AMERICA’S TOP METROS: Who’s Leading the Recovery, … · 2014-06-05 · AMERICA’S TOP METROS:...

C E N T E R F O R S T A T E A N D L O C A L L E A D E R S H I PA T T H E M A N H A T T A N I N S T I T U T E

C S L

Civ

iC R

epo

RtN

o. 8

9 Ju

ne 2

014

Publ

ishe

d by

Man

hatt

an In

stitu

te

AMERICA’S TOP METROS: Who’s Leading the Recovery, and Why

L

Tom Gray & Robert Scardamalia

America’s Top Metros: Who’s Leading the Recovery, and Why

exeCutive SummaRy

In a slow, uneven economic recovery, some cities have managed not only to survive but even to thrive. Their stories,

along with those of the not-so-successful, are the subject of this study. Using data since 2009 for the nation’s

metropolitan statistical areas (MSAs), we identify leaders and laggards as measured by growth in economic output

(GDP), personal income, and jobs. Among the 100 largest MSAs—which together make up about two-thirds of the

nation’s population—we take a detailed look at the top 20 and bottom 20 economic performers. For each of these

metros, we examine a number of factors that may be spurring its growth or holding it back: What are the dominant

industries? What types of occupations have grown the most (or the least) in income and job count? Where are tax

policies most and least friendly to business? Which MSAs have the most college graduates? Which have the most

Fortune 500 companies? Which depend most and least on government for jobs and income?

This analysis turns up no simple formula for success but does lead to some tentative conclusions about the conditions

that help foster economic leadership in today’s economy. Here are some key findings:

• Global centers of technology and energy, such as San Jose and Houston, had a fast start in the recovery and contin-

ued to prosper through 2013. MSAs with a manufacturing-based economy, such as Detroit, Cleveland, and Toledo,

were fast out of the gate but showed signs of slowing last year.

• The Texas success story continues. The Lone Star State’s four largest MSAs are in the top-performing 20, and none

of its MSAs are in the bottom 20. Other large states have mixed results. California has three MSAs in the top 20,

but four in the bottom 20. Florida has no top-20 MSAs, but four in the bottom 20. New York has no MSAs in

either group.

• Higher educational attainment, as measured by the percentage of college graduates, was associated with greater

economic success, though there were exceptions.

• MSAs with higher levels of employment in the “professional, scientific, and technical sector” category tended to

outperform those with a lower share of these occupations.

• The top 20 performers have a generous share of large corporate headquarters—154 (31 percent) of the Fortune

500 companies. The bottom 20 had just 36 (7 percent).

• Leading MSAs, in general, depend less than laggards do on public-sector spending and jobs.

• Business tax climate is hard to measure but may matter. Some MSAs in high-tax environments have done well, while

some in low-tax states have languished. There is evidence that growth may be affected by tax burdens specifically

on new business investment.

• Laggards are more likely to suffer from a home-building hangover. A number of Sun Belt metros in Florida, Arizona,

Nevada, and inland California depended on construction for a sizable share of jobs and economic growth before

the recession. Since then, they have been slow to recover. Top performers have been less affected by the housing

boom and bust.

Civ

ic R

epor

t 89

June 2014

• The jury is still out on the Rust Belt renaissance. Old industrial powerhouses of the upper Midwest recovered

sharply just after 2009, but time will tell if this was just a statistical fluke—the result of having fallen so low that

any improvement is magnified—or the start of true long-term prosperity. One MSA in this group, Grand Rapids,

continued to thrive through 2013.

If there is one lesson here for policymakers, it is to understand the inherent strengths of a place and to make the

most of them. This commonsense advice is not always heeded, especially when natural resources are at issue. Metros

with oil and gas wealth can choose to exploit these assets or leave them in the ground. For the foreseeable future,

the first of those options is likely to make them richer, if not greener. Local governments and business leaders also

need to heed demographic trends and take advantage of them. Whatever happens at the policy level, health care

will be a source of steady growth as the population ages. Metros that earn a reputation for excellence in medicine

stand to gain by serving not only their own residents but also those who come from elsewhere to receive world-class

care. And whatever the comparative advantages a metro can claim, it is always wise to observe the rule of “do no

harm” in dealing with job-producing businesses. Measuring business-friendliness is an inexact science at best, but a

reputation for high costs and overregulation is never a good thing to have.


Introduction

Part 1: Who Are the Leaders and Laggards?

Part 2: What Separates Leaders from Laggards?

Part 3: 2013 Jobs Data—Who Has Momentum?

Part 4: Toward a Growth Policy—Some Lessons Learned

APPENDIX: ALL MSAs, Ranked by 2009–2012 Economic Indicators

Performance

CONTENTS1

3

18

26

29

33

Civ

ic R

epor

t 89

June 2014

about the authoRS

TOM GRAY is a writer, editor and communications consultant whose work has covered a wide range of fields, including

investor relations, personal finance, health care, engineering, scientific research, and local, state, and national politics.

He has written for publications and websites such as City Journal, the Daily Beast and Investor’s Business Daily (where

he also served as senior editor), and has authored three books on online investing published by John Wiley & Sons.

He was co-author, with Bob Scardamalia, of the Manhattan Institute’s 2012 study, “The Great California Exodus: A

Closer Look.” As editorial-page editor of the Los Angeles Daily News, Gray won a number of awards for writing and

editing, including first place awards for editorial writing from the California Newspaper Publishers Association and

the Inland Daily Press Association. He also has provided marketing and communications services for business and not-

for-profit clients including Deloitte & Touche, ValueOptions Inc., the Kavli Foundation, the Synthetic Biology Institute

at the University of California, Berkeley, and the University of California, Santa Barbara. A graduate with distinction

from Stanford University, Gray also has master’s degrees in English and business administration.

ROBERT SCARDAMALIA is president of RLS Demographics, Inc., a firm specializing in the use and analysis of economic

and demographic data for private and public applications. His consulting practice includes public and private clients

focused on topics related to migration, aging, disability, consumer marketing and business demographics. Scardamalia

was formerly director of the Center for Research and Information Analysis in the New York State Department of Economic

Development and also served as chief demographer of the State of New York and director of the State Data Center.

He has served on numerous state and national advisory committees for the Census Bureau, as well as for other state

and federal statistical agencies. Scardamalia is past President and Board member of the Association of Public Data

Users and serves on the Board for the Center for Social and Demographic Analysis at the State University of New York

at Albany, where he is also an adjunct faculty member. He was co-author, with Tom Gray, of the Manhattan Institute’s

2012 study, “The Great California Exodus: A Closer Look”. Scardamalia holds a bachelor’s degree in sociology from

Penn State University and a master’s degree in demography from Georgetown University.


1

INTRODUCTION

By any measure, it has been a long slog for the American economy as it struggles to recover from the Great Recession. It has now been five years since employment last peaked, and growth has not yet made up for the lost jobs. At last report

(March 2014), payrolls were about 437,000 jobs short of prerecession highs. To put it another way, the economy had failed in 60 months to reach a goal that took it 28 months after the recession of 1981–82; 32 months after the slump of 1990; and 48 months after the recession of 2001. Unemployment remains stubbornly high—especially when workers who have given up looking for jobs and those forced to settle for part-time work are taken into account. Household incomes have yet to bounce back from the hit they took in the recession. If this is a recovery, it doesn’t feel like one to most Americans.

But if the national picture is gloomy, it is not uniformly so. There are places in the U.S. that really have bounced back. They have more than made up for their lost jobs and have made substantial gains in output and personal income. For some, especially the manufacturing-based metropolitan statistical areas (MSAs) of the upper Midwest, the jury is out on whether their recovery is sustainable. But other metros that were fast out of the gate seemed to be maintaining their growth in to 2013. These include large metros that, by their sheer size, have had a significant impact on state and national economies.

When it comes to creating jobs, top-performing metropolitan statistical areas have punched well above their weight. The four largest MSAs

Tom Gray & Robert Scardamalia

ameRiCa’S top metRoS: Who’S Leading the ReCoveRy, and Why

Civ

ic R

epor

t 89

June 2014

2

right is occurring in a select group of dynamic MSAs. These are the focus of this study, which identifies the leaders among MSAs and suggests reasons for their success. Part 1 of our paper presents our rankings—how metros compare on measures of growth in output, income, and jobs. Part 2 takes a close look at the economies and resources of leaders and laggards. We end with Part 3, which addresses the question facing state and local policymakers and business leaders: What can we do to succeed? Economic leaders among the MSAs have certain traits in common. Some are hard to emulate, such as having vast amounts of oil and gas under your feet. But others are matters of attitude and choice, such as deciding how much to restrict drilling for these riches. Business climate is another factor that cannot be ignored, though it is difficult to measure. And any metro area needs to know and make use of its comparative advantage: What does it do better, at less cost, than competitors at home and abroad, and how can it find ways to do more of this?

in Texas, for instance, constitute 5 percent of the U.S. population but have generated 10 percent of the nation’s new jobs since the recession bottomed out four years ago. Two California MSAs, San Jose and San Francisco, have produced 27 percent of the state’s job growth, with less than 17 percent of its population. The Nashville MSA includes about 27 percent of Tennessee’s population but has accounted for 54 percent of its employment growth since the end of 2009. The benefits of such growth spread beyond metro area boundaries—to state finances, among other things. In California, the surging wealth of Silicon Valley produced the tax revenue needed to end the state’s decade-long budget crisis. Texas lawmakers who sat down to write their two-year budget in 2011 were facing a shortfall of up to $27 billion; two years later, thanks to the state’s recovery, they were greeted with a projected surplus of $8 billion.

Not everything is going wrong in the American economy, in other words. And much of what goes

FIGURE 1: METROPOLITAN STATISTICAL AREAS OF THE UNITED STATES


3

This is the question, of course, that Adam Smith asked about nations. In our day, when goods and services trade worldwide as easily as they were exchanged between neighboring villages in Smith’s day, it’s a question that cities and regions need to be asking themselves.

Part 1: Who Are the Leaders and Laggards?

The United States is richly endowed with farms, forests, and oil fields, but most of its economic activity, by far, springs from its cities. In a 2012 report, the U.S. Conference of Mayors noted that America’s metropolitan statistical areas accounted for 83.7 percent of its population, 85.8 percent of its jobs, 89.9 percent of its wage and salary income, and 90.7 percent of its real GDP. Of the 100 largest economies in the world, 37 belong to U.S. MSAs. Metro areas truly drive the U.S. economy.

They also give us an economic portrait of the coun-try, in some ways more true to economic life than a map of the states. Each metro area is a distinct economy, made up of residents whose lives and work are tied to one or more urban hubs. They have dis-tinct identities based on their key businesses, their geography, political attitudes, education, culture, and local history. In some cases, they set the tone for the economy of a whole state, or several states at once. In others, MSAs within a state can follow different paths, with differing levels of success. Some lead and some lag, even under the same state laws and regulations.

For these reasons, one can draw a picture of America’s uneven recovery by identifying the best- and worst-performing MSAs since the recession. For this study, we have focused on three areas—personal income, gross domestic product, and private-sector

Base Rankings: Rankings by Average:

Per Capita GDP Per Capita Personal Income

Private Sector Employment

Average Rank

Odessa, TX 3 2 2 2.3 1

Elkhart-Goshen, IN 2 8 4 4.7 2

Columbus, IN 4 12 3 6.3 3

Midland, TX 22 1 1 8.0 4

Williamsport, PA 5 18 6 9.7 5

Longview, TX 9 9 12 10.0 6

San Jose-Sunnyvale-Santa Clara, CA 10 4 28 14.0 7

Victoria, TX 8 15 25 16.0 8

Bismarck, ND 36 6 9 17.0 9

Fargo, ND-MN 39 10 19 22.7 10

Monroe, MI 11 25 51 29.0 11

Peoria, IL 7 19 63 29.7 12

Nashville-Davidson-Murfreesboro-Franklin, TN 48 31 11 30.0 13

Cleveland, TN 43 39 8 30.0 14

Grand Rapids-Wyoming, MI 27 52 14 31.0 15

Corpus Christi, TX 31 20 60 37.0 16

Kokomo, IN 1 106 5 37.3 17

Detroit-Warren-Dearborn, MI 15 72 31 39.3 18

Houston-The Woodlands-Sugar Land, TX 80 17 22 39.7 19

Laredo, TX 54 65 10 43.0 20

TABLE 1: TOP–PERFORMING METROS, 2009–2012, ALL SIZES

Civ

ic R

epor

t 89

June 2014

4

job growth—on the MSAs (357 in all) for which these data are available for 2009–12. The job growth numbers, from the Bureau of Labor Statistics (BLS), are aggregate totals of private-sector employment. The personal income and GDP numbers, from the Bureau of Economic Analysis (BEA), are constant-dollar per-capita figures. Private-sector job growth is computed from annual average totals for nonfarm, nongovernment employment. We ranked MSAs in each of the three areas and gave them an overall rank based on the average of the three. Our goal was to measure how well these metros produced wealth for their residents in the first three years of the recovery.

Tables 1 and 2 show the top 20 and bottom 20 performers in our all-metros ranking. Most are smaller MSAs (below the median population of 259,000), though there are some standout big metros in the top 20: San Jose, Nashville, Grand Rapids, Detroit, and Houston. (The full list can be found in the Appendix.)

Some of the smaller MSAs have made dramatic moves in the recovery. Kokomo, Indiana, rode the U.S. manufacturing revival to an eye-popping 65.2 percent jump in its per-capita GDP from 2009 to 2012. The oil and gas boom helped Midland, Texas, produce a rise of 56.2 percent in per-capita income—all the more impressive amid a population boom (up 7.6 percent in just three years). It also expanded private-sector employment by 25.3 percent. At the other end of the scale are metros hard-hit and slow to recover. In Gulfport-Biloxi-Pascagoula, Mississippi, per-capita GDP fell 8.7 percent, and the job count in 2012 was lower (by 0.9 percent) than in the recession year of 2009. Other MSAs had especially steep job losses: 4.9 percent in Dalton, Georgia; and 4.5 percent in Rocky Mount, North Carolina, for instance.

