helped uel demand across consumer-driven industries. Ambulatory health care and administrative and support industries together addedroughly 5,000 jobs in the period encompassed by our ve-year indicator. Proessional, scientic, andtechnical services added another 2,600 jobs. Te debut o a new rail line between Salt Lake and Ogden in2008 will help support uture economic activity.31 In addition, Ogdens Hills Air Force Base has served asan important driver or the metros emerging aerospace industry.

Although it dropped eight spots, Myrtle BeachNorth Myrtle BeachConway, South Carolina,managed to maintain a solid position in 19th place. Overall job growth in the ve-year period examinedin our indicators outstripped the national average by more than 15 percentage points. Contributing tothat growth was the metros leisure and hospitality sector, which posted 6.6 percent growth between 2006and 2007 alone. Plans or an airport expansion are currently underway to accommodate both residents



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and leisure travelers.32 In the past ew years, a booming population (driven in part by an increasingnumber o retirees who choose to settle here) has helped to maintain a robust service economy. Ourindicator or ve-year employment growth shows that accommodations and ood services added more

than 6,700 jobs between 2002 and 2007. Another 2,100 jobs were added in administrative and supportservices during the same period.

Greeley, Colorado, improved by nine positions to rank 20th in this years index. Te areas low cost oliving has provided a more aordable alternative to residents in nearby metros. With a healthy populationinux in the last ew years, Greeleys overall employment base rose 2.5 percent rom March 2007 toMarch 2008. Vestas Wind Systems, a manuacturer o wind turbines, will give a urther boost to the areashigh-tech industry base, as it expects to add another 700 jobs.33 In act, high-tech output in the metrogrew 2.7 percentage points aster than the national average. Plastic and rubber manuacturing has grownby 12.2 percent on an average annual basis over the ve-year period we examined, while proessional,

scientic, and technical services added over 600 jobs during that same time rame.

Rising by a substantial ty-three spots in this years index, Durham, North Carolina, ranks 21st overall.Our indicator or recent job momentum shows that total employment grew 2.3 percent between March2007 and March 2008. In 2007, Durhams high-tech output was 2.2 times the national average. Inaddition, the metro area (which is part o the Research riangle) is home to a diverse set o high-techindustries, thanks to key players such as Duke University, IBM, and GlaxoSmithKline.34 Durhams economyhas witnessed an expansion in the last ew years. Between 2002 and 2007 (the period covered in our ve-year job growth indicator), ambulatory health-care hospital services created more than 5,200 jobs, whileeducation services added another 3,600 jobs. Perhaps the most signicant expansion came rom the public

sector, as government created more than 4,300 jobs in the metro area. Te regions strength in high tech,particularly in the lie sciences, brightens its prospects or long-term economic prosperity.

2007200620052004200320022001

4.0

3.0

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0.0



Figure 14. Government employmentDurham vs. United States

DurhamUnited States



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Nashville-Davidson-Murreesboro-Franklin, Tennessee, made solid strides rom last years ranking toclaim the 22nd spot overall. Strong migration trends have contributed to population growth year-over-year, while housing prices have declined at a more moderate pace than in the rest o the nation. Non-

arm employment and wages have experienced healthy gains, rising 4.5 and 7.7 percentage points higher,respectively, than the national average in our indicator or ve-year job growth. Te metros relativelylow business costs have supported the expansion o warehousing (1,500 jobs), clothing (2,400 jobs), andmanagement o companies (2,200 jobs) between 2002 and 2007. In the last year alone, the metro areaadded 540 jobs in its data-processing services sector. Te presence o Nissan and GM plants, however, maynot continue to be a source o growth, given the gloomy outlook on auto manuacturing in the short term.35

Dallas-Plano-Irving, Texas, moved up sharply to come in at 23rd place. Growth in the metro divisionhas been airly broad-based, exceeding the national average in many o the categories used to compilethe index. Te areas high-tech sector continues to diversiy and attract new rms. Just recently, A&announced that it will be moving its headquarters rom San Antonio to Dallas.36 Internet service

providers/data processing and telecoms are already 3.5 and 2.3 times more concentrated, respectively,in Dallas than in the nation as a whole. Between 2006 and 2007, the category or management ocompanies and enterprises contributed more than 2,100 jobs, an increase o 7.7 percent. Te credit-intermediation industry has added more than 18,000 jobs over the last ve years, supporting the metrosalready well-established nancial sector. Dallass growing reputation as a convention center has generatedpositive impact on local business and increased demand in industries that cater to such large-scale events.

