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Silicon Slopes Executive Director Clint Betts sits down with Mark Zuckerberg, founder and CEO of Facebook, at the Silicon Slopes Tech Summit at the Salt Palace Convention Center in Salt Lake City on Friday, Jan. 31, 2020.

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Utah smokes California in latest ranking of top performing U.S. cities

Silicon Slopes Executive Director Clint Betts sits down with Mark Zuckerberg, founder and CEO of Facebook, at the Silicon Slopes Tech Summit at the Salt Palace Convention Center in Salt Lake City on Friday, Jan. 31, 2020.
| Scott G Winterton, Deseret News

When it comes to the top performing economies in the country, Utah cities are watching California’s Bay Area heavyweights fade in the mirror as the Provo-Orem metropolitan area earned a No. 1 ranking in a new study that saw two other Utah metros earn top-10 slots.

The annual Milken Institute Best-Performing Cities Index has Provo-Orem regaining its nation-leading status after dropping to the No. 2 position last year following top-place rankings in 2018 and 2019.

The Santa Monica, California-based economic think tank is offering a “first look” at how cities across the country have weathered the economic impacts of the COVID-19 pandemic, assessing data sets that cover jobs, wages, high-tech growth, housing affordability and household broadband access.

In its 2021 assessment, Milken researchers noted that Utah — which netted three top tier rankings with Salt Lake City in the No. 4 spot and Ogden-Clearfield at No. 9 — was benefitting from those employees and businesses fleeing high-priced Northern California zip codes for the more affordable, and economically vibrant, climes of the Mountain West.

“The pandemic has had an outsized impact on cities where the economic effects of the current recession are exacerbated by high housing costs,” said Kevin Klowden, executive director of the Milken Institute Center for Regional Economics and California Center, in a release.

“By measuring for factors such as jobs, wages, and high-tech growth, the Best-Performing Cities Index offers analysis of how metro areas have fared based on the resilience of their local economy.

“And by incorporating data designed to gauge inclusivity, it provides important insights into how cities will be prepared to meet challenges and opportunities for future growth post-pandemic.”

The report notes some typically very high performing California cities, whose economies have long been fueled by the explosive growth of the U.S. tech sector, are suffering from pandemic-induced fallout on a larger scale than other, more affordable metro economies.

“California’s usual standouts, including (down from No. 1 last year) No. 24 San Francisco and No. 22 San Jose (down from No. 5 in 2020), dropped to Tier 2 of the index due to the high cost of housing and a strong negative shift in short-term job growth,” Milken researchers wrote. “This may indicate the outsized effect of the coronavirus pandemic on so-called ‘superstar cities.’”

Milken reported that Provo-Orem, a study area determined by the U.S. Census Bureau’s designated “metropolitan statistical areas,” rose above other U.S. cities thanks to its nation-leading job growth rates, expanding tech sector and relatively affordable cost of living.

“Provo ranked first in both one- and five-year job growth while also ranking highly in high-tech GDP concentration and the number of high-tech industries,” researchers wrote. “Provo-Orem is a recipient of the tech sector’s outmigration from the expensive West Coast.

“It is a relatively new innovation center but offers a high quality of life and amenities in the mountain region ... with significantly lower costs than Silicon Valley.”

The inclusion of housing affordability data, new to this year’s report, worked against expensive coastal locations while directly benefitting the rankings of economies that were more inclusive to all residents. Milken researchers said the change was incited by unprecedented conditions wrought by the public health crisis.

“The unique nature of the COVID-19 pandemic has provided an inflection point,” Milken researchers wrote. “We have responded by modernizing the index to show which cities have built inclusive local economies. We did so by adding one- and five-year measures of housing affordability — the percentage of households spending less than 30 percent of income on housing costs — and a measure of household access to any form of broadband internet.

“These highlight the degree to which infrastructure improvements reflect economic performance, and local job creation and higher wages make prosperity more accessible for all of a metro area’s residents.”

Salt Lake City jumped 21 places over its 2020 ranking and earned accolades for its business diversity, high wages and reliable economic expansion.

“The (Salt Lake) region has experienced consistent employment growth — 3% growth for one year (11th in the country) and 15.5% for five years (28th in the country) — spanning a range of sectors.

“Most notably, Salt Lake City is home to a regional tech, finance and professional services hub.”

High-paying non-tech jobs also helped fuel the state’s capital city to its No. 4 ranking, including “concentrations of middle-skill jobs in medical supply and service industry machinery manufacturing, which pay average annual salaries of $58,770 and $63,770 respectively.”

Ogden-Clearfield leapt 13 slots, improving its 2020 No. 22 placement to this year’s No. 9 position. Milken researchers said the northern Utah metro was one of the few U.S. cities that successfully battled the headwinds of COVID-19’s negative impacts on jobs.

“Ogden-Clearfield moved up to second place in short-term job growth, one of only a handful of large cities (and the only Tier 1 city) to achieve positive job growth over the last 12 months,” researchers wrote.

And the report noted Hill Air Force Base continues to be a primary, and powerful, economic driver for the area.

“Hill Air Force Base is an economic stabilizer, providing over 25,000 jobs with a payroll of almost $1.5 billion, and it pumps hundreds of millions more into the economy in construction and service contracts,” the report states. “The defense technology industry is a key driver in Ogden-Clearfield’s economy, as the Air Force supports innovation in the field.”

Successfully finding the middle ground of building thriving innovation industries while maintaining reasonable cost of living rates were the keys to the highest performing U.S. cities, researchers concluded.

“As we discovered through our rankings, cities perform best when they pursue innovative strategies that allow high-tech industries to grow while still providing affordable costs of living,” said Misael Galdamez, senior policy analyst in the Milken Institute Center for Regional Economics, in a statement.

“This alignment provides a foundation for metro areas to become more resilient to economic shocks.”

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