But it is large MSAs that primarily drive the economy (or hold it back). To get a clearer picture of the significant leaders and laggards, we turned our focus to the 100 largest MSAs, based on their 2012

Base Rankings: Rankings by Average:



Average Rank

Anniston-Oxford-Jacksonville, AL 262 339 343 314.7 338

Jefferson City, MO 247 348 351 315.3 339

Manhattan, KS 266 344 340 316.7 340

Prescott, AZ 334 318 300 317.3 341

Grand Junction, CO 264 342 348 318.0 342

Yuma, AZ 351 356 263 323.3 343

Mount Vernon-Anacortes, WA 343 315 316 324.7 344

Dover, DE 354 336 291 327.0 345

Santa Fe, NM 350 329 303 327.3 346

Reno, NV 306 347 332 328.3 347

Salem, OR 336 331 320 329.0 348

Lake Havasu City-Kingman, AZ 304 332 354 330.0 349

Pocatello, ID 307 346 341 331.3 350

Lawrence, KS 333 328 336 332.3 351

Carson City, NV 303 345 353 333.7 352

Bremerton-Silverdale, WA 311 343 349 334.3 353

Rocky Mount, NC 299 350 355 334.7 354

Dalton, GA 327 325 356 336.0 355

Lawton, OK 322 340 347 336.3 356

Gulfport-Biloxi-Pascagoula, MS 355 357 309 340.3 357

TABLE 2: LOWEST PERFORMING METROS, 2009–2012, ALL SIZES


5

Top Metros Bottom Metros

Arkansas Little Rock-North Little Rock-Conway

Arizona Phoenix-Mesa-Scottsdale

Tucson

California Bakersfield

San Jose-Sunnyvale-Santa Clara

San Francisco-Oakland-Hayward Fresno

Riverside-San Bernardino-Ontario

Sacramento-Roseville-Arden-Arcade

Stockton-Lodi

Colorado Colorado Springs

Connecticut Hartford-West Hartford-East Hartford

Florida Jacksonville

Cape Coral-Fort Myers

Deltona-Daytona Beach-Ormond Beach

Palm Bay-Melbourne-Titusville

Indiana Indianapolis-Carmel-Anderson

Maryland Baltimore-Columbia-Towson

Massachusetts Boston-Cambridge-Newton, MA-NH**

Michigan Detroit-Warren-Dearborn

Grand Rapids-Wyoming

Minnesota Minneapolis-St. Paul-Bloomington, MN-WI**

Nevada Las Vegas-Henderson-Paradise

New Mexico Albuquerque

North Carolina Greensboro-High Point

Winston-Salem

Ohio Cleveland-Elyria

Columbus

Toledo

Youngstown-Warren-Boardman, OH-PA**

Oregon Portland-Vancouver-Hillsboro, OR-WA**

Pennsylvania Pittsburgh

Tennessee Nashville-Davidson-Murfreesboro-Franklin

Texas Austin-Round Rock

Dallas-Fort Worth-Arlington

Houston-The Woodlands-Sugar Land

San Antonio-New Braunfels

Virginia Virginia Beach-Norfolk-Newport News, VA-NC**

Washington Spokane-Spokane Valley

Wisconsin Milwaukee-Waukesha-West Allis

*Top 20 and bottom 20 performing metros of the country’s 100 largest MSAs**Multi-state MSAs listed under state of primary urban center

TABLE 3: STATES WITH LARGE METROS IN THE TOP AND BOTTOM 20*

Civ

ic R

epor

t 89

June 2014

6

population. This group ranges from the giant New York City metro area, at 19.8 million, to Spokane, Washington, at 532,000. All told, these 100 metros have a total population of 208 million, more than two-thirds of the U.S. total.

Table 3 shows the leaders and laggards among these large metros (that is, the top and bottom 20) by state. It’s not hard to see which states have come out ahead. Texas and Ohio each have four top performing metros and no also-rans. Florida has only laggards, while California has a mix, with three MSAs from the top 20 and four from the bottom. Some large states, such as New York and Illinois, do not have metros in either category.

Table 4 shows all the 100 largest MSAs, with the top 20 and bottom 20 performers highlighted. We include their rankings in three categories and average the three for an overall rank.

Next, we take a closer look at the top and bottom 20 large MSAs, with some key data, including 2012 populations; economic performance; leading categories in earnings and job growth; and the number of Fortune 500 companies (largest listed first) headquartered there. The earnings growth leaders shown here are the North

American Industrial Classification System (NAICS) sectors that contributed the largest share to an MSA’s overall increase in nonfarm earnings in 2009–12. The job growth leaders are the BLS occupational categories with the largest number of new jobs in the same period. The percentage growth in these categories in 2009–12 is given in parentheses. (Note: The NAICS “Mining” industry category includes oil and gas production.)

First, the leaders, by performance rank:

1. San Jose–Sunnyvale–Santa Clara, CA Population: 1,894,388 Per-capita GDP growth: 15.9% Per-capita personal income growth: 22.6% Private-sector job growth: 7.1% Earnings growth led by: Manufacturing (+29.3%) Job growth led by: Professional and business

services (+12.0%) Fortune 500 companies: Apple, Hewlett-Packard,

Intel, Google, Cisco Systems, 10 moreWhat’s good for Apple is good for Silicon Valley, and Apple has been having some very good years. From 2009 to 2012, its revenue more than quadrupled, to $156.5 billion. Google’s sales more than doubled in that time, to $52.2 billion. But how long will this party last? The San Jose MSA has a boom-and-bust history. At the end

Base Rankings: Ranking by Averages:



Average Rank






Austin-Round Rock, TX 10 25 1 12.0 6

Dallas-Fort Worth-Arlington, TX 17 11 12 13.3 7

San Antonio-New Braunfels, TX 14 15 13 14.0 8

Pittsburgh, PA 8 12 26 15.3 9

Youngstown-Warren-Boardman, OH-PA 6 16 36 19.3 10

Indianapolis-Carmel-Anderson, IN 23 27 14 21.3 11

Columbus, OH 35 14 16 21.7 12

TABLE 4: 100 LARGEST MSAs, RANKED BY 2009–2012 ECONOMIC PERFORMANCE


7

Toledo, OH 4 34 27 21.7 13

Portland-Vancouver-Hillsboro, OR-WA 3 42 28 24.3 14

Minneapolis-St. Paul-Bloomington, MN-WI 20 28 25 24.3 15

Cleveland-Elyria, OH 11 10 55 25.3 16

San Francisco-Oakland-Hayward, CA 49 6 23 26.0 17

Baltimore-Columbia-Towson, MD 16 33 34 27.7 18

Boston-Cambridge-Newton, MA-NH 19 32 35 28.7 19

Bakersfield, CA 86 2 3 30.3 20

Charlotte-Concord-Gastonia, NC-SC 30 48 15 31.0 21

Allentown-Bethlehem-Easton, PA-NJ 24 51 21 32.0 22

Oklahoma City, OK 75 5 19 33.0 23

Louisville/Jefferson County, KY-IN 7 39 53 33.0 24

Greenville-Anderson-Mauldin, SC 15 70 17 34.0 25

Seattle-Tacoma-Bellevue, WA 13 47 44 34.7 26

Knoxville, TN 51 22 31 34.7 27

Akron, OH 22 21 61 34.7 28

Bridgeport-Stamford-Norwalk, CT 37 7 63 35.7 29

Chattanooga, TN-GA 36 29 42 35.7 30

New York-Newark-Jersey City, NY-NJ-PA 39 44 29 37.3 31

Cincinnati, OH-KY-IN 21 26 68 38.3 32

Buffalo-Cheektowaga-Niagara Falls, NY 47 20 49 38.7 33

El Paso, TX 46 43 32 40.3 34

Ogden-Clearfield, UT 27 71 24 40.7 35

Salt Lake City, UT 41 65 18 41.3 36

Provo-Orem, UT 48 74 5 42.3 37

Tampa-St. Petersburg-Clearwater, FL 73 17 39 43.0 38

Richmond, VA 32 58 40 43.3 39

Birmingham-Hoover, AL 12 40 81 44.3 40

Worcester, MA-CT 33 37 65 45.0 41

Chicago-Naperville-Elgin, IL-IN-WI 26 52 58 45.3 42

Charleston-North Charleston, SC 40 94 8 47.3 43

Madison, WI 42 57 43 47.3 44

Denver-Aurora-Lakewood, CO 72 41 30 47.7 45

Dayton, OH 45 31 67 47.7 46

Baton Rouge, LA 31 62 57 50.0 47

Rochester, NY 76 24 51 50.3 48

Jackson, MS 57 19 76 50.7 49

Syracuse, NY 43 23 89 51.7 50

Providence-Warwick, RI-MA 50 36 71 52.3 51

Urban Honolulu, HI 28 82 48 52.7 52

Raleigh, NC 66 86 11 54.3 53

Oxnard-Thousand Oaks-Ventura, CA 44 45 78 55.7 54

McAllen-Edinburg-Mission, TX 65 93 10 56.0 55

Atlanta-Sandy Springs-Roswell, GA 55 81 33 56.3 56

Civ

ic R

epor

t 89

June 2014

8

Scranton-Wilkes-Barre-Hazleton, PA 29 69 74 57.3 57

Kansas City, MO-KS 34 75 64 57.7 58

Wichita, KS 25 50 99 58.0 59

Miami-Fort Lauderdale-West Palm Beach, FL 78 76 22 58.7 60

Tulsa, OK 89 3 84 58.7 61

San Diego-Carlsbad, CA 81 35 62 59.3 62

Albany-Schenectady-Troy, NY 69 60 52 60.3 63

Des Moines-West Des Moines, IA 56 80 46 60.7 64

North Port-Sarasota-Bradenton, FL 94 30 60 61.3 65

Boise City, ID 71 97 20 62.7 66

Omaha-Council Bluffs, NE-IA 59 61 69 63.0 67

New Orleans-Metairie, LA 54 96 41 63.7 68

Harrisburg-Carlisle, PA 64 55 72 63.7 69

Springfield, MA 58 54 79 63.7 70

Memphis, TN-MS-AR 67 38 90 65.0 71

Los Angeles-Long Beach-Anaheim, CA 77 64 56 65.7 72

Orlando-Kissimmee-Sanford, FL 85 77 38 66.7 73

Augusta-Richmond County, GA-SC 61 66 73 66.7 74

New Haven-Milford, CT 83 63 54 66.7 75

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 62 68 75 68.3 76

Lakeland-Winter Haven, FL 100 9 98 69.0 77

St. Louis, MO-IL 53 73 82 69.3 78

Washington-Arlington-Alexandria, DC-VA-MD-WV 80 84 45 69.7 79

Columbia, SC 70 92 47 69.7 80

Jacksonville, FL 82 72 59 71.0 81

Greensboro-High Point, NC 38 88 87 71.0 82

Phoenix-Mesa-Scottsdale, AZ 74 90 50 71.3 83

Virginia Beach-Norfolk-Newport News, VA-NC 68 59 92 73.0 84

Milwaukee-Waukesha-West Allis, WI 63 79 80 74.0 85

Colorado Springs, CO 52 89 83 74.7 86

Sacramento-Roseville-Arden-Arcade, CA 84 56 85 75.0 87

Deltona-Daytona Beach-Ormond Beach, FL 90 49 86 75.0 88

Cape Coral-Fort Myers, FL 95 95 37 75.7 89

Little Rock-North Little Rock-Conway, AR 91 67 70 76.0 90

Fresno, CA 96 46 88 76.7 91

Riverside-San Bernardino-Ontario, CA 87 85 66 79.3 92

Winston-Salem, NC 93 53 95 80.3 93

Spokane-Spokane Valley, WA 60 91 97 82.7 94

Hartford-West Hartford-East Hartford, CT 98 78 77 84.3 95

Stockton-Lodi, CA 99 83 94 92.0 96

Albuquerque, NM 79 98 100 92.3 97

Tucson, AZ 88 99 93 93.3 98

Palm Bay-Melbourne-Titusville, FL 97 87 96 93.3 99

Las Vegas-Henderson-Paradise, NV 92 100 91 94.3 100


9

of 2013, its total job count was still 12 percent short of the highs that it hit in 2000, at the height of the dot-com mania.

2. Nashville-Davidson-Murfreesboro-Franklin, TN Population: 1,726,693 Per-capita GDP growth: 9.0% Per-capita personal income growth: 14.6% Private-sector job growth: 9.8% Earnings growth led by: Health-care and social

assistance (+18.4%) Job growth led by: Professional and business

services (+23.1%)Fortune 500 companies: HCA Holdings, Dollar General, Vanguard Health Systems

Nashville is a standout performer in an otherwise lackluster state. It lost some 50,000 jobs in the recession and has regained about twice that number. Among other large Tennessee metros, Knoxville is just now getting back to its pre-slump recession level, while Memphis and Chattanooga (like the state as a whole) remain behind. What makes the difference for Nashville? The roster of big companies suggests one factor—the city’s major role in the health-care industry. And as the capital of country music, Nashville draws tourists as well as a large part of the entertainment industry.

3. Grand Rapids–Wyoming, MI Population: 1,005,648 Per-capita GDP growth: 11.5% Per-capita personal income growth: 13.5% Private-sector job growth: 9.1% Earnings growth led by: Manufacturing (+20.6%) Job growth led by: Professional and business

services (+28.1%) Fortune 500 companies: NoneGrand Rapids reminds us that Michigan manufacturing is not all about automobiles. If this MSA has one signature industry, it is office furniture: Steelcase, Herman Miller, and other global leaders in the industry are based here. The good news is that Grand Rapids profits from business expansion—more employees mean more chairs and desks. The risk is that business contraction has the opposite effect. Then again, people will still need shoes (Wolverine Worldwide) and might

take a shot at selling for Amway (based here). So far, the diverse economy of Grand Rapids has served it well in the recovery, with a boost from an increasingly friendly Michigan business climate.

4. Houston–The Woodlands–Sugar Land, TX Population: 6,177,015 Per-capita GDP growth: 6.3% Per-capita personal income growth: 17.8% Private-sector job growth: 7.6% Earnings growth led by: Mining (+76.7%) Job growth led by: Professional and business

services (+13.1%) Fortune 500 companies: Phillips 66, ConocoPhil-

lips, Enterprise Products, Sysco, 21 moreHouston is the hub of an industry—oil and gas—that is notorious for wide swings in demand and price. At least since the 1980s, though, this MSA has had remarkably smooth and robust growth, powering through recessions and quickly recovering. Following a pattern seen in other metro economies with strength in manufacturing or energy production, it has seen its sharpest earnings growth in the BEA’s “mining” category (which includes oil and gas production), while the largest share of new jobs has come in “professional and business services”—including the many businesses and occupations that supply and support the drillers and refiners.

5. Detroit-Warren-Dearborn, MI Population: 4,292,060 Per-capita GDP growth: 14.5% Per-capita personal income growth: 12.5% Private-sector job growth: 6.9% Earnings growth led by: Manufacturing (+28.7%) Job growth led by: Professional and business

services (+14.6%) Fortune 500 companies: General Motors, Ford

Motor, TRW Automotive, Lear, 8 moreDetroit, the city, languishes in bankruptcy. But the economy of its suburbs—making up most of the Detroit MSA—saw healthy growth from 2009 to 2012. The recovering auto industry boosted earnings from durable-goods manufacturing (the category covering cars, trucks, and parts) by 30.4 percent. The area also gained 36,800 new manufacturing jobs, not far behind

Civ

ic R

epor

t 89

June 2014

10

the 43,600 jobs gained in the broad “professional and business services” category. These numbers need to be seen in context: Detroit’s economy is coming off the worst slump since the Great Depression, and its comeback is impressive—in percentage terms—partly because it was starting from such a low base. Slowing job growth in 2013 raised the question of how long the recovery can be sustained.

6. Austin–Round Rock, TX Population: 1,834,303 Per-capita GDP growth: 8.8% Per-capita personal income growth: 12.1% Private-sector job growth: 10.9% Earnings growth led by: Professional, scientific,

and technical services (+27.3%) Job growth led by: Professional and business

services (+17.2%) Fortune 500 companies: Dell, Whole Foods“Austin envy,” as Forbes.com blogger Marian Salzman has called it, is still going strong. The Texas capital has some built-in recession-proofing—it hosts the government and largest university of a large, fast-growing state—plus a brand that attracts young, well-educated workers. Set against San Francisco or Silicon Valley, it’s hotter in summer, but more business-friendly and far more affordable. Apple employs some 3,500 people here and is expanding in Austin with a new 1 million-square-foot facility expected to add another 3,600 jobs.

7. Dallas–Fort Worth–Arlington, TX Population: 6,700,991 Per-capita GDP growth: 6.4% Per-capita personal income growth: 12.4% Private-sector job growth: 6.2% Earnings growth led by: Professional, scientific,


services (+13.3%) Fortune 500 companies: ExxonMobil, AT&T,

Fluor, AMR, Kimberly-Clark, 13 moreThe largest Texas MSA (and fourth-largest in the nation) has a strong presence in several major sectors—including energy, transportation, telecommunications, technology, and consumer products. The fact that it attracts and

keeps such a diverse mix of corporate leaders suggests that its success rests less on a particular industry and more on its reputation as a good place, in general, to do business. Of all the metros that consistently outperform their peers, Dallas–Fort Worth may testify the most to the benefits of a friendly business climate.