Savannah, Georgia, rose to 24th place this year. Our ve-year indicator shows that non-armemployment and wages have risen by 11.9 and 9.5 percentage points higher, respectively, than thenational averages. Not only does the city benet rom a strong military presence, but Savannahs port hasalso served as a key asset to its economic vitality.37 As the dollar has declined, exports have strengthened,

supporting trade-related activity in the region. Support activities or transportation added 1,200 jobsbetween 2002 and 2007, while administrative and support contributed nearly 4,000 jobs. Te metrosaerospace industry has also generated 1,400 jobs during that period, increasing 4.8 percent on an averageannual basis. Growth in these industries has yielded higher-paying jobs in the region.

Figure 15. Support activities for transportation employmentSavannah vs. United States

2007200620052004200320022001

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SavannahUnited States



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Des MoinesWest Des Moines,Iowa, came in at 25th, ater placing 58th last year. Te Des Moineseconomy has been growing slightly above the U.S. average in terms o employment and wages. Te areashigh-tech output outstripped the national average by 6.3 percentage points. Proessional, scientic, and

technical services generated more than 1,900 jobs between 2002 and 2007, the period examined in ourve-year indicators. Machinery manuacturing has grown at an average annual rate o almost 4.0 percentover that period. Te metro area is also a hub or nancial services and insurance, including key playerssuch as Wells Fargo and Principal Financial Group.38 Te credit-intermediation activities industry isalmost three times more concentrated in Des Moines than in the nation as a whole; this industry hascontributed more than 4,200 jobs during the ve-year period we examined.



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Americas Ten Largest Cities: Performance

Among Americas ten largest cities, outcomes were decidedly mixed. Unlike the previous two editions

o the index, this years results show none o the ten largest cities in the country ranked among the topten overall perormers. As shown in the table below, previous standouts RiversideSan BernardinoOntario, Caliornia, and Phoenix-Mesa-Scottsdale, Arizona, both experienced signicant declines.Meanwhile, HoustonSugar LandBaytown, Texas, continued its dramatic, energy-industry-drivenascent to become the top perormer among the nations ten largest metros. (Te economies o Houstonand Dallas-Plano-Irving, Texas, were proled earlier in this report since both metros placed among thetop twenty-ve best-perorming cities overall.)

Metropolitan Statistical Area (MSA)2008rank

2007rank

Houston-Sugar Land-Baytown, TX 16 32

Dallas-Plano-Irving, TX* 23 59

Phoenix-Mesa-Scottsdale, AZ 32 4

Washington-Arlington-Alexandria, DC-VA-MD-WV* 41 37

Riverside-San Bernardino-Ontario, CA 53 3

Atlanta-Sandy Springs-Marietta, GA 59 86

New York-White Plains-Wayne, NY-NJ* 85 148

Los Angeles-Long Beach-Glendale, CA* 126 109

Philadelphia, PA* 130 142

Chicago-Naperville-Joliet, IL* 160 152

*Indicates Metropolitan Division


Table 5. Performance of America's ten largest cities

Rank in 2008 index



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Out o the nations ten largest cities, Phoenix-Mesa-Scottsdale, Arizona, posted the 3rd-bestperormance (it placed 2nd among this group in the 2007 index). In the ull ranking o the nations200 largest metros, however, the Phoenix area ell rom 4th all the way to 32nd place. Like many other

Sunbelt cities, Phoenix has been hit hard by the bursting o the housing bubble, which has aectedseveral sectors related to construction and homebuilding. Although the decline in Phoenix was not assteep as the deterioration in Riverside, Caliornia, the metro did experience a signicant slowdown in theconstruction industry, especially in the specialty trade contractor sector. Tis downturn comes ater anextended period in which the Phoenix metro area set the pace or the rest o the nation in construction inorder to accommodate a rapidly growing population.

One o the sectors showing the greatest decline in the Phoenix metro area during the period examinedin our ve-year indicator is telecommunications. From 2002 to 2007, the sector lost more than 5,400employees, posting an average annual decline o 6.61 percent. Te act that a sector with a current 0.93LQ has led the metro in employment decline over this ve-year span is actually a sign o the generalstrength o the Phoenix economy, indicating that job losses have been relatively minimal in the industriesthat are most highly concentrated here. On the positive side, the largest gainer over the past year has beenlocal government, which added more than 7,000 jobs.