8. San Antonio–New Braunfels, TX Population: 2,234,003 Per-capita GDP growth: 7.1% Per-capita personal income growth: 13.0% Private-sector job growth: 6.0% Earnings growth led by: Finance and insurance

(+31.3%) Job growth led by: Education and health

services (+10.0%) Fortune 500 companies: Valero, Tesoro, United

Services Auto Association, 2 moreSan Antonio has a diversified economy and strong ties to the military. In recent years, it has benefited from the Pentagon’s Base Realignment and Closure Round (BRAC), which has closed bases elsewhere and consolidated functions in a dozen “joint base” locations, including San Antonio. Oil production from the nearby Eagle Ford shale formation also has contributed to the metro’s recovery: earnings in the “mining” category were up 148.6 percent.

9. Pittsburgh, PA Population: 2,360,733 Per-capita GDP growth: 9.4% Per-capita personal income growth: 13.7% Private-sector job growth: 4.5% Earnings growth led by: Mining (+156.5%) Job growth led by: Professional and business

services (+10.8%) Fortune 500 companies: United States Steel,

PNC Financial Services, PPG Industries, 6 morePittsburgh’s recent economic performance says a lot about its location. The MSA sits atop the Marcellus shale formation, and the drilling boom there has led to a sharp rise in oil-related earnings and employment. Jobs in the “mining and logging” category (oil and gas included) rose by 77 percent, from 5,600 to 9,900,


11

between 2009 and 2012. The 156 percent spike in “mining” earnings amounted to a $1.5 billion increase in just three years.

10. Youngstown-Warren-Boardman, OH-PA Population: 558,206 Per-capita GDP growth: 10.3% Per-capita personal income growth: 13.0% Private-sector job growth: 3.9% Earnings growth led by: Manufacturing (+32.7%) Job growth led by: Manufacturing (+16.6%) Fortune 500 companies: NoneYoungstown’s recovery is another story with an oil-and-gas angle. The MSA is over the Marcellus and Utica shale formations, but has not seen as much drilling activity as areas to the south and east. However, drillers’ supply needs are giving Youngstown’s manufacturing sector a boost. In 2012, the French firm Vallourec opened a $1.1 billion steel-pipe plant in the Youngstown area, producing 350 jobs. This was the first mill to open since steelmakers abandoned Youngstown three decades ago.

11. Indianapolis-Carmel-Anderson, IN Population: 1,928,982 Per-capita GDP growth: 5.7% Per-capita personal income growth: 12.0% Private-sector job growth: 5.9% Earnings growth led by: Health-care and social


services (+14.1%) Fortune 500 companies: WellPoint, Eli Lilly,

Simon Property GroupManufacturing still matters in the Indianapolis MSA: it accounts for some 84,000 jobs, or 9 percent of total employment. But it doesn’t count for as much as it once did. The recession accelerated a decline that began at the turn of the last century, and most of the lost jobs have not come back. Indianapolis has made up the loss with growth in services, particularly health-care. Jobs in the BLS “education and health services” category have been making a steady, recession-proof climb since at least 1990. As for earnings, the largest share of these came in the BEA’s “health-care and social assistance” category during the recovery.

12. Columbus, OH Population: 1,944,002 Per-capita GDP growth: 4.7% Per-capita personal income growth: 13.4% Private-sector job growth: 5.6% Earnings growth led by: Government and

government enterprises (+16.7%) Job growth led by: Education and health

services (+14.4%) Fortune 500 companies: Cardinal Health,

Nationwide, American Electric Power, 2 moreColumbus, like Austin, hosts a state government and a major public university. It appears to depend more than its Texas counterpart on the public sector, however. State government alone accounted for nearly $1.5 billion in earnings growth from 2009 to 2012. So its future prosperity is tied somewhat to that of the whole state. But it has its own growth potential in a substantial corporate sector, led by drug distributor Cardinal Health and insurer Nationwide.

13. Toledo, OH Population: 608,711 Per-capita GDP growth: 11.8% Per-capita personal income growth: 11.2% Private-sector job growth: 4.4% Earnings growth led by: Manufacturing

(+26.8%) Job growth led by: Manufacturing (+13.5%) Fortune 500 companies: Dana Holding,

Owens-Illinois, Andersons, Owens CorningAnother industrial region on the rebound, the Toledo MSA enjoyed an especially big leap (36 percent) in earnings from durable-goods manufacturing between 2009 and 2012. This is a sign that Toledo is making plenty of things—tradable goods—that people outside its modest-size market want to buy. Looking ahead, Toledo will be an indicator of how durable America’s manufacturing comeback really is.

14. Portland-Vancouver-Hillsboro, OR-WA Population: 2,289,800 Per-capita GDP growth: 13.8% Per-capita personal income growth: 10.7% Private-sector job growth: 4.3%

Civ

ic R

epor

t 89

June 2014

12

Earnings growth led by: Manufacturing (+23.1%)

Job growth led by: Professional and business services (+11.0%)

Fortune 500 companies: Nike, Precision Castparts

One factor in the success of the Portland MSA is growth in computer-related manufacturing—what might be called a Silicon Valley spillover effect. Tech giants based in the San Jose MSA have been expanding into areas that are more affordable while still attractive to engineers and other high-skilled workers. The industrial corridor between the suburbs of Hillsboro and Beaverton has been nicknamed “Silicon Forest.” One company alone, Intel, hired some 3,400 workers from 2009 to 2012, bringing its total employment in the Portland area to 16,300. Durable-goods manufacturing (which includes chip-making) accounted for the largest share of earnings growth in Portland’s recovery.

15. Minneapolis–St. Paul–Bloomington, MN-WI Population: 3,422,264 Per-capita GDP growth: 6.2% Per-capita personal income growth: 11.9% Private-sector job growth: 4.5% Earnings growth led by: Finance and insurance

(+26.1%) Job growth led by: Professional and business

services (+10.5%) Fortune 500 companies: UnitedHealth Group,

Target, Best Buy, CHS, 14 moreDiversification works well for Minneapolis–St. Paul. As a recent Brookings Institution study notes, the region has “a unique mix of company headquarters, precision manufacturing, financial services, and health and medical technologies.” Eighteen Fortune 500 companies are based here. Some of the nation’s most recognizable brands, from Scotch Tape to Cheerios, come from Minneapolis–St. Paul, and the metro has a strong position in the health-care economy. It hosts the giant insurer UnitedHealth and the two largest medical device companies, Medtronic and St. Jude Medical.

16. Cleveland-Elyria, OH Population: 2,063,535 Per-capita GDP growth: 7.5%

Per-capita personal income growth: 14.2% Private-sector job growth: 2.7% Earnings growth led by: Manufacturing (+16.7%) Job growth led by: Professional and business

services (+8.5%) Fortune 500 companies: Progressive, Parker

Hannifin, Sherwin-Williams, 2 moreLike Detroit and other MSAs linked economically to the auto industry, the Cleveland MSA saw an early and brisk recovery after 2009 as manufacturing revived. Cleveland also has assets beyond its historical manufacturing core. Its young health-care businesses, for instance, attracted more venture capital in 2012 than any other midwestern market, including Chicago and Minneapolis. It lost jobs in 2013, however, raising doubts about the sustainability of its recovery.

17. San Francisco–Oakland–Hayward, CA Population: 4,455,560 Per-capita GDP growth: 3.4% Per-capita personal income growth: 15.7% Private-sector job growth: 4.6% Earnings growth led by: Professional, scientific


services (+12.6%) Fortune 500 companies: Chevron, McKesson,

Wells Fargo, Safeway, Oracle, 13 moreSan Jose’s larger neighbor, the San Francisco–Oakland MSA, has some of the same growth drivers—software (Oracle) and social media (Facebook)—that power Silicon Valley. But it is more broadly diversified, with one of the nation’s biggest banks (Wells Fargo) and the second-largest oil company (Chevron) within its borders. Like the larger Dallas–Fort Worth MSA, San Francisco–Oakland MSA boasts 18 Fortune 500 companies. Like San Jose, it is an expensive place to live and do business, but so far in this recovery, its natural assets—including an ideal climate and a highly educated workforce—have outweighed its disadvantages.

18. Baltimore-Columbia-Towson, MD Population: 2,753,149 Per-capita GDP growth: 6.6% Per-capita personal income growth: 11.3% Private-sector job growth: 3.9%


13

Earnings growth led by: Government and government enterprises (+12.6%)


Fortune 500 companies: NoneBetween 2009 and 2012, the Baltimore MSA lost its last Fortune 500 company when Black & Decker was acquired by Connecticut-based Stanley Tool Works. Manufacturing and corporate management did not contribute significantly to its recovery, but government work did. Yearly earnings from federal civilian employment, for instance, rose 24 percent, or $2 billion, and growth in this sector results in a spinoff of indirect private-sector employment, especially in professional and business services. This area has long been an administrative center for the federal government—both Social Security and Medicare/Medicaid are headquartered in the Baltimore suburb of Woodlawn, for instance. Politics, as much as economics, may determine how much employment grows here.

19. Boston-Cambridge-Newton, MA-NH Population: 4,640,802 Per-capita GDP growth: 6.3% Per-capita personal income growth: 11.3% Private-sector job growth: 3.9% Earnings growth led by: Professional, scientific


services (+6.9%) Fortune 500 companies: Liberty Mutual, TJX,

Staples, Raytheon, 6 moreBoston has played to its strengths in its recovery, growing fastest in those fields (professional, scientific, and technical services) that require a highly educated workforce. Its closest West Coast counterpart in this respect is San Francisco–Oakland, which has about the same high proportion of college graduates in its population. Boston has an edge over the Bay Area in housing costs, and Massachusetts tends to score better than California in rankings of business climate.

20. Bakersfield-Delano, CA Population: 856,158 Per-capita GDP growth (decline): (0.3)% Per-capita personal income growth: 19.1%

Private-sector job growth: 9.3% Earnings growth led by: Mining (+65.7%) Job growth led by: Construction (+26.0%),

mining and logging (+34.7%) Fortune 500 companies: NoneBakersfield—covering California’s Kern County—has a substantial farm economy, a rarity among large MSAs. Annual earnings from its export-driven agricultural sector (led by almonds and pistachios) came to $2.2 billion in 2012, more than double the 2009 total. An upswing in the oil business also helped boost personal income and (nonfarm) jobs. Kern County is the heart of California’s oil country, and interest in the vast potential of the state’s Monterey shale formation—thought to hold more than 15 billion barrels of oil—has helped spur drilling and employment.

Here are the 20 laggards—again, by rank:

81. Jacksonville, FL Population: 1,377,850 Per-capita GDP growth: 0.6% Per-capita personal income growth: 9.0% Private-sector job growth: 2.5% Earnings growth led by: Finance and insurance


services (+14.6%) Fortune 500 companies: CSX, Fidelity National

Financial, Fidelity Nat’l Info. ServicesJacksonville has a major seaport and a diversified economy, but its recovery has been held back by the lingering effects of the Florida housing bust. Like most other metros in the bottom 20, it saw construction earnings and jobs drop from 2009 to 2012. There were signs in 2013 that the real-estate slump and its dampening effect on the economy were finally coming to an end. For the year ending December 2013, the BLS reported that construction jobs were up 8 percent.

82. Greensboro–High Point, NC Population: 736,065 Per-capita GDP growth: 4.3% Per-capita personal income growth: 7.4% Private-sector job growth: 0.7% Earnings growth led by: Manufacturing

(+11.3%)

Civ

ic R

epor

t 89

June 2014

14


Fortune 500 companies: VFGreensboro is another MSA that has had to wait for its economy to start bouncing back. Early in 2013, a local business group said that it had finally seen signs of a “fledgling recovery.” Greensboro, like Winston-Salem (see no. 93 below) is making an economic transition from older blue-collar manufacturing, such as textiles and tobacco, to a more diversified mix of high-skill, high-value-added industries. Its manufacturing sector accounted for the largest share of earnings growth from 2009 to 2012, but the 11.3 percent increase here was modest compared with the growth in northern MSAs such as Detroit, Toledo, and Youngstown.

83. Phoenix-Mesa-Scottsdale, AZ Population: 4,329,534 Per-capita GDP growth: 1.3% Per-capita personal income growth: 7.2% Private-sector job growth: 2.8% Earnings growth led by: Finance and insur-

ance (+20.1%) Job growth led by: Education and health ser-

vices (+11.6%) Fortune 500 companies: Avnet, Freeport–Mc-

MoRan Copper & Gold, US Airways, 3 moreThe Phoenix metro area lost 100,000 construction jobs—more than half the total—from 2006 to 2009 and has just recently started to gain some of them back. The rest of its economy has come back faster, with leisure and hospitality jobs near their prerecession levels and education and health services continuing a steady climb uninterrupted by the recession. The aftereffects of the residential housing bust finally seem to be fading, with construction jobs up 5.6 percent in 2013 and private-sector jobs overall up 3 percent.

84. Virginia Beach–Norfolk–Newport News, VA-NC Population: 1,699,925 Per-capita GDP growth: 1.8% Per-capita personal income growth: 9.5% Private-sector job growth: 0.1% Earnings growth led by: Government and


services (+7.1%) Fortune 500 companies: Smithfield Foods,

Norfolk Southern, Dollar Tree, Huntington Ingalls Industries

The Virginia Beach–Norfolk area depends more than most other MSAs on defense spending. Unlike San Antonio, another big military town, it has not been a big winner in recent reshufflings of bases and other facilities. In 2011, for instance, the Pentagon shut down the Norfolk-based Joint Forces Command. Government spending still contributed the largest share of earnings growth in the 2009–12 period, but its increase was small compared with Baltimore’s.

85. Milwaukee–Waukesha–West Allis, WI Population: 1,566,981 Per-capita GDP growth: 2.2% Per-capita personal income growth: 8.2% Private-sector job growth: 1.2% Earnings growth led by: Manufacturing


services (+10.9%) Fortune 500 companies: Johnson Controls,

Northwestern Mutual, Manpower, 6 moreMilwaukee’s roster of nine Fortune 500 companies makes it a significant corporate center. Its largest firm, Johnson Controls, got a leg up from the revival of the U.S. auto industry (the company makes car batteries and auto interiors). After manufacturing, earnings from corporate management activities contributed the largest share to the MSA’s growth. However, job growth from manufacturing showed signs of peaking as early as 2012, and the job count in this category declined in 2013.

86. Colorado Springs, CO Population: 688,353 Per-capita GDP growth: 3.1% Per-capita personal income growth: 7.2% Private-sector job growth: 0.9% Earnings growth led by: Government and



15

services (+11.0%) Fortune 500 companies: NoneA sign of the struggle of Colorado Springs to recover can be seen in the data on professional, scientific, and technical services—an industry category with well-paid, highly educated employees. Earnings here fell by 3 percent from 2009 to 2012. At the same time, the MSA leaned increasingly on government for what growth it could muster. Nearly half its overall earnings growth came from federal military and civilian spending. Total job growth was a weak 1.7 percent over the three years, and three-quarters of the 7,700 new jobs came from the public sector.

87. Sacramento-Roseville-Arden-Arcade, CA Population: 2,196,482 Per-capita GDP growth: 0.2% Per-capita personal income growth: 9.7% Private sector job growth: 0.8% Earnings growth led by: Government and

government enterprises (+6.3%) Job growth led by: Professional and business

services (+9.4%) Fortune 500 companies: NoneThe Sacramento economy centers on California’s state government, which employs about 70,000 people in the area. All told, the federal, state, and local public sectors employ more than 220,000, some 26 percent of the MSA’s working population. (By comparison, the public-sector average for the U.S. is 19 percent.) Normally, public employment tends to act as a cush-ion in recessions, but the downturn of the 2000s hit California’s public sector hard. State and local govern-ments retrenched, and Sacramento also went through a real-estate bust. Its slow recovery has been helped by a stabilizing of state finances, though the construction job count is still scraping bottom.

88. Deltona–Daytona Beach–Ormond Beach, FL Population: 595,309 Per-capita GDP growth (decline): (1.3)% Per-capita personal income growth: 10.3% Private-sector job growth: 0.7% Earnings growth led by: Manufacturing (+26.4%) Job growth led by: Leisure and hospitality

(+5.6%)

Fortune 500 companies: NoneThis MSA, coterminous with Volusia County, is another Florida metro trying to shake off the effects of the home-building bust on construction and consumer spending. Construction jobs are just starting to revive, and manufacturing has been a bright spot. A number of major companies have plants here, including medical product makers Covidien, Sparton Electronics, and Teledyne Technologies. As in other Florida MSAs, future growth here may depend on how well the state’s business-friendly image and tax policies can make up ground lost in the real-estate debacle.

89. Cape Coral–Fort Myers, FL Population: 645,293 Per-capita GDP growth (decline): (2.9)% Per-capita personal income growth: 6.7% Private-sector job growth: 3.8% Earnings growth led by: Professional, scientific,

and technical services (+30.1%) Job growth led by: Retail trade (+8.1%) Fortune 500 companies: NoneLike Volusia County on Florida’s east coast, Lee County on the west—the Cape Coral–Fort Myers MSA—has been held back by the prolonged real-estate slump. It has a small manufacturing sector but gets a larger share of earnings from the professional, scientific, and technical services category. Fort Myers is the home of 21st Century Oncology, a medical group serving much of the U.S. and Latin America. Leisure and hospitality is the only job category showing much recent growth.

90. Little Rock–North Little Rock–Conway, AR Population: 717,666 Per-capita GDP growth (decline): (1.8)% Per-capita personal income growth: 9.3% Private-sector job growth: 1.6% Earnings growth led by: Government and


services (+5.3%) Fortune 500 companies: Dillard’s, WindstreamUnlike most of the bottom 20 on our list, the Little Rock MSA is not trying to dig out from a building slump. Construction earnings rose 11.8 percent from 2009 to 2012, though construction jobs (lumped with logging

Civ

ic R

epor

t 89

June 2014

16

and mining for this MSA by the BLS) slipped by 1.7 percent. Little Rock’s problem seems to be the lack of robust growth in any sector. It is not held back as much as it is failing to push forward. The leadership of the “government and government enterprises” sector in its earnings growth shows the value of being a state capital, along with the sluggishness of the private sector.

91. Fresno, CA Population: 947,895 Per-capita GDP growth (decline): (3.1)% Per-capita personal income growth: 10.4% Private-sector job growth: 0.5% Earnings growth led by: Transportation and

warehousing (+37.2%) Job growth led by: Education and health

services (+6.5%) Fortune 500 companies: NoneLike Bakersfield, another MSA in California’s San Joaquin Valley, the Fresno metro area has a significant agricultural sector: farm earnings totaled $1.8 billion in 2012, up 38 percent from 2009. But Fresno didn’t have quite as big a farm boom as Bakersfield, which saw earnings rise 106.5 percent. And Fresno doesn’t have Bakersfield’s oil. It has been left with declining construction (the housing boom and bust hit here, too) and an economy that leans heavily on health care and government.

92. Riverside–San Bernardino–Ontario, CA Population: 4,350,096 Per-capita GDP growth (decline): (0.6)% Per-capita personal income growth: 7.8% Private-sector job growth: 2.3% Earnings growth led by: Health care and social

assistance (+14.8%) Job growth led by: Education and health

services (+11.9%) Fortune 500 companies: NoneThe “Inland Empire,” as this MSA is called, suffers both from a real-estate hangover and from the sluggish recovery of its giant neighbor MSA, Los Angeles. Riverside–San Bernardino grew explosively in the 1980s and 1990s as workers in more expensive L.A. and Orange Counties moved inland for cheaper housing. Jobs followed them for a time, but employment plunged in the recession and hasn’t come close to reaching pre-slump levels.

93. Winston-Salem, NC Population: 647,697 Per-capita GDP growth (decline): (1.9)% Per-capita personal income growth: 9.9% Private-sector job growth (decline): (0.1)% Earnings growth led by: Management of

companies and enterprises (+123.7%) Job growth led by: Professional and business

services (+17.9%) Fortune 500 companies: Branch Banking and

Trust, Reynolds AmericanIn the heart of tobacco and textile country, Winston-Salem is trying to make the transition to high-value-added fields such as technology and medical research. The recession put roadblocks in its way, including the decision by Dell to close a facility in Winston-Salem because of the weak economy. Manufacturing, which fell sharply in the recession, has continued to lose ground, both in earnings and job count, during the recovery.

94. Spokane–Spokane Valley, WA Population: 532,253 Per-capita GDP growth: 2.8% Per-capita personal income growth: 7.2% Private-sector job growth (decline): (0.5)% Earnings growth led by: Health care and social


services (+6.6%) Fortune 500 companies: NoneSpokane’s recovery is weak in most areas, reflecting the lack of fast-growing industries or companies. Its role as a health-care destination for the inland Pacific Northwest gives it a large health-care and social-services sector. This gives Spokane some recession insurance, but it is an inherently slow-growing sector that, by its size, slows down recoveries.

95. Hartford–West Hartford–East Hartford, CT Population: 1,214,400 Per-capita GDP growth (decline): (3.7)% Per-capita personal income growth: 8.4% Private-sector job growth: 1.4% Earnings growth led by: Finance and insurance



17

services (+8.2%) Fortune 500 companies: United Technologies,

Aetna, Hartford Financial Services, 2 moreHartford and financial services have a long history together. In other places, finance is making a comeback; but it’s making only sluggish progress in the Connecticut capital. Finance and insurance earnings rose 14.5 percent from 2009 to 2012, but other MSAs, such as Minneapolis–St. Paul, at 26.1 percent, have done better in this sector. And Hartford’s job count in financial activities continues a long slide, declining by 2,700. During the same three-year stretch, Dallas–Fort Worth gained more than 11 times as many jobs—31,600. Connecticut is a high-cost state, and finance jobs do not need to be tied to a particular place in the age of electronic transfers and e-commerce.

96. Stockton-Lodi, CA Population: 702,612 Per-capita GDP growth (decline): (3.7)% Per-capita personal income growth: 7.9% Private-sector job growth (decline): (0.1)% Earnings growth led by: Transportation and

warehousing (+14.3%) Job growth led by: Transportation (+8.6%) Fortune 500 companies: NoneStockton is sadly famous for its 2013 municipal bankruptcy, and the city’s surroundings seem to feel the pain as well. Stockton is an important deepwater port, a shipping point for the massive agricultural output of California’s Central Valley, and its transport-related sectors are its only bright spots. Otherwise, it has been seeing growth mainly in the health and education fields, with a continuing slump in construction and financial activities.

97. Albuquerque, NM Population: 901,700 Per-capita GDP growth (decline): (0.8)% Per-capita personal income growth: 6.2% Private-sector job growth (decline): (3.5)% Earnings growth led by: Government and


services (+4.9%)

Fortune 500 companies: NoneReaders by now will recognize Albuquerque’s recession story: a bad slump driven by falling real-estate prices, followed by an anemic recovery without strong private-sector growth drivers. Leadership has come from government in earnings and from education and health services in jobs. Neither has been growing all that much.

98. Tucson, AZ Population: 992,394 Per-capita GDP growth (decline): (0.7)% Per-capita personal income growth: 5.6% Private-sector job growth: 0.0% Earnings growth led by: Government and


services (+4.3%) Fortune 500 companies: NoneTucson plays second fiddle in Arizona to the Phoenix MSA, and its weak recovery to some extent echoes that of its larger neighbor. Tucson has had a slower road back, perhaps because it lacks corporate leadership (such as the six Fortune 500 companies in Phoenix) and depends more on public spending. The continued slump in its construction sector, with earnings down 10.8 percent over three years, suggests that it still has more work to do to shake off the real-estate bust.

99. Palm Bay–Melbourne–Titusville, FL Population: 547,307 Per-capita GDP growth (decline): (3.1)% Per-capita personal income growth: 7.5% Private-sector job growth (decline): (0.5)% Earnings growth led by: Health care and social

assistance (+11.6%) Job growth led by: Leisure and hospitality

(+7.5%) Fortune 500 companies: NoneThis is Brevard County, the “Space Coast” known for Cape Canaveral, the Kennedy Space Center, and, in recent years, foreclosures. The local economy soared in the mid-2000s building boom, only to plummet after 2007, when the housing market collapsed. In 2012, it made the top of a Forbes list of “The Top 10 New Foreclosure Capitals.” At the time, three years into the official

Civ

ic R

epor

t 89

June 2014

18

recovery, it had a foreclosure rate of one per 170 homes and a 22-month supply of distressed homes for sale. The construction sector’s record reflects the prolonged slump, slipping 10.7 percent in earnings and 15 percent in jobs from 2009 to 2012. Businesses not tied to building have been steadier, with education, health services, and leisure and hospitality showing modest growth.

100. Las Vegas–Henderson–Paradise, NV Population: 2,000,759 Per-capita GDP growth (decline): (1.8)% Per-capita personal income growth: 2.4% Private-sector job growth: 0.3% Earnings growth led by: Accommodation and

food services (+12.1%) Job growth led by: Leisure and hospitality

(+4.3%) Fortune 500 companies: Las Vegas Sands,

MGM Resorts Int’l, Caesars Entertainment, Wynn Resorts

Las Vegas has also been on a construction roller coaster, with some 70,000 building jobs lost from 2006 to 2012. From 2009 to 2012, when other metros were starting to recover, the gambling capital saw yearly construction earnings fall 41 percent and jobs fall 42 percent. Employment in this sector remains near its recession low. The good news for Las Vegas is that its core industry, leisure and hospitality, was far less volatile. This sector has been gradually rising, but Las Vegas faces continued competition from other gambling centers, including Atlantic City in the U.S., Macau in Asia, and American Indian casinos throughout California and other states.

PART 2: WHAT SEPARATES LEADERS FROM LAGGARDS?

Each MSA has its own story. And there is more than one way for a city or region to thrive. In fact, there may be as many routes to success as there are MSAs. At the same time, success stories tend to have certain things in common. The same is true for the laggards. We have briefly told those stories for MSAs in two groups: the top 20 and the bottom 20, based on performance from 2009 to 2012. Here are some features that tend to set these groups apart.

Leaders have more college graduates.

With some exceptions, top-performing MSAs have a more educated population than the MSAs at the bottom of the list. Census data from 2012 for the 100 largest MSAs showed San Jose with the second-highest percentage of residents with bachelor’s degrees or higher, behind only Washington, D.C. Also high on the list were top-performing MSAs San Francisco (fourth), Boston (fifth), Austin (eighth), and Minneapolis (tenth). As shown in Table 5, the top 20 had a college-graduate average of 34.3 percent, compared with 26.9 percent for the bottom 20 (Table 6).

Metro areas can do well without a relatively well-educated workforce; Bakersfield, last among all the 100 large MSAs, with only 15.3 percent of its population holding college degrees, has thrived lately on the strength of oil drilling and farming. Youngstown and Toledo are also on the low side of college-grad rankings (97th and 88th) but have caught a wave of resurgent manufacturing spurred, in part, by the auto industry and gas drillers. But the options of such metros are also more limited than those with highly educated populations. Businesses in an MSA with high skill levels are more likely to find the employees they need in order to compete globally and offer high-paying jobs.

Leaders are home to more large companies.

If nothing else, hosting large corporations lends prestige to a metro area. The more tangible benefits of a Fortune 500 home office are harder to gauge. A big company in a small local economy can make a huge difference to the area’s future. Larger MSAs don’t stand or fall on the whims of one company, but they do benefit from the high-paying management and support jobs typical of a corporate HQ. And some MSAs seem especially good at attracting (or growing) and retaining large firms. The San Jose MSA, for instance, has 15 Fortune 500 companies, or about eight for each million residents. Minneapolis–St. Paul has 18, or more than five per million. By contrast, Los Angeles has two Fortune 500 companies per million


19

people, Chicago has just under three, and the New York MSA has about three and a half.

Overall, the top-performing 20 large MSAs are home to 154 Fortune 500 corporations. The bottom 20 have just 36. Even corrected for the larger size of the top 20 group, that is still a sizable difference—more than twice the number per resident. As with other indicators, there are exceptions. In the bottom 20, Milwaukee is a significant corporate center, with nine large companies. Baltimore has no Fortune 500 companies at all, but still ranks among the top 20 performers. Yet in a number of other cases, the concentration of big companies does seem to reflect certain strengths. Corporations may favor an MSA because it is rich with the professional support

they require, such as banking and legal services. They may also be attracted to an MSA to be at the center of their industry, where specialized talent and suppliers are most abundant. San Jose is one such hub in technology. Houston plays a similar role in energy. The recent announcement from Occidental Petroleum, the last large oil company in Los Angeles, that it will move to Houston is evidence that—in this industry, at least—Houston is the place to be.

Leaders have a higher “PST” quotient.