2007200620052004200320022001

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Figure 16. Construction employmentPhoenix-Mesa-Scottsdale vs. United States

Phoenix-Mesa-ScottsdaleUnited States



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Te Washington-Arlington-Alexandria, DC-VA-MD-WV,metro areasaw very little change rom lastyear. Te 4th-best perormer among the ten largest cities in the country, it slid only our spots (rom37th to 41st) in the complete rankings o the 200 largest metros. More than 10,000 jobs were added in

proessional, scientic, and technical services rom 2006 to 2007; in our ve-year indicator, which examinesthe period rom 2002 to 2007, more than 77,000 jobs were added in this sector. High tech continues tothrive in the region, even as other sectors have begun to alter. Te ederal government has been a key sourceo new employment in the metro. While this sector ell slightly in 2007, the number o ederal jobs grewsignicantly rom 2002 to 2006, due in large part to the creation o the Department o Homeland Securityand growth in the Deense Department. Although total growth in ederal employment in the metro areaaveraged only slightly over 1 percent per year rom 2002 to 2006, the vast size o the government meansthat even a relatively small percentage change translates into a signicant number o jobs.

2007200620052004200320022001

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Figure 17. Federal government employmentWashington-Arlington-Alexandria vs. United States

Washington-Arlington-AlexandriaUnited States



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Tis years index shows a dramatic reversal o ortunes in RiversideSan BernardinoOntario,Caliornia. Last years top perormer among the nations ten largest cities, it is now only the 5th-bestperormer in that group. In the ull rankings o the nations 200 largest metro areas, however, Riverside

tumbled rom 3rd place all the way to 53rd. Te housing downtown has hit the metros economy hard.Te specialty trade contractor sector, which includes home builders and related services, lost more than12,600 jobs rom 2006 to 2007. In act, Riversides construction sector, which dramatically outpacedthe rest o the nation or the rst hal o the decade, has now become one o the greatest drags on thelocal economy, shrinking by 11 percent rom 2006 to 2007. Te region has continued to benet romcorporate relocations, however, with administrative and support services adding more than 3,200 jobsyear over year.

Warehousing and storage continues to be a strong sector or the Riverside metro area, as its locationoutside Los Angeles and San Diego makes it an ideal distribution point. Despite the sotening economy,warehousing added more than 1,600 jobs rom 2006 to 2007, growing at over 6.4 percent (not matchingthe rapid 17.5 percent increase it posted during the entire period rom 2002 to 2007, but still postingsolid gains). Continued growth in this sector is highly likely as the metro remains the only area inSouthern Caliornia with both the space and the inrastructure to handle expanded cargo ows.39 Telargest overall gains in our one-year job growth indicator came rom administrative and support services,which added more than 3,200 jobs rom 2006 to 2007.

2007200620052004200320022001

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Figure 18. Construction employmentRiverside-San Bernardino-Ontario vs. United States

Riverside-San Bernardino-Ontario

United States



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AtlantaSandy SpringsMarietta, Georgia, continues to post the astest overall population growth inthe country. Te city held its 6th-place position among the ten largest metros in the 2008 index, whileits overall ranking rose rom 86th to 59th. Te city continues to add jobs, gaining more than 7,300

positions in proessional, scientic, and technical services rom 2006 to 2007. Atlanta continues tobenet rom its role as home to corporate headquarters o multiple Fortune 500 companies.40 Despitelosing BellSouth headquarters to a merger with A&, Atlanta remains the base or A& Mobility(ormerly Cingular Wireless).41

Despite these positive trends, larger economic orcesincluding the rising price o oil and gas and thehousing downturnhave placed signicant pressures on three o Atlantas major corporations. DeltaAirlines continues to cut sta due to hikes in uel prices and declining revenues. Both Home Depot andSun rust Bank have seen the sub-prime mortgage crisis hit their bottom lines, and tightening creditstandards may begin to curb the rapid population inux into the metro.42