The percentage of college graduates and the num-ber of corporate headquarters are what we would call “high-value” factors: they are associated with

% of residents with bachelor’s degrees or

higher, 2008 (1)

Number of Fortune 500 companies,

2012 (2)

Professional, scientific, and technical (PST) sector as % of 2012

nonfarm earnings (3)

% change in PST sector earnings,

2009–12 (3)

San Jose, CA 46.4 15 17.6* +23.7*

Nashville, TN 32.6 3 9.0 +28.7

Grand Rapids, MI 27.9 0 6.5 +10.7

Houston, TX 29.6 25 11.4 +19.1

Detroit, MI 28.2 12 13.8 +17.8

Austin, TX 40.5 2 13.8 +27.3

Dallas–Fort Worth, TX 31.6 18 10.3 +18.0

San Antonio, TX 26.5 5 7.0 +18.4

Pittsburgh, PA 30.5 9 10.3 +14.5

Youngstown, OH-PA 18.8 0 3.5 +6.1

Indianapolis, IN 32.1 3 8.8 +16.1

Columbus, OH 34.1 5 9.2 –0.3

Toledo, OH 23.7 4 5.6 +10.0

Portland, OR-WA 35.1 2 9.0 +19.4

Minneapolis–St. Paul, MN-WI 39.5 18 10.0 +13.5

Cleveland, OH 28.5 5 9.0 +11.4

San Francisco–Oakland, CA 45.0 18 21.9 +11.4

Baltimore, MD 36.4 0 13.3 +18.8

Boston, MA-NH 42.9 10 16.7 +17.4

Bakersfield, CA 15.3 0 5.3 +21.7

Totals/Averages 34.3 154 10.6 +15.8

TABLE 5: TOP 20 LARGE MSAs (RANK 1 TO 20): HIGH-VALUE FACTORS

*Estimate from BEA data; see “Note on Confidentiality” in table 6Source: (1) Census Bureau (American Community Survey); (2) Fortune, CNN.com; (3) Bureau of Economic Analysis

Civ

ic R

epor

t 89

June 2014

20

the growth of high-paying jobs and rising incomes from high-skilled services. These occupations—ac-counting, law, engineering, architecture, and other fields requiring extensive training and expertise—are included in the “professional, scientific, and technical services” sector of the North American Industrial Classification System (NAICS). We call it PST for short, and it has been a major factor in

the growth of most top-performing MSAs since the recession. As a group, the top 20 have seen an average growth of 15.8 percent in personal income from this sector, above the 14.7 percent average for all metro areas and well above the 8.5 percent for the bottom 20 performers (Tables 5 and 6). Also worth noting is the different share of PST income in the economies of the top and bottom

% of residents with bachelor’s degrees or

higher, 2008 (1)

Number of Fortune 500 companies,

2012 (2)

Professional, scientific, and technical (PST) sector as % of 2012

nonfarm earnings (3)

% change in PST sector earnings,

2009–12 (3)

Jacksonville, FL 28.0 3 8.3 +13.1

Greensboro, NC 26.2 1 6.2 +19.5

Phoenix, AZ 29.2 6 8.6 +10.1

Virginia Beach, VA-NC 28.8 4 7.6 +0.8

Milwaukee, WI 32.5 9 8.0 +8.1

Colorado Springs, CO 34.8 0 11.4 –3.0

Sacramento, CA 30.3 0 9.1 +9.0

Deltona–Daytona Beach, FL 21.0 0 5.2 +8.6

Cape Coral–Fort Myers, FL 24.2 0 8.0 +30.1

Little Rock, AR 29.4 1 7.6 +13.2

Fresno, CA 18.5 0 4.7 +4.5

Riverside–San Bernardino, CA 19.5 0 4.4 +2.1

Winston-Salem, NC 28.7 2 6.3 +6.7

Spokane, WA 27.4 0 6.1 +10.4

Hartford, CT 36.9 5 8.3 +12.5

Stockton, CA 18.9 0 3.2 +9.9

Albuquerque, NM 29.9 0 12.3 +0.8

Tucson, AZ 30.2 0 8.1 +2.6

Palm Bay, FL 26.8 1 9.8 +5.4

Las Vegas, NV 22.1 4 7.4 +5.7

Totals/Averages 26.9 36 7.5 +8.5

TABLE 6: BOTTOM 20 LARGE MSAs (RANK 81 TO 100): HIGH-VALUE FACTORS

Source: (1) Census Bureau (American Community Survey); (2) Fortune, CNN.com; (3) Bureau of Economic Analysis

NOTE ON CONFIDENTIALITY:The Bureau of Labor Statistics and the Bureau of Economic Analysis are required by law to maintain the confidentiality of business data. As a result, useful data sometimes fall into their nondisclosure requirements and are suppressed. This was the case with the professional, scientific, and technical services category of personal income for the San Jose–Sunnyvale–Santa Clara MSA in 2012. We developed an estimate of the 2012 figure by estimating other categories suppressed for nondisclosure. For the forestry, fishing, and related activities sector, we applied the sector share of total private nonfarm earnings for all U.S. metro areas for 2009 and 2012. For both the utilities and transportation and warehousing sectors, we applied the percentage change from 2009 to 2012 from all U.S. metro areas to the 2009 figure, which wasn’t suppressed. Deriving these estimates for suppressed categories allowed us to estimate the professional, scientific, and technical services sector by simple subtraction of all other sectors from the total. While there is undoubtedly error in this estimate, it still shows that the San Jose–Sunnyvale–Santa Clara metro area experienced growth in the sector (23.7 percent) well above the collective U.S. metro area average of 14.7 percent.


21

20 MSAs. In 2012, the PST sector accounted for 10.6 percent of overall income in the top 20 and just 7.5 percent in the bottom 20.

Laggards have recovered more slowly from the home-building slump.

The residential construction boom of the early to mid-2000s had an uneven impact on the nation. So did the bust that followed. In some regions, the booms were not excessive and were followed by relatively mild downturns, most of which bottomed out in 2010. MSAs in Texas, the Northeast, and the upper Midwest tended to follow this pattern. Florida, Arizona, Nevada, and inland California experienced something more economically damaging: a bubble

that collapsed into a prolonged slump. In some cases, the downturn was not clearly over until 2013.

In general, as can be seen in Tables 7 and 8, the top 20 performers have had a much gentler ride on the real-estate roller coaster. The worst peak-to-trough loss of construction jobs—Detroit’s, at -39.8%—is still smaller than the average job loss of -43.1% in the bottom 20. Eight of the bottom 20 MSAs lost more than half of their construction jobs, with Las Vegas shedding nearly two-thirds. And the steeper the decline, the slower the recovery. All of the top 20 MSAs experienced a rise in construction-related income from 2009 to 2012, with the increases averaging 12.9 percent. The yearly count of residential building permits rose in all but two of them, with an

Year of construction jobs peak (1)

Year of trough

(1)

% change in jobs, peak to

trough (1)

Construction sector as % of 2012 nonfarm earnings (2)

% change in construction

earnings, 2009–12 (2)

% change in residential

building permits, 2009–12 (3)

San Jose, CA 2007 2011 –33.1 3.0 +8.3 +405.7

Nashville, TN 2007 2010 –26.4 5.6 +9.8 +67.2

Grand Rapids, MI * 2004 2010 –31.6 4.6 +8.5 +62.4

Houston, TX 2008 2011 –17.0 4.6 +13.2 +58.4

Detroit, MI* 2004 2010 –39.8 4.2 +13.3 +239.5

Austin, TX* 2007 2011 –19.4 6.2 +11.5 +123.4

Dallas–Fort Worth, TX* 2008 2010 –19.4 5.9 +12.8 +72.0

San Antonio, TX 2008 2011 –22.6 7.1 +1.6 +158.1

Pittsburgh, PA 2008 2010 –13.5 6.2 +15.9 +14.3

Youngstown, OH-PA* 2004 2010 –20.0 5.5 +24.4 –17.3

Indianapolis, IN 2007 2010 –27.9 6.3 +17.9 –10.8

Columbus, OH* 2004 2010 –32.3 4.5 +9.8 +67.8

Toledo, OH* 2005 2010 –29.7 6.5 +17.6 +22.0

Portland, OR–WA 2007 2010 –30.9 5.8 +6.9 +93.7

Minneapolis–St. Paul, MN-WI* 2005 2010 –38.1 4.4 +12.4 +146.1

Cleveland, OH* 2004 2010 –28.0 4.2 +12.2 +12.7

San Francisco–Oakland, CA** 2007 2010 –28.6 4.4 +7.3 +158.1

Baltimore, MD* 2006 2010 –21.4 6.3 +6.8 +16.4

Boston, MA-NH 2006 2010 –23.5 4.5 +12.3 +61.6

Bakersfield, CA 2006 2010 –36.5 7.1 +36.2 +12.8

Averages -27.0 5.3 +12.9 +82.1

TABLE 7: TOP 20 LARGE MSAs AND THE CONSTRUCTION CYCLE

*“Construction, mining, and logging” category in BLS data (columns 1–3)**San Francisco–San Mateo–Redwood City Metropolitan Division for BLS dataSource: (1) Bureau of Labor Statistics, annual data through 2012; (2) Bureau of Economic Analysis; (3) Census Bureau

Civ

ic R

epor

t 89

June 2014

22

average increase of 82.1 percent. In the bottom 20, only three MSAs saw a rise in construction earnings; the group had an overall decrease of 7.2 percent. Building permits rose, but not by as much—just 25.7 percent, on average.

One hopeful sign is that, as of 2012, the share of personal income from construction in both the top and bottom 20 was the same, averaging just over 5 percent. In other words, at least some of the MSAs that depended on debt-fueled home-building for much of their growth in the past decade may have settled into a more sustainable level of construction activity. Whether they have completely shaken off the bust remains to be seen. The impact lingers wherever homeowners are still trying to shed excess

debt and where foreclosed properties have yet to clear the market.

Leaders rely less than laggards on government spending.

Betting on government has not been a winning strategy for most MSAs lately. With a few exceptions, income earned in the public sector increased by single digits, if it rose at all, from 2009 to 2012. This was a period of retrenchment in state and local spending and, after the 2009 stimulus package ran its course, in the federal government as well. Just three MSAs in the top 20—San Antonio, Columbus, and Baltimore—and one in the bottom 20 (Colorado Springs) saw income from the public sector gain more than 10

Year of construction jobs peak (1)

Year of trough

(1)

% change in jobs, peak to

trough (1)

Construction sector as % of 2012 nonfarm earnings (2)

% change in construction

earnings, 2009–12 (2)

% change in residential

building permits, 2009–12 (3)

Jacksonville, FL 2006 2012 –45.9 4.5 –9.7 +53.6

Greensboro, NC* 2007 2012 –31.6 5.0 –1.6 –9.1

Phoenix, AZ 2006 2010 –54.2 6.0 –2.9 +72.2

Virginia Beach, VA-NC* 2005 2012 –30.2 4.5 –12.8 +1.5

Milwaukee, WI 2007 2012 –33.2 3.9 –5.4 +23.6

Colorado Springs, CO* 2006 2011 –34.1 4.6 –8.4 +119.9

Sacramento, CA 2005 2011 –49.7 5.1 –9.8 +25.8

Deltona–Daytona Beach, FL* 2006 2011 –53.8 4.9 –8.1 +14.1

Cape Coral–Fort Myers, FL* 2006 2011 –57.5 7.7 +11.8 +116.4

Little Rock, AR* 2007 2012 –13.3 6.1 –3.5 +8.7

Fresno, CA 2006 2011 –50.4 4.9 +1.2 –17.2

Riverside–San Bernardino, CA 2006 2011 –53.7 6.8 –3.7 –6.1

Winston-Salem, NC* 2007 2011 –31.1 4.5 –9.6 +9.9

Spokane, WA* 2007 2011 –33.8 5.7 –10.8 –24.2

Hartford, CT* 2007 2012 –23.8 4.6 +3.6 –1.1

Stockton, CA 2005 2011 –55.7 5.4 –4.7 +27.0

Albuquerque, NM* 2006 2012 –40.8 6.1 –6.1 +23.2

Tucson, AZ 2006 2012 –48.7 4.2 –12.4 +33.4

Palm Bay, FL* 2006 2011 –54.7 4.1 –10.7 +13.4

Las Vegas, NV 2006 2012 –65.9 6.3 –41.1 +26.7

Averages –43.1 5.3 –7.2 +25.7

TABLE 8: BOTTOM 20 LARGE MSAs AND THE CONSTRUCTION CYCLE

*“Construction, mining, and logging” category in BLS data (columns 1–3)Source: (1) Bureau of Labor Statistics, annual data through 2012; (2) Bureau of Economic Analysis; (3) Census Bureau


23

percent (Tables 9 and 10). Ten experienced losses. The winners gained from local increases in military spending (San Antonio and Colorado Springs), higher state spending (Ohio’s capital, Columbus), and federal programs, such as Social Security and Medicare, spared from budget cuts (Baltimore). Otherwise, government spending has been on a slow-growth to no-growth track. As such, it softened the job losses of the recession but now impedes the progress of MSAs that depend heavily on it.

It’s no surprise, then, that the top 20 MSAs tend to get significantly less of their overall personal income from government activities than the 20 laggards do. The share of total earnings from government averaged 14.6 percent for MSA leaders and 21.3 percent for

the bottom 20. The average three-year gain in this income was low for both groups: 4.7 percent for the top 20 and 2.8 percent for the bottom 20. What made more difference was the government share of MSA income. The capitals of the two largest states make an instructive contrast here. Austin had a relatively modest gain of 6.4 percent in government income, but it was one of the top-performing MSAs overall. Sacramento had a nearly identical increase (6.3 percent) from the public sector. But it was one of the laggards. The key distinction between the two is that Austin’s public-sector income share was 17 percent, while Sacramento’s was much higher, at 25.5 percent. Put another way, Austin had a bigger stake in the private sector and was rewarded when private-sector growth outstripped that of government.

Government as % share of total earnings, 2012

Federal (civilian) as % of total, 2012

Military as % of total, 2012

State and local as % of total,

2012

% change in overall government earnings, 2009–12

San Jose, CA 7.7 1.0 0.1 6.6 –2.5

Nashville, TN 10.6 1.9 0.4 8.3 +4.9

Grand Rapids, MI 11.2 1.1 0.2 9.9 +3.3

Houston, TX 9.1 1.2 0.2 7.7 +3.9

Detroit, MI 11.3 2.3 0.3 8.7 –5.7

Austin, TX 17.0 1.7 0.3 15.1 +6.4

Dallas–Fort Worth, TX 10.3 2.0 0.3 8.1 +5.4

San Antonio, TX 22.7 5.6 5.2 12.0 +10.1

Pittsburgh, PA 11.4 2.1 0.3 9.0 +3.1

Youngstown, OH-PA 15.8 1.5 0.4 13.9 +0.7

Indianapolis, IN 13.0 2.6 0.4 10.0 +3.4

Columbus, OH 19.3 2.1 0.3 16.9 +16.7

Toledo, OH 16.3 1.2 0.3 14.9 –1.4

Portland, OR-WA 14.2 2.6 0.5 11.2 +7.3

Minneapolis–St. Paul, MN-WI 12.3 1.5 0.4 10.4 +2.0

Cleveland, OH 13.9 2.7 0.3 10.9 +0.9

San Francisco–Oakland, CA 14.1 1.7 0.2 12.2 +6.8

Baltimore, MD 23.8 9.7 2.0 12.1 +12.6

Boston, MA-NH 11.3 1.8 0.3 9.2 +8.3

Bakersfield, CA 26.0 5.8 1.6 18.6 +7.4

Averages 14.6 2.6 0.7 11.3 +4.7

TABLE 9: TOP 20 LARGE MSAs AND PERSONAL INCOME FROM GOVERNMENT

Source: Bureau of Economic Analysis

Civ

ic R

epor

t 89

June 2014

24

Do leaders have a better business climate?

What makes one place better than another as a place to do business? This is the multilayered question that managers and owners try to answer when they are deciding where to start, relocate, or expand an enterprise. A little experience tells them that there are no simple answers. Measuring business climate is more art than science, and the more factors that are thrown into the mix, the less scientific and more subjective the process becomes. In our study, we have surveyed the wide variety of ratings—mainly of states, but sometimes of MSAs—put out by think tanks, advocacy groups, accounting firms, and journalists. With some digging, we have tried to find rankings that were published at the start of the period we are examining—2009 to 2012—to see how well the rankings predict economic performance.

We find that rankings of states and MSAs seem to be as much about the recent past as they are about the future. High rankings tend to follow success rather than predict it. For instance, the top 20 performers on our large MSA list had, as a group, a slightly higher rank than the 20 laggards on the 2009 Forbes list of 200 “Best Places for Business and Careers” (Tables 11 and 12). Four years later, most of the top 20 had risen, with their average going from 88.7 to 60.8—after recording considerable economic growth.