2007200620052004200320022001

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0.5



Figure 19. Population growthAtlanta-Sandy Springs-Marietta vs. United States

Atlanta-Sandy Springs-Marietta

United States



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O the nations ten largest metros, New YorkWhite PlainsWayne, New YorkNew Jersey, posted themost dramatic gains. Once ranked 9th among this group, it is now the 7th-best perormer. In terms othe overall rankings, however, it jumped an impressive sixty-three places, rising rom 148th place in the

2007 index to 85th this year. Construction in New York has been thriving, and so ar the area has stavedo the slump that has aected the rest o the country. Employment in building construction actuallygrew at a 4 percent pace over the year rom 2006 to 2007, adding more than 3,700 jobs; specialty tradecontractors also added nearly 6,700 jobs. Te sector comprising securities, commodities, and othernancial investment activities continued to consolidate in the metro, adding more than 11,500 jobs rom2006 to 2007. New York actually trailed the country as a whole in adding jobs in nance and insurancerom 2001 to 2003 (in act, it suered signicant losses in this sector as nancial rms relocated in thewake o 9/11), but that trend has since reversed itsel. Employment growth in the metro areas nancesector remained strong at 2 percent, even as the sector slipped into slightly negative territory on anational level, reecting the credit crunch.

However, continued pressure on major nancial institutions is now becoming apparent in the New Yorkmetro area; many rms in the nancial sector and in support activities are trimming payrolls in 2008 dueto the allout rom the subprime crisis. Te sudden all o Bear Stearns combined with tremendous lossesat major institutions such as Citibank are likely to soon wipe out many o the gains posted by New Yorkthis year.

2007200620052004200320022001

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2.0

0.0

-2.0

-4.0

-6.0

-8.0



Figure 20. Finance and insurance employmentNew York-White Plains-Wayne vs. United States

New York-White Plains-Wayne

United States



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Te local economy in Los AngelesLong BeachGlendale, Caliornia, did not perorm well over thepast year. Te metro area ell seventeen places overall rom 109th to 126th in the overall rankings, andslipped rom 7th to 8th place among the ten largest metros. In our indicator or recent job momentum,

which examines March 2007 to March 2008, Los Angeles ranked 156th overall or job growth, actuallylosing 0.26 percent o its work orce. Like other metros experiencing steep housing declines, Los Angeleshas been hit over the past year by the loss o jobs in the construction sector (but since most o the metroarea is already heavily developed, losses in this sector are a ar smaller percentage o the total work orcethan in neighboring Riverside). However, high housing prices in Los Angeles have let the metro areahighly vulnerable to the eects o tightening credit. Job losses in the nancial-services sector (includingtrouble spots such as Countrywide and IndyMac) are a growing concern.

Our ve-year job growth indicator shows that the largest job losses during this period in Los Angeles havebeen suered in the apparel industry and in corporate management. Although Los Angeles has managedto remain a center or ashion design, more than 16,400 jobs were lost in apparel manuacturingbetween 2002 and 2007 (including more than 3,000 cuts between 2006 and 2007 alone). Te categoryencompassing management o companies and enterprises saw the loss o more than 23,300 workersbetween 2002 and 2007 (including more than 3,800 in the most recent year). As companies havecontinued to move their headquarters out o Los Angeles due to high cost o doing business, the impacthas not only been elt in terms o lost jobs, but also in the orm o lost spending that these companiesonce contributed locally.

Te one continued bright spot or the local economy continues to be international trade and tourism.As the dollar weakens, exports thrive and international visitors arrive to take advantage o travel bargains.Los Angeles saw a 4 percent rise in international arrivals in the rst quarter o 2008.43

2007200620052004200320022001

4.0

2.0

0.0

-2.0

-4.0

-6.0

-8.0

-10.0



Figure 21. Corporate management employment

Los Angeles-Long Beach-Glendale vs. United States

Los Angeles-Long Beach-GlendaleUnited States



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Overtaken by New York, Philadelphia, Pennsylvania, slipped one spot, to 9th place, among the tenlargest metro areas. Despite this, the city rose twelve places, rom 142nd to 130th, in the ull ranking oall 200 metro areas. Philadelphia has continued to thrive as a corporate center. In our indicator or ve-

year job growth, which examines 2002 through 2007, the management o companies and enterprisessector posted more than 11.5 percent annual growth, adding more than 15,300 jobs. On the downside, data processing, hosting, and related services saw an annual decline o more than 16 percent peryear, shedding more than 7,000 jobs in the region during the same period. More troubling has beenthe decline o pharmaceutical manuacturing, which has been vital to the regions economy. Chemicalmanuacturing as a whole lost more than 8,300 jobs rom 2002 to 2007 (although losses have slowedrecently, to only 640 rom 2006 to 2007). While Philadelphia outpaced the nation in pharmaceuticalmanuacturing growth in 2001 and 2002, it has since trailed severely, continuing to lose jobs even as thecountry as a whole returned to net gains in the sector in 2006 and 2007.