Policymakers—who make decisions of crucial importance to companies, especially in the area of taxes and regulation—cannot ignore business climate, hard as it is to measure. But policy choices do not always translate clearly into economic success or failure. Right-to-work laws, for example, may be business-friendly in principle and may advertise

Government as % share of total earnings, 2012

Federal (civilian) as % of total,

2012

Military as % of total, 2012

State and local as % of total,

2012

% change in overall government earnings, 2009–12

Jacksonville, FL 17.1 4.2 3.7 9.3 +0.8

Greensboro, NC 12.7 1.9 0.3 10.5 –2.4

Phoenix, AZ 13.6 1.8 0.6 11.3 –0.3

Virginia Beach, VA-NC 36.7 9.6 15.6 11.6 +4.1

Milwaukee, WI 11.5 1.8 0.3 9.4 –1.2

Colorado Springs, CO 35.0 6.5 18.1 10.4 +15.1

Sacramento, CA 25.5 2.1 0.3 32.7 +6.3

Deltona–Daytona Beach, FL 18.0 1.4 0.5 16.0 –2.1

Cape Coral–Fort Myers, FL 21.3 1.8 0.4 19.1 +8.1

Little Rock, AR 23.9 4.2 2.7 17.1 +8.2

Fresno, CA 25.5 4.2 0.3 21.0 +1.9

Riverside–San Bernardino, CA 26.6 2.6 2.2 21.8 +2.3

Winston-Salem, NC 11.2 1.1 0.4 9.7 –1.6

Spokane, WA 21.4 3.5 2.2 15.7 +2.2

Hartford, CT 15.6 1.1 0.2 14.3 +2.0

Stockton, CA 23.2 2.7 0.4 20.2 –0.7

Albuquerque, NM 26.3 6.7 1.9 17.7 +4.7

Tucson, AZ 26.3 5.7 2.9 17.7 +8.4

Palm Bay, FL 17.8 5.5 1.8 10.5 –1.6

Las Vegas, NV 16.7 2.2 2.1 12.5 +2.2

Averages 21.3 3.5 2.9 15.4 +2.8

TABLE 10: BOTTOM 20 LARGE MSAs AND PERSONAL INCOME FROM GOVERNMENT

Source: Bureau of Economic Analysis


25

a more general pro-business approach by a state; however, they have not had significant influence on relative performance of MSAs in the current recovery.

As for taxes, the prescription for a good business climate would seem simple: the lower the better, as long as revenue is enough to pay for necessary public services. But simply ranking state business tax burdens at a point in time isn’t quite enough to separate the leaders from the laggards. Comparing tax burdens from year to year, as we have done with annual state rankings by the Tax Foundation, is more useful because it suggests where the climate is changing. And here the states with top-performing MSAs stand out. Fifteen of the top 20 metros were in states that became more business-friendly in taxation from the 2010

to 2013 fiscal years (corresponding to the prior calendar years). The 20 laggards, meanwhile, were in states with a more mixed record—on average getting worse, with only four turning friendlier.

The most useful gauge of tax climate may be the Business Tax Competitive Index, developed by Ernst & Young and issued by the Council on State Taxation in 2011. The index takes all state and local taxes on business and calculates a single number: the percentage by which taxes reduce a business’s return on a capital investment over 30 years. The ranking of states (and the District of Columbia) comes out differently from that of the Tax Foundation study. Maine is on top, with the lowest effective tax rate of 3.0 percent. New

Right-to-work state? (1)

2013 Tax Foundation

business-climate rank (2)

Change in Tax Foundation

rank, 2010–13 (2)

Forbes Best Places (200

MSAs): rank in 2009 (3)

2011 Ernst & Young Business Tax

Competitiveness Index state rank (4)

San Jose, CA N 48 0 115 29

Nashville, TN Y 15 –7 42 45

Grand Rapids, MI Y 12 –7 143 24

Houston, TX Y 9 –2 28 20

Detroit, MI Y 12 –5 193 24

Austin, TX Y 9 –2 8 20

Dallas–Fort Worth, TX Y 9 –2 32 20

San Antonio, TX Y 9 –2 16 20

Pittsburgh, PA N 19 –8 77 21

Youngstown, OH-PA N 39 –8 187 3

Indianapolis, IN Y 11 –1 31 19

Columbus, OH N 39 –8 38 3

Toledo, OH N 39 –8 156 3

Portland, OR-WA N 12 –2 26 2

Minneapolis–St. Paul, MN-WI N 44 +1 76 10

Cleveland, OH N 39 –8 144 3

San Francisco–Oakland, CA N 48 0 127 29

Baltimore, MD N 41 –4 51 12

Boston, MA-NH N 24 –12 90 32

Bakersfield, CA N 48 0 194 29

Totals/Averages 8Y, 12N 26.3 –4.0 88.7 18.4

TABLE 11: TOP 20 LARGE MSAs: SOME BUSINESS-CLIMATE INDICATORS

Source: (1) National Right to Work Legal Defense Foundation; (2) Tax Foundation; (3) Forbes.com; (4) Council on State Taxation (note: rankings include 50 states and D.C.)NOTE: All rankings and ranking changes are in reverse order of value. Lowest numbers indicate highest ranks, and negative changes show improvement in rank.

Civ

ic R

epor

t 89

June 2014

26

Mexico is 51st, with an ETR of 16.6 percent. Florida, Texas, New York, and California are all near the middle of the pack. Oregon and Ohio shine, ranked second and third. More to the point of our study, the average state ranking for our 20 top-performing MSAs, at 18.4, was well above the average of 29.8 for the bottom 20.

There is more to business climate than taxes, of course. Taxes are more measurable at the bottom line than other factors, and they certainly enter corporate calculations when expansion and investment decisions are made. Tax incentives, a way of making the tax climate exceptionally friendly to a favored business, are an obvious draw. But businesses also consider resources

such as workforce skills and supply, as well as access to capital. Nontax costs (for labor, rents, and utilities) also matter, as does quality of life. And the desirability of one MSA in a state can be quite different from that of another, even under the same regime of taxes and other costs. California, with its mix of top performers and laggards, is a good example of this.

PART 3: 2013 JOBS DATA—WHO HAS MOMENTUM?

At the time we were preparing this study, the BEA had not yet released 2013 data on personal income

Right-to-work state? (1)

2013 Tax Foundation

business-climate rank (2)

Change in Tax Foundation

rank, 2010–13 (2)

Forbes Best Places (200 MSAs): rank in 2009 (3)

2011 Ernst & Young Business Tax

Competitiveness Index state rank (4)

Jacksonville, FL Y 5 0 161 27

Greensboro, NC Y 44 +5 41 34

Phoenix, AZ Y 25 –3 113 39

Virginia Beach, VA-NC Y 15 +12 56 6

Milwaukee, WI N 43 +1 173 4

Colorado Springs, CO N 18 +5 10 18

Sacramento, CA N 48 0 119 29

Deltona–Daytona Beach, FL Y 5 0 151 27

Cape Coral–Fort Myers, FL Y 5 0 134 27

Little Rock, AR Y 33 –7 22 36

Fresno, CA N 48 0 189 29

Riverside–San Bernardino, CA N 48 0 94 29

Winston-Salem, NC Y 44 +5 18 34

Spokane, WA N 6 –3 29 40

Hartford, CT N 40 +2 108 38

Stockton, CA N 48 0 195 29

Albuquerque, NM N 38 +15 11 51

Tucson, AZ Y 25 –3 133 39

Palm Bay, FL Y 5 0 170 27

Las Vegas, NV Y 3 +1 92 33

Totals/Averages 11Y, 9N 27.3 +1.4 101.0 29.8

TABLE 12: BOTTOM 20 LARGE MSAs: SOME BUSINESS-CLIMATE INDICATORS

Source: (1) National Right to Work Legal Defense Foundation; (2) Tax Foundation; (3) Forbes.com; (4) Council on State Taxation (note: rankings include 50 states and D.C.)NOTE: All rankings and ranking changes are in reverse order of value. Lowest numbers indicate highest ranks, and negative changes show improvement in rank.


27

or GDP for MSAs. But the BLS had released employment data through December 2013, enabling us to add a fourth year of private-sector job data to compare with what we had for the three years from 2009 to 2012. The results, in Tables 13 and 14, show which MSAs among the leaders have kept up their pace of job growth and which seem to have lost steam. Likewise for the laggards—all of which are improving, but some more than others. It’s a mixed picture, especially among the leaders.

Half of the top 20 performers had job increases last year at or above the national average of 2.1 percent. Most of these showed momentum; they were improv-ing on their average pace of the prior three years. The top-performing large MSA, San Jose, had a

robust 3.6 percent increase in 2013, well up from its 2009–12 average of 2.3 percent. The private-sector employment in Grand Rapids hit a booming 5.3 percent, well up from an already robust 2.4 percent rate earlier in the recovery. Nashville slipped below its earlier rate but still had a healthy 2.7 percent in-crease in 2013. Houston, Austin, Dallas–Fort Worth, Portland (OR), Minneapolis–St. Paul, Boston, and Bakersfield also improved on their already strong 2009–12 performance.

But some MSAs showed signs of flagging. San Antonio’s job growth went nearly flat, at 0.4 percent. One factor, cited by local officials, was cuts in defense spending, which affected the metro’s large military sector and private companies serving it.

December 2012 (,000s)


Year-over-year % change

Average annual % change,

2009–12

Difference in % rate, 2013 vs.

2009–12

San Jose, CA 830.3 860.5 +3.6% +2.3% +1.3%

Nashville, TN 704.4 723.3 +2.7% +3.2% –0.5%

Grand Rapids, MI 357.2 376.3 +5.3% +2.9% +2.4%

Houston, TX 2,381.0 2,454.8 +3.1% +2.5% +0.6%

Detroit, MI 1,642.7 1,659.9 +1.0% +2.2% –1.2%

Austin, TX 674.8 700.1 +3.7% +3.5% +0.2%

Dallas–Fort Worth, TX 2,699.2 2,762.4 +2.3% +2.0% +0.3%

San Antonio, TX 730.8 733.9 +0.4% +2.0% –1.5%

Pittsburgh, PA 1,046.9 1,062.4 +1.5% +1.5% +0.0%

Youngstown, OH-PA 197.1 197.1 0.0% +1.3% –1.3%

Indianapolis, IN 804.4 816.1 +1.5% +1.9% –0.5%

Columbus, OH 800.1 811.1 +1.4% +1.8% –0.5%

Toledo, OH 260.9 261.5 +0.2% +1.4% –1.2%

Portland, OR-WA 868.4 890.7 +2.6% +1.4% +1.2%

Minneapolis–St. Paul, MN-WI 1,546.5 1,579.4 +2.1% +1.5% +0.6%

Cleveland, OH 888.3 884.1 –0.5% +0.9% –1.4%

San Francisco–Oakland, CA 1,722.8 1,753.4 +1.8% +1.5% +0.3%

Baltimore, MD 1,108.2 1,129.6 +1.9% +1.3% +0.6%

Boston, MA-NH 2,228.2 2,278.8 +2.3% +1.3% +1.0%

Bakersfield, CA 185.5 191.3 +3.1% +3.0% +0.1%

Averages +2.0% +2.0% 0.0%

U.S. Totals 113,693.0 116,058.0 +2.1%

TABLE 13: TOP 20 LARGE MSAs: PRIVATE-SECTOR JOB CHANGE, 2013

Source: Bureau of Labor Statistics

Civ

ic R

epor

t 89

June 2014

28

Manufacturing centers in the upper Midwest—Youngstown, Cleveland, Detroit, and Toledo—all fell sharply off their earlier pace. Cleveland even had a drop in jobs of 0.5 percent. Pittsburgh held steady, but at a lackluster rate of 1.5 percent. Indianapolis and Columbus also lost momentum, continuing to add jobs but at a rate below the U.S. average. Grand Rapids, the growth leader of the whole top-20 pack, was the great regional exception.

Is the refurbished Rust Belt slipping back into idle? Time will tell, but 2013 was not a banner year for the industrial heartland. It may be just a pause in the region’s manufacturing renaissance. And it may be a sign that the strongest growth is going on outside the region’s large MSAs, in smaller cities that have found opportunities in advanced manufacturing. It must be said that growth

from a very low point can be strong, up to a point, without being sustainable. From 2009 to 2012, the U.S. auto industry was emerging from a state of near-collapse (bankruptcy, in the case of GM and Chrysler) and had nowhere to go but up as long as the economy was improving. Now it is in a more normal, slower-growing market, shared with rival foreign automakers that have made their own comebacks. Detroit, along with other regions tied to the manufacture of cars and trucks, will have to deal with some familiar challenges as it tries to squeeze growth out of a highly competitive market. One reason Grand Rapids seems to be surging while its neighbors falter may be that its manufacturing is diversified and not so dependent on autos.

In the bottom 20, recovery seems to be taking hold in parts of the Sun Belt. Phoenix, with a 3.0 percent



Year-over-year change (%)

Average annual % change, 2009–12

Difference in % rate, 2013 vs. 2009–12

Jacksonville, FL 534.9 545.2 +1.9% +0.8% +1.1%

Greensboro, NC 299.7 304.2 +1.5% +0.2% +1.3%

Phoenix, AZ 1,562.9 1,610.4 +3.0% +0.9% +2.1%

Virginia Beach, VA–NC 591.3 602.1 +1.8% +0.0% +1.8%

Milwaukee, WI 735.5 739.9 +0.6% +0.4% +0.2%

Colorado Springs, CO 204.2 205.9 +0.8% +0.3% +0.5%

Sacramento, CA 608.3 623.7 +2.5% +0.3% +2.3%

Deltona–Daytona Beach, FL 137.5 139.1 +1.2% +0.2% +0.9%

Cape Coral–Fort Myers, FL 174.5 178.0 +2.0% +1.3% +0.8%

Little Rock, AR 274.5 278.6 +1.5% +0.5% +1.0%

Fresno, CA 222.3 225.1 +1.3% +0.2% +1.1%

Riverside–San Bernardino, CA 954.4 971.2 +1.8% +0.8% +1.0%

Winston-Salem, NC 182.3 183.0 +0.4% +0.0% +0.4%

Spokane, WA 174.6 176.6 +1.1% –0.2% +1.3%

Hartford, CT 465.5 470.5 +1.1% +0.5% +0.6%

Stockton, CA 156.4 158.2 +1.2% +0.0% +1.2%

Albuquerque, NM 286.1 288.9 +1.0% –1.2% +2.2%

Tucson, AZ 287.7 288.9 +0.4% +0.0% +0.4%

Palm Bay, FL 169.6 172.0 +1.4% –0.2% +1.6%

Las Vegas, NV 743.4 754.7 +1.5% +0.1% +1.4%

Averages +1.4% +0.2% +1.2 %

TABLE 14: BOTTOM 20 LARGE MSAs: PRIVATE-SECTOR JOB CHANGE, 2013



29

increase in jobs, was just a shade below Houston’s 3.1 percent (in the top 20). Unlike in some other metros hit hard by the real-estate slump, its construction sector recovered relatively early—it bottomed out in 2010—and is now growing strongly, with a 5.6 percent job gain in 2013. Sacramento also had a healthy hike of 2.5 percent in jobs, possibly reflecting the tonic effect of Silicon Valley’s surging wealth on California’s fiscal condition. On the whole, however, the laggards of 2009–12 are still trailing the pack. Sacramento and Phoenix are the only two that did better than the U.S. average in 2013.

PART 4: TOWARD A GROWTH POLICY—SOME LESSONS LEARNED

We engaged in this study with a commitment to follow where the data might lead us. What we found, as can be seen in the examples and tables above, is hardly a simple story with an easy-to-draw moral. The MSAs that did the most to lead the economy out of the recession have different strengths. The formula followed by one is not necessarily a good—or even possible—example for the others to follow. In some cases, what looks like a winning formula in the period we’ve studied may not produce sustained growth.

That said, there are lessons to be learned from the 2009–12 data. Here is what policymakers should take away from the diverse stories of metros that charged out of the gate and those that lagged behind after the Great Recession bottomed out:

Know thyself.

Every local economy has strengths and weaknesses. Some, like taxes and regulations, can be changed by policy. But others are inherent in the nature of the place. You either have oil and gas beneath your feet, or you don’t. You may want to trade smokestacks for cutting-edge tech and “clean jobs,” but you don’t have the needed critical mass of talent, research institutions, venture capital, and entrepreneurs. On the other hand, you may be better than any other

MSA at making something the nation (and world) needs: think of Grand Rapids and office furniture. Just as there is no single route to success, every community has to evaluate its existing strengths and figure out how best to draw on them for growth over the long term. Targeting an industry like technology only works for MSAs that have strength and support in that area.