Philadelphias ongoing quest to remain competitive and attract new jobs is made more difcult by itshigh cost o doing business and the regions high taxes. Steps have been proposed to reduce property andwage tax burdens in Pennsylvania, and this may restore some o the regions competitive balance in thenear uture.44

2007200620052004200320022001

10.0

5.0

0.0

-5.0

-10.0

-15.0



Figure 22. Pharmaceutical manufacturing employmentPhiladelphia vs. United States

Philadelphia

United States



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Chicago-Naperville-Joliet, Illinois, remains in 10th place among the ten largest metros, with its overallranking alling slightly to 160th rom 152nd. Mirroring a trend aced by many other older industrialcities, Chicago is coping with the decline o manuacturing. Our ve-year job growth indicator shows

that six dierent industrial sectors (textile mills, apparel manuacturing, leather manuacturing, woodproduct manuacturing, plastics and rubber manuacturing, and computer and electronic productmanuacturing) all lost jobs at the rate o more than 4 percent per year between 2002 and 2007, sheddingmore than 19,000 jobs in total. Chicagos need or health care has actually been a leading source or newjobs, as ambulatory health-care services contributed more than 19,300 new jobs between 2002 and 2007.Administrative support services ared even better during that period, adding more than 35,200 jobs.

Te one-year job growth indicator shows the eect o the decline in home construction, with a loss omore than 3,700 specialty trade contractor jobs rom 2006 to 2007; this sector posted the largest declineduring that period in the region. However, the retail environment has remained strong, led by electronicswholesaling, which grew by more than 10,000 jobs rom 2002 to 2007, including more than 2,900 jobsadded rom 2006 to 2007 alone.

2007200620052004200320022001

0.0

-2.0

-4.0

-6.0

-8.0

-10.0



Figure 23. Manufacturing employmentChicago-Naperville-Joliet vs. United States

Chicago-Naperville-Joliet

United States



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Midland, Texas, was the best perormer among 124 small cities in our 2008 index, improving rom lastyears 3rd-place ranking among 179 metros. Overall job and wage growth were solid. In our one-yearindicator or job growth, which measures rom 2006 to 2007, employment increased by 4.3 percent

in this region, outpacing the national average by 3.2 percentage points. Midlands unemployment ratedropped to 2.7 percent in February 2008, demonstrating that the local economy remains very healthy.46Oileld services are highly concentrated in this region. Te employment category encompassing supportactivities or miningincluding the drilling o oil and gas wells and oil and gas operationsprovides6,870 jobs (or 10.4 percent o total jobs in Midland); this industry recorded an 11.3 percent averageannual increase between 2002 and 2007. Consumer spending has been a source o strength; retail saleshave increased by 3.8 percent over 2007 levels.47

2007200620052004200320022001

10.50

10.00

9.50

9.00

8.50

8.00

7.50

7.00

6.50

0.22

0.20

0.18

0.16

0.14

0.12

Percent share of total employment Percent share of total employment


Figure 24. Employment in support activities for miningMidland vs. United States

Midland (L)

United States (R)

The Best-Performing Small Cities


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Placing 2nd among the 124 smallest cities in 2008 is Coeur dAlene, Idaho. Despite the housingdownturn, overall job and wage growth in this region outperormed the national average. Our ve-yearindicators, which encompass the period rom 2002 to 2007, show that employment and wages in Coeur

dAlene grew 18.8 and 21.8 percent over the national average, respectively.

Te areas ast-growing tourism industry has recently been a major engine o growth, adding 1,800 newjobs in 2007 alone.48 Tis sector now accounts or 3.1 percent o total jobs in the metro area. CoeurdAlene has also emerged as a regional health-care hub; hospitals and health-care services accounted or51.7 percent o job growth rom 2006 to 2007.