Focusing on industry leadership brings high rewards and risks.

MSAs that hold a commanding position in a major sector, such as computer technology (San Jose), energy (Houston), and autos (Detroit), will share the ups and down of their industry. If the long-term economic and political trend in their industry is toward growth, as seems to be the case in technology and U.S. oil and gas production, they will thrive. But tech and energy have had their busts (the dot-com bubble and the 1980s oil slump, for instance) as well as booms. Other industries, like autos, are dependably cyclical. What goes up can be expected to come down every few years. Metros leading these industries need to accept such cycles as a fact of life. Are the risks too high? Not if businesses and governments are wisely managed. Local economies need to cushion themselves from cyclical volatility by fostering a highly skilled, versatile workforce that enables them to diversify. Companies have to stay one step ahead of global rivals, and state and local politicians have to resist the urge to bloat the public sector when business delivers a tax windfall. The now-bankrupt city of Detroit is a cautionary tale, as was California in the 2000s. It’s worth noting that the two largest municipal bankruptcies before Detroit, the California cities of Stockton and San Bernardino, are in MSAs on our bottom 20 list. On the corporate side, the U.S. auto industry has a history of losing its competitive edge when business is good. Time will tell if it has changed.

Health care and education smooth out the bumps.

For most of the 20 top-performing MSAs, professional and business services took the lead in private-sector

Civ

ic R

epor

t 89

June 2014

30

job growth. This category includes high-paid, high-skilled work from engineering to law, so it helped produce a corresponding rise in personal income as well. But they also gained jobs in another large category—education and health services, a reliable source of employment in good times and bad. For the lagging MSAs, this sector tended to play a larger role in their growth (if they were able to grow at all).

As the chart above indicates, education and health services produced nearly 4 million jobs over the past ten years, all in the private sector (it excludes public school teachers and other government employees). Jobs in professional and business services have increased more sharply since the recession, but their ten-year gain is only about 2.3 million. Manufacturing jobs have made only a modest comeback nationwide and are far below prerecession levels. These trends teach a lesson in the value of diversification. Some sectors rise or fall with forces of supply and demand, global competition, innovation, and (especially in manufacturing) automation. Others are driven by demographic trends that are much more predictable.

The demand for health-care will grow with an aging population. Education is population-driven, too, and the number of school and college-age people is not hard to forecast. Beyond their stability, education and health-care can be a growth engine for an MSA that does them exceptionally well. World-class universities and medical centers not only become destinations for people seeking the best care or college; they also produce new technology and businesses, some with enormous growth potential.

Don’t measure manufacturing wealth by jobs alone.

With a few exceptions—Detroit, Toledo, Youngstown, and Grand Rapids—manufacturing jobs have risen modestly, if at all, among top-performing MSAs. But personal income from manufacturing has increased more sharply. From 2009 to 2012, the average income gain in this category among the top 20 was 16.4 percent, while jobs rose an average of just 4.5 percent, and five of the MSAs actually shed jobs. Just one, San Francisco, saw a drop in manufacturing

U.S. SECTOR EMPLOYMENT TRENDS, 2004–13

10

12

14

16

Manufacturing Education & Health Svcs.Prof. & Business Svcs.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

18

20

22

Tota

l Em

plo

yees

(m

illio

ns)



31

income. San Jose, the top-ranked MSA, saw income rise 29.3 percent from manufacturing, with a job hike of just 1.1 percent

Leaving aside the question of whether the manufac-turing recovery is sustainable, it clearly doesn’t deserve the label “jobless.” And judged by the income it has produced, it has raised living standards in long-depressed areas. That, not the mere job count, is the important story. It is also a reminder that today’s man-ufacturing is not the labor-intensive process of old. Technology is continually raising the productivity of the individual worker, so fewer workers are needed for the same output. By the same token, each worker produces more wealth—and gets at least some of that wealth back in higher pay. And when that money is spent, it nurtures the whole community. Bottom line: modern manufacturing jobs are worth the effort to get them, including the tax and regulatory changes that may be needed to attract new plants.

Avoid the housing trap.

The experience of leader and laggard metros in recent years suggests that it’s time to retire that old economic chestnut, “Housing drives the economy.” Ten years ago, home-building was driving some economies. These now show up in our bottom 20 list of large MSAs, nursing hangovers and waking up late to the recovery. Their recovery has been held back by the loss of construction jobs and home equity, leading to lower consumption overall. As places such as Las Vegas, Phoenix, and parts of Florida show, construction jobs as a share of the nonfarm total employment had surpassed 9 percent at the height of the building boom; in Cape Coral–Fort Myers, they topped 16 percent in 2006. The top 20 metros were never as housing-dependent, and they got through the real-estate bust with less damage (some didn’t have a “bust” at all, but just a cooling of an already lukewarm market). As their real-estate markets bottomed out, both the top 20 and the bottom 20 had, on average, about the same share of their workforce in construction—just over 4 percent. For the top 20 MSAs, which had averaged

5.5 percent in their peak construction years, it wasn’t much of a drop. It was a bigger change for the bottom 20, which had peaked at an average of 7.8 percent. One lesson here is that construction should be limited to meeting demand from people who genuinely have the means to pay. Maybe 5 percent is not the magic number. But clearly, the rule should be that a healthy economy drives housing, not the other way around.

Business can succeed in an unfriendly climate, but friendlier is better.

This study will probably not settle any arguments about which states or MSAs are better than others as a place to do business. The top and bottom performers are, literally, all over the map, though Texas can point to the signal achievement of having its four largest metros not just in the top 20, but in the top ten. Texas is clearly doing something right. But its archrival California—a high-tax state, by most measures, and widely criticized as overregulated—boasts the Number 1 MSA, San Jose, and two other top-20 metros, San Francisco and Bakersfield. Florida, generally low-tax like Texas, makes a poor showing in the MSA rankings.

These results may say more about attitudes (and yes, luck) than any measurable policy matter such as taxation. Texas is lucky, of course, to be rich in oil and gas at a time when transformative technologies—hydraulic fracturing and horizontal drilling—have vastly expanded the ability to extract it. The same good fortune helps explain the growth of jobs and income in Bakersfield, the center of California’s still-significant oil business. But it’s not enough to be blessed with natural resources. Getting rich from those resources requires a willingness to pull them from their natural state. These activities disrupt the environment and create risks that, even if manageable, at least stir up debate. Different states settle those debates in different ways. Texas, North Dakota, and Wyoming tend to come down on the side of extraction. So does Pennsylvania, for now, but New York balks. California’s attitudes break down by

Civ

ic R

epor

t 89

June 2014

32

region. Along the coast, oil drilling is anathema. Fifty miles inland (where, fortunately, most of the oil is found), it’s a mainstay of the local economy.

The state of a state’s or a metro’s business climate may really come down to the type of businesses they want. Plenty of places will pass on oil refining (or on a new Wal-Mart); none will turn down biotech. The trouble is that biotech thrives in just a few places, typically where research universities and venture capital come together. Most MSAs, including the many smaller ones below the large 100, have to take what is best suited to their location and workforce.

But if those local factors ultimately define the choices that a community can make, political leaders will always have the power to choose how much they add to the costs that a business must pay. Just which taxes matter most, and how high they can go before they drive business away, are questions beyond the reach of our study. We’ve noted one measure of tax burdens, Ernst & Young’s Business Tax Competitiveness Index, which tends to give higher marks to the

better-performing MSAs—a sign that it may be on to something. But it might be best to boil down the complexities of tax and regulatory policy to a simple “Do no (unnecessary) harm” rule: to recognize that taxes and regulations on business have local economic costs, and to act accordingly.

A Final Word on This Study

Our analysis of MSA performance has been limited mostly to one set of metro areas (the largest 100) and mostly to a specific span of time—the period from 2009 to 2012, roughly starting with the end of the last recession. These limitations allow us to make only tentative conclusions, particularly about what will happen in coming years. And though the 100 largest MSAs include most of the U.S. population, they leave out plenty of smaller metro areas that may have interesting stories of their own. The faster-growing of these small metros may be playing key roles in the recovery, certainly within their own communities, and some may be rising into the ranks of the top 100 before long.


33

Base Rankings: Ranking by Averages:

Per Capita GDP

Per Capita Personal Income


Average Rank

Abilene, TX 109 32 204 115.0 81

Akron, OH 89 78 169 112.0 77

Albany, GA 315 40 323 226.0 255

Albany-Schenectady-Troy, NY 212 212 151 191.7 200

Albuquerque, NM 238 327 352 305.7 330

Alexandria, LA 174 352 322 282.7 312

Allentown-Bethlehem-Easton, PA-NJ 95 183 71 116.3 85

Altoona, PA 140 163 239 180.7 182

Amarillo, TX 240 99 229 189.3 199

Ames, IA 25 162 166 117.7 87

Anchorage, AK 319 128 41 162.7 158

Ann Arbor, MI 142 131 86 119.7 91

Anniston-Oxford-Jacksonville, AL 262 339 343 314.7 338

Appleton, WI 196 158 196 183.3 192

Asheville, NC 250 314 145 236.3 263

Athens-Clarke County, GA 278 269 249 265.3 296

Atlanta-Sandy Springs-Roswell, GA 177 277 94 182.7 189

Atlantic City-Hammonton, NJ 235 308 339 294.0 323

Auburn-Opelika, AL 190 302 27 173.0 174

Augusta-Richmond County, GA-SC 188 218 218 208.0 231

Austin-Round Rock, TX 50 86 7 47.7 21

Bakersfield, CA 265 13 13 97.0 57

Baltimore-Columbia-Towson, MD 75 121 98 98.0 58

Bangor, ME 191 312 255 252.7 285

Barnstable Town, MA 158 23 165 115.3 82

Baton Rouge, LA 117 214 160 163.7 163

Battle Creek, MI 26 167 214 135.7 113

Bay City, MI 120 238 209 189.0 197

Beaumont-Port Arthur, TX 29 76 177 94.0 55

Bellingham, WA 233 288 213 244.7 275

Bend-Redmond, OR 275 297 289 287.0 315

Billings, MT 47 71 139 85.7 48

Binghamton, NY 180 207 342 243.0 272

Birmingham-Hoover, AL 67 148 241 152.0 138

Bismarck, ND 36 6 9 17.0 9

Blacksburg-Christiansburg-Radford, VA 59 185 128 124.0 96

Bloomington, IL 258 174 236 222.7 250

Bloomington, IN 259 255 319 277.7 306

Boise City, ID 218 326 66 203.3 221

APPENDIX: ALL MSAs, RANKED BY 2009–2012 ECONOMIC INDICATORS PERFORMANCE

Civ

ic R

epor

t 89

June 2014

34

Boston-Cambridge-Newton, MA-NH 81 119 99 99.7 60

Boulder, CO 42 252 47 113.7 79

Bowling Green, KY 105 115 58 92.7 53

Bremerton-Silverdale, WA 311 343 349 334.3 353

Bridgeport-Stamford-Norwalk, CT 132 27 172 110.3 73

Brownsville-Harlingen, TX 211 244 35 163.3 161

Brunswick, GA 323 239 357 306.3 332

Buffalo-Cheektowaga-Niagara Falls, NY 159 74 146 126.3 99

Burlington, NC 106 310 130 182.0 187

Burlington-South Burlington, VT 37 63 65 55.0 28

Canton-Massillon, OH 19 38 107 54.7 27

Cape Coral-Fort Myers, FL 312 321 101 244.7 274

Cape Girardeau, MO-IL 256 281 296 277.7 307

Carson City, NV 303 345 353 333.7 352

Casper, WY 302 11 20 111.0 76

Cedar Rapids, IA 116 152 189 152.3 139

Champaign-Urbana, IL 251 231 307 263.0 293

Charleston, WV 170 98 314 194.0 202

Charleston-North Charleston, SC 143 313 29 161.7 156

Charlotte-Concord-Gastonia, NC-SC 114 168 50 110.7 74

Charlottesville, VA 148 61 174 127.7 105

Chattanooga, TN-GA 128 96 121 115.0 80

Cheyenne, WY 216 44 179 146.3 130

Chicago-Naperville-Elgin, IL-IN-WI 99 184 164 149.0 132

Chico, CA 298 104 200 200.7 214

Cincinnati, OH-KY-IN 87 89 193 123.0 94

Clarksville, TN-KY 126 319 57 167.3 166

Cleveland, TN 43 39 8 30.0 14

Cleveland-Elyria, OH 63 36 157 85.3 47

Coeur d’Alene, ID 346 241 292 293.0 322

College Station-Bryan, TX 93 175 81 116.3 84

Colorado Springs, CO 173 304 246 241.0 269

Columbia, MO 147 204 26 125.7 97

Columbia, SC 217 307 136 220.0 248

Columbus, GA-AL 283 240 245 256.0 287

Columbus, IN 4 12 3 6.3 3

Columbus, OH 124 53 54 77.0 38

Corpus Christi, TX 31 20 60 37.0 16

Corvallis, OR 165 280 190 211.7 236

Crestview-Fort Walton Beach-Destin, FL 331 228 287 282.0 309

Cumberland, MD-WV 58 82 273 137.7 120

Dallas-Fort Worth-Arlington, TX 78 41 37 52.0 25

Dalton, GA 327 325 356 336.0 355


35

Danville, IL 163 118 231 170.7 171

Davenport-Moline-Rock Island, IA-IL 108 103 171 127.3 104

Dayton, OH 153 117 183 151.0 135

Decatur, AL 267 323 261 283.7 313

Decatur, IL 107 229 276 204.0 223

Deltona-Daytona Beach-Ormond Beach, FL 286 171 256 237.7 267

Denver-Aurora-Lakewood, CO 219 149 85 151.0 134

Des Moines-West Des Moines, IA 178 274 134 195.3 204


Dothan, AL 288 188 334 270.0 299

Dover, DE 354 336 291 327.0 345

Dubuque, IA 13 130 18 53.7 26

Duluth, MN-WI 155 81 186 140.7 123

Durham-Chapel Hill, NC 260 279 117 218.7 247

Eau Claire, WI 85 176 69 110.0 72

El Centro, CA 357 147 92 198.7 210

El Paso, TX 154 153 93 133.3 110

Elizabethtown-Fort Knox, KY 6 68 76 50.0 23

Elkhart-Goshen, IN 2 8 4 4.7 2

Elmira, NY 40 111 120 90.3 52

Erie, PA 90 127 96 104.3 64

Eugene, OR 115 236 258 203.0 220

Evansville, IN-KY 210 55 104 123.0 95

Fairbanks, AK 290 237 30 185.7 195

Fargo, ND-MN 39 10 19 22.7 10

Farmington, NM 341 45 313 233.0 260

Fayetteville, NC 255 270 335 286.7 314

Fayetteville-Springdale-Rogers, AR-MO 205 66 49 106.7 69

Flagstaff, AZ 281 353 238 290.7 318

Flint, MI 21 114 132 89.0 51

Florence, SC 220 200 188 202.7 218

Florence-Muscle Shoals, AL 118 140 46 101.3 61

Fond du Lac, WI 45 160 242 149.0 133

Fort Collins, CO 101 211 53 121.7 93

Fort Smith, AR-OK 192 87 328 202.3 216

Fort Wayne, IN 49 88 105 80.7 42

Fresno, CA 316 165 265 248.7 278

Gadsden, AL 236 259 158 217.7 244

Gainesville, FL 305 112 199 205.3 226

Gainesville, GA 141 275 45 153.7 140

Glens Falls, NY 121 48 140 103.0 62

Goldsboro, NC 244 193 315 250.7 282

Grand Forks, ND-MN 77 7 68 50.7 24

Civ

ic R

epor

t 89

June 2014

36

Grand Junction, CO 264 342 348 318.0 342


Great Falls, MT 231 199 301 243.7 273

Greeley, CO 270 100 16 128.7 106

Green Bay, WI 168 203 133 168.0 169

Greensboro-High Point, NC 136 298 257 230.3 257

Greenville, NC 144 159 126 143.0 127

Greenville-Anderson-Mauldin, SC 72 227 56 118.3 88

Gulfport-Biloxi-Pascagoula, MS 355 357 309 340.3 357

Hagerstown-Martinsburg, MD-WV 92 254 36 127.3 103

Hanford-Corcoran, CA 131 3 192 108.7 70

Harrisburg-Carlisle, PA 203 195 210 202.7 217

Harrisonburg, VA 86 205 163 151.3 136

Hartford-West Hartford-East Hartford, CT 320 265 223 269.3 298

Hattiesburg, MS 197 290 266 251.0 283

Hickory-Lenoir-Morganton, NC 74 286 270 210.0 235

Hinesville, GA 30 311 308 216.3 241

Hot Springs, AR 76 80 310 155.3 142

Houma-Thibodaux, LA 253 123 173 183.0 191


Huntington-Ashland, WV-KY-OH 248 169 329 248.7 279

Huntsville, AL 200 276 338 271.3 300

Idaho Falls, ID 342 301 187 276.7 304

Indianapolis-Carmel-Anderson, IN 94 91 44 76.3 37

Iowa City, IA 198 142 80 140.0 121

Ithaca, NY 280 110 90 160.0 153

Jackson, MI 18 144 216 126.0 98

Jackson, MS 182 73 222 159.0 148

Jackson, TN 97 30 21 49.3 22

Jacksonville, FL 245 233 167 215.0 239

Jacksonville, NC 292 333 297 307.3 334

Janesville-Beloit, WI 51 93 203 115.7 83

Jefferson City, MO 247 348 351 315.3 339

Johnson City, TN 269 108 251 209.3 234

Johnstown, PA 214 260 244 239.3 268

Jonesboro, AR 134 49 42 75.0 36

Joplin, MO 66 182 230 159.3 151

Kalamazoo-Portage, MI 252 245 298 265.0 295

Kankakee, IL 96 253 185 178.0 179

Kansas City, MO-KS 123 256 175 184.7 194

Kennewick-Richland, WA 344 351 87 260.7 290

Killeen-Temple, TX 329 355 137 273.7 303

Kingsport-Bristol-Bristol, TN-VA 91 75 232 132.7 109


37

Kingston, NY 222 102 290 204.7 224

Knoxville, TN 172 79 89 113.3 78

Kokomo, IN 1 106 5 37.3 17

La Crosse-Onalaska, WI-MN 103 186 123 137.3 116

Lafayette, LA 340 24 39 134.3 112

Lafayette-West Lafayette, IN 20 136 15 57.0 30

Lake Charles, LA 127 219 247 197.7 207

Lake Havasu City-Kingman, AZ 304 332 354 330.0 349

Lakeland-Winter Haven, FL 332 33 326 230.3 256

Lancaster, PA 133 190 224 182.3 188

Lansing-East Lansing, MI 130 268 103 167.0 165

Laredo, TX 54 65 10 43.0 20

Las Cruces, NM 338 294 142 258.0 289

Las Vegas-Henderson-Paradise, NV 295 354 275 308.0 335

Lawrence, KS 333 328 336 332.3 351

Lawton, OK 322 340 347 336.3 356

Lebanon, PA 88 154 72 104.7 66

Lewiston, ID-WA 300 266 311 292.3 321

Lexington-Fayette, KY 129 209 118 152.0 137

Lima, OH 28 189 260 159.0 149

Lincoln, NE 137 178 114 143.0 126

Little Rock-North Little Rock-Conway, AR 294 223 206 241.0 270

Logan, UT-ID 100 247 125 157.3 144

Longview, TX 9 9 12 10.0 6

Longview, WA 52 156 205 137.7 119

Los Angeles-Long Beach-Anaheim, CA 234 216 159 203.0 219

Louisville/Jefferson County, KY-IN 35 143 154 110.7 75

Lubbock, TX 227 109 155 163.7 162

Lynchburg, VA 201 289 330 273.3 302

Macon, GA 229 208 202 213.0 238

Madera, CA 138 5 184 109.0 71

Madison, WI 150 201 124 158.3 147

Manchester-Nashua, NH 183 113 176 157.3 145

Manhattan, KS 266 344 340 316.7 340

Mankato-North Mankato, MN 46 14 150 70.0 35

Mansfield, OH 41 145 302 162.7 160

McAllen-Edinburg-Mission, TX 204 309 32 181.7 185

Medford, OR 254 295 293 280.7 308

Memphis, TN-MS-AR 208 141 271 206.7 229

Merced, CA 330 37 113 160.0 152

Miami-Fort Lauderdale-West Palm Beach, FL 237 258 73 189.3 198

Michigan City-La Porte, IN 53 57 286 132.0 108

Midland, TX 22 1 1 8.0 4

Civ

ic R

epor

t 89

June 2014

38

Milwaukee-Waukesha-West Allis, WI 202 273 237 237.3 266

Minneapolis-St. Paul-Bloomington, MN-WI 83 95 78 85.3 46

Missoula, MT 184 264 299 249.0 280

Mobile, AL 277 285 285 282.3 311

Modesto, CA 276 122 194 197.3 205

Monroe, LA 157 300 212 223.0 252

Monroe, MI 11 25 51 29.0 11

Montgomery, AL 249 330 321 300.0 327

Morgantown, WV 135 77 52 88.0 49

Morristown, TN 34 146 305 161.7 157

Mount Vernon-Anacortes, WA 343 315 316 324.7 344

Muncie, IN 68 197 264 176.3 175

Muskegon, MI 65 67 67 66.3 33

Myrtle Beach-Conway-North Myrtle Beach, SC-NC 279 334 262 291.7 319

Napa, CA 314 64 55 144.3 129

Naples-Immokalee-Marco Island, FL 195 191 24 136.7 115


New Haven-Milford, CT 246 215 156 205.7 228

New Orleans-Metairie, LA 176 322 119 205.7 227

New York-Newark-Jersey City, NY-NJ-PA 139 157 84 126.7 101

Niles-Benton Harbor, MI 161 137 254 184.0 193

North Port-Sarasota-Bradenton, FL 310 116 168 198.0 208

Norwich-New London, CT 352 303 281 312.0 337

Ocala, FL 308 28 317 217.7 243

Ocean City, NJ 160 221 274 218.3 246

Odessa, TX 3 2 2 2.3 1

Ogden-Clearfield, UT 104 232 77 137.7 117

Oklahoma City, OK 228 21 62 103.7 63

Olympia-Tumwater, WA 318 349 253 306.7 333

Omaha-Council Bluffs, NE-IA 186 213 201 200.0 211

Orlando-Kissimmee-Sanford, FL 261 262 102 208.3 232

Oshkosh-Neenah, WI 17 132 129 92.7 54

Owensboro, KY 113 105 23 80.3 41

Oxnard-Thousand Oaks-Ventura, CA 152 161 228 180.3 181

Palm Bay-Melbourne-Titusville, FL 317 296 294 302.3 328

Panama City, FL 339 317 116 257.3 288

Parkersburg-Vienna, WV 291 180 312 261.0 291

Pensacola-Ferry Pass-Brent, FL 282 272 108 220.7 249

Peoria, IL 7 19 63 29.7 12

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 193 224 221 212.7 237

Phoenix-Mesa-Scottsdale, AZ 224 305 148 225.7 254

Pine Bluff, AR 145 54 345 181.3 184

Pittsburgh, PA 44 46 79 56.3 29


39

Pittsfield, MA 213 92 272 192.3 201

Pocatello, ID 307 346 341 331.3 350

Port St. Lucie, FL 309 263 152 241.3 271

Portland-South Portland, ME 171 179 180 176.7 176

Portland-Vancouver-Hillsboro, OR-WA 16 151 83 83.3 45

Prescott, AZ 334 318 300 317.3 341

Providence-Warwick, RI-MA 169 134 208 170.3 170

Provo-Orem, UT 164 248 17 143.0 125

Pueblo, CO 243 107 198 182.7 190

Punta Gorda, FL 328 235 64 209.0 233

Racine, WI 57 320 141 172.7 173

Raleigh, NC 206 292 34 177.3 178

Rapid City, SD 181 43 162 128.7 107

Reading, PA 226 170 106 167.3 167

Redding, CA 285 220 325 276.7 305

Reno, NV 306 347 332 328.3 347

Richmond, VA 119 202 110 143.7 128

Riverside-San Bernardino-Ontario, CA 272 291 181 248.0 277

Roanoke, VA 207 250 191 216.0 240

Rochester, MN 64 62 161 95.7 56

Rochester, NY 230 85 149 154.7 141

Rockford, IL 23 97 111 77.0 39

Rocky Mount, NC 299 350 355 334.7 354

Rome, GA 239 257 215 237.0 265

Sacramento-Roseville-Arden-Arcade, CA 257 198 252 235.7 262

Saginaw, MI 32 225 59 105.3 67

Salem, OR 336 331 320 329.0 348

Salinas, CA 353 338 219 303.3 329

Salisbury, MD-DE 325 284 318 309.0 336

Salt Lake City, UT 146 217 61 141.3 124

San Angelo, TX 112 42 48 67.3 34

San Antonio-New Braunfels, TX 71 58 43 57.3 31

San Diego-Carlsbad, CA 242 133 170 181.7 186

San Francisco-Oakland-Hayward, CA 166 26 74 88.7 50


San Luis Obispo-Paso Robles-Arroyo Grande, CA 225 60 33 106.0 68

Santa Cruz-Watsonville, CA 326 69 197 197.3 206

Santa Fe, NM 350 329 303 327.3 346

Santa Maria-Santa Barbara, CA 215 155 147 172.3 172

Santa Rosa, CA 232 129 235 198.7 209

Savannah, GA 263 251 88 200.7 213

Scranton-Wilkes–Barre-Hazleton, PA 111 226 220 185.7 196

Seattle-Tacoma-Bellevue, WA 69 166 127 120.7 92

Civ

ic R

epor

t 89

June 2014

40

Sebastian-Vero Beach, FL 271 150 122 181.0 183

Sheboygan, WI 162 173 333 222.7 251

Sherman-Denison, TX 61 177 250 162.7 159

Shreveport-Bossier City, LA 348 47 226 207.0 230

Sioux City, IA-NE-SD 313 56 304 224.3 253

Sioux Falls, SD 324 101 70 165.0 164

South Bend-Mishawaka, IN-MI 38 94 217 116.3 86

Spartanburg, SC 12 299 97 136.0 114

Spokane-Spokane Valley, WA 187 306 295 262.7 292

Springfield, IL 284 271 195 250.0 281

Springfield, MA 185 192 234 203.7 222

Springfield, MO 79 324 182 195.0 203

Springfield, OH 60 164 259 161.0 155

St. Cloud, MN 102 50 91 81.0 43

St. George, UT 301 341 115 252.3 284

St. Joseph, MO-KS 14 242 40 98.7 59

St. Louis, MO-IL 175 234 243 217.3 242

State College, PA 125 51 138 104.7 65

Stockton-Lodi, CA 321 282 282 295.0 324

Sumter, SC 82 138 135 118.3 90

Syracuse, NY 151 83 269 167.7 168

Tallahassee, FL 337 120 346 267.7 297

Tampa-St. Petersburg-Clearwater, FL 221 70 109 133.3 111

Terre Haute, IN 70 84 225 126.3 100

Texarkana, TX-AR 167 230 207 201.3 215

Toledo, OH 24 126 82 77.3 40

Topeka, KS 223 261 211 231.7 259

Trenton, NJ 55 246 112 137.7 118

Tucson, AZ 273 337 280 296.7 325

Tulsa, OK 274 16 248 179.3 180

Tuscaloosa, AL 84 243 95 140.7 122

Tyler, TX 199 35 240 158.0 146

Urban Honolulu, HI 110 278 143 177.0 177

Utica-Rome, NY 194 210 306 236.7 264

Valdosta, GA 345 196 324 288.3 316

Vallejo-Fairfield, CA 349 249 279 292.3 320

Victoria, TX 8 15 25 16.0 8

Vineland-Bridgeton, NJ 293 222 331 282.0 310

Virginia Beach-Norfolk-Newport News, VA-NC 209 206 278 231.0 258

Visalia-Porterville, CA 296 29 153 159.3 150

Waco, TX 56 194 233 161.0 154

Warner Robins, GA 287 287 344 306.0 331

Washington-Arlington-Alexandria, DC-VA-MD-WV 241 283 131 218.3 245


41

Waterloo-Cedar Falls, IA 156 124 75 118.3 89

Wausau, WI 149 316 327 264.0 294

Weirton-Steubenville, WV-OH 268 125 350 247.7 276

Wenatchee, WA 347 293 227 289.0 317

Wheeling, WV-OH 62 34 284 126.7 102

Wichita Falls, TX 179 22 267 156.0 143

Wichita, KS 98 181 337 205.3 225

Williamsport, PA 5 18 6 9.7 5

Wilmington, NC 289 335 268 297.3 326

Winchester, VA-WV 73 135 38 82.0 44

Winston-Salem, NC 297 187 283 255.7 286

Worcester, MA-CT 122 139 178 146.3 131

Yakima, WA 335 90 277 234.0 261

York-Hanover, PA 189 267 144 200.0 212

Youngstown-Warren-Boardman, OH-PA 33 59 100 64.0 32

Yuba City, CA 356 172 288 272.0 301

Yuma, AZ 351 356 263 323.3 343

The Manhattan Institute’s Center for State and Local Leadership (CSLL) promotes

promising new approaches to reform of state and local government. CSLL works on a broad

range of issues, including public sector reform (specifically of pensions and health benefits),

education reform, prisoner reentry, policing, public housing, infrastructure, immigration, and

public service delivery. By spotlighting new ideas, and providing the research and proposals

to inform creative new policies, the CSLL hopes to lay the groundwork for an environment

in which commerce, employment, and a rich civic life can flourish.

The CSLL operates across the country, working in states such as California, Illinois, and

Rhode Island, and cities such as Newark, New Jersey and Detroit, Michigan. The CSLL’s

tools include regular writing and research reports by affiliated Manhattan Institute scholars

and senior fellows, along with public events and media appearances. The CSLL operates

www.PublicSectorInc.org, a website devoted to analysis of the implications—financial

and political—of the power wielded by public sector unions and allied elected officials.

The CSLL also annually selects and showcases: the Manhattan Institute’s Urban Innovator

Award, which recognizes a state or local leader whose combination of policy creativity and

skill at implementation has led to groundbreaking improvements in public service; and the

Manhattan Institute’s Social Entrepreneurship Awards, which recognize those who identify

social needs and take it upon themselves to address them privately.

www.manhattan-institute.org/csll

The Manhattan Institute is a 501(C)(3) nonprofit organization. Contributions are tax-

deductible to the fullest extent of the law. EIN #13-2912529

CenteR foR State and LoCaL LeadeRShip

Michael AllegrettiDirector

feLLoWS

Rick Baker

Daniel DiSalvo

Richard C. Dreyfuss

Stephen D. Eide

Edward Glaeser

Nicole Gelinas

Steven Malanga

Edmund J. McMahon

Fred Siegel

Jacob Vigdor

Marcus A. Winters

Date post:	21-Jun-2018
Category:	Documents
Upload:	lykhanh
View:	215 times
Download:	0 times

AMERICA’S TOP METROS: Who’s Leading the Recovery, … · 2014-06-05 · AMERICA’S TOP METROS:...

Documents