2007200620052004200320022001

10

8

6

4

2

0

-2

-4


Sources: Global Insight, Milken Institute

Figure 25. Job growthCoeur d'Alene vs. United States

Coeur d'Alene

United States



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Bend, Oregon, last years top perormer, has slipped slightly to 3rd place in the 2008 index. Our ve-year job growth indicator, which spans 2002 to 2007, shows that Bends overall employment rose 25.3percent aster than the national average during this period. However, recent unemployment gures

indicate a sotening local economy, with Bend recording a higher jobless rate than the U.S. average or2007 (5.0 percent in Bend vs. 4.6 percent or the nation as a whole). Bends housing market has beendecelerating, with median home prices alling by 10.1 percent (rom $319,900 in the rst quarter o2007 to $290,500 in the rst quarter o 2008). But a recent report singled out Bend as having thesecond-most overvalued housing market in the nation (trailing only Atlantic City, New Jersey), andestimated that its home values are still inated by 49.5 percent.49 Tis may indicate that urther declinesare in store.

Te indicator or recent job momentum shows the greatest decline in the Bend area occurred inmanuacturing; employment in this industry dropped 6.9 percent rom March 2007 to March 2008.Weakness was especially apparent in wood manuacturing, which is strongly concentrated in this region.Tis sector lost 7.9 percent o its jobs rom 2006 to 2007, possibly due to a slowdown in new housingconstruction. But tourism remains a bright spot or job creation. From 2006 to 2007, employment inair transportation grew by 11.8 percent, while the arts, entertainment, and recreation sector saw 11.2percent job growth.

2007200620052004200320022001

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20

15

10

5

0

-5



Figure 26. Arts, entertainment, and recreation employmentBend vs. United States

Bend

United States



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Grand Junction, Colorado, moved up the rankings to take the 5th-place spot. Ater placing 18th outo 179 small cities in 2007, the metro area made a remarkable jump into the top ten small cities in 2008index. Te indicator or one-year overall job growth shows a robust perormance, 4.6 percentage points

above the national average rom 2006 to 2007; in this measure, Grand Junction ranks 2nd among smallcities. Te citys unemployment rate has consistently declined since 2003, dipping to 3.2 percent in2007, well below the national average o 4.6 percent.

Soaring oil prices contributed to economic gains in this region due to its abundance o oil shale andpotential or extraction.50 Te employment category or mining support activities has consequentlybecome a leading industry here, creating 2,420 jobs or a 37.4 percent average annual increase in growthrom 2002 to 2007. Te availability o jobs has sparked population growth; Grand Junction experienceda net migration rate o 3.1 percent in 2007.

200720062005200420032002

100

80

60

40

20

0

-20

-40



Figure 28. Net migrationGrand Junction, Colorado

Net migration

Population

Improving on its 10th-place showing in the 2007 index, Warner Robins, Georgia, now ranks 6th amongthe best-perorming small cities. Robins Air Force Base is still a dominant orce in the local economy,generating $4.2 billion in economic impact in central Georgia each year. Warner Robins Air LogisticsCenter remains the metros top employer, accounting or more than 15,000 jobs.51

Not surprisingly, ederal jobs are more highly concentrated in this region than jobs in private industry.Tis level o government employment has brought economic stability to the metro area, since ederalpositions typically have greater job security and less requent turnovers.



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2007200620052004200320022001

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4

2

0

-2

-4

-6



Figure 29. Federal government employmentWarner Robins vs. United States

Warner RobinsUnited States

Longview, Texas, leapt rom 30th place in last years index to take 7th place in the 2008 ranking o smallcities. Like the rest o the booming exas economy, this metro perormed particularly well in the one-year indicators or job and wage growth. Between 2006 and 2007, overall job growth hit 4.2 percent,3.1 percentage points higher than the national average o 1.1 percent. Short-term wage growth has beensolid, outpacing the national average by 4.8 percent rom 2005 to 2006.

Longviews economy is ueled by the energy sector, with many jobs based in the East exas oil elds. Oiland gas extraction and its supporting activities remain the engine o growth in this region. Particularlynoteworthy is the employment category or mining support activities, which added more than 1,960 jobs

in the ve-year period we examined, or 13.4 percent annual job growth since 2002.Popular as the regional shopping

best performing cities 2008 milken

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