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- Austin was ranked the best-performing metro area by the Milken Institute.
- The city placed highly for job and wage growth, tech sector GDP growth, and income equality.
- Raleigh and Boise also placed high for large cities, while Idaho Falls ranked first for small cities.
Austin, Raleigh, and Boise ranked as the best-performing metro areas, according to the Milken Institute's annual list released Tuesday.
The ranking, which analyzed 403 metropolitan areas nationwide, considered 13 metrics across labor market performance, high-tech impact, and access to economic opportunities.
The ranking looked at data collected between January 2022 and August 2023, and it introduced two new metrics not considered in earlier versions of the ranking: income inequality and resilience, meaning a metro area's ability to endure economic distress and severe weather.
Only 11 large and seven small cities were classified as Tier 1, placing high among many metrics.
According to the Bureau of Labor Statistics, as of January 2024, there were 5.4 million more employed Americans than before the pandemic in February 2020 — a 3.5% increase. Per the Milken Institute report, for 2022, nearly 91% of job growth occurred in metropolitan areas, though by the end of that year, only 52% of metro areas reached or exceeded pre-pandemic employment levels. Big cities also saw their tech sectors grow much faster than small cities.
While some metro areas like Los Angeles-Long Beach-Glendale and New York-Jersey City-White Plains have seen population loss and slowdowns in job and wage growth, others, particularly in the Sunbelt region, have grown rapidly.
With inflation coming down to 3.4% in December from highs of 9% in mid-2022, many metro areas have maintained strong economic performance, particularly in smaller, less expensive cities where many younger people moved for remote jobs.
"The less-than-complete recovery of many cities signals that the pandemic has had long-lasting impacts on employment in several metropolitan areas," the report said. "Cities with a large pre-pandemic leisure and hospitality sector might be experiencing a particularly slow recovery because national employment in this sector remained 4.4 percent below its pre-pandemic level by the end of 2022."
The Austin-Round Rock area ranked first after coming in second last year for large cities, or those with 275,000 residents or more. This is attributed to the city's rapid job growth, high wages, and robust tech sector. Between 2017 and 2022, the metro area's high-tech output rose 62.4% and grew its 14 high-tech industries, ranking fourth for high-tech diversification.
The city has struggled to keep prices affordable for housing and other expenses, though the city's ranking has improved for the percentage of households with affordable housing. In fact, the city had an over 73% wage increase from 2017 to 2022, which hasn't contributed to the same degree of income inequality as other metro areas with similar rapid wage growth.
Raleigh ranked second, ranking eighth for job growth between 2017 and 2022, sixth for wage growth over the same period, and 39th for high-tech GDP growth. Raleigh's economy grew partly due to job and wage growth in the business and professional services and leisure and hospital sectors. Raleigh was also the only Tier 1 large city to rank in the top 25% for housing costs and broadband, and it's prioritized new housing projects, though more construction is needed to ensure housing units keep up with demand.
Boise, which came in third, ranked in the top five for the second year in a row. The city ranked third for job growth between 2017 and 2022, fourth for wage growth during the period and 20th for community resilience. The city still has a ways to go to improve high-tech GDP contributions across many industries.
The Provo-Orem metropolitan area in Utah fell from first among large metro areas last year to fifth, citing major tech layoffs and job and wage growth declines. Still, both this metro area and Salt Lake City have seen sizeable job growth over the last few years — both are in the top 10 for high-tech GDP growth between 2017 and 2022.
Gains in some large metro areas — particularly, Elgin, Illinois; Houston-The Woodlands-Sugar Land, Texas; and Richmond, Virginia — were due mainly to growth in the leisure and hospitality sector, which is still below pre-pandemic levels but continues to drive job growth.
The report noted how most top-performing metro areas are in landlocked states — only one top-tier city metro area, Charleston-North Charleston in South Carolina, is on a coastline.
Philadelphia jumped 130 places between 2023 and 2024 in the large cities list, while Manhattan, Kansas, rose 160 places for small cities. Wichita and Lawrence, both in Kansas, also saw big jumps year-over-year.
Idaho Falls ranked as the top small city, seeing balanced growth. The city has seen robust job growth, particularly at Idaho National Laboratory, and growth in the health-care and social assistance sector. While the city still has a ways to go for wage growth, it ranks highly for its diverse economy and income distribution.
Four of the top seven small cities were in Idaho, exemplified by Coeur d'Alene, Twin Falls, and Pocatello. Idaho has experienced high job and wage growth over the last five years, with a growing high-tech sector and high marks for resilience and income distribution. Some of these cities also significantly improved the percentage of households with broadband internet.
California led the biggest drops for both large and small cities. The San Luis-Obispo-Paso Robles-Arroyo Grande metro area fell 74 spots, while Modesto fell 73, both driven by a deceleration in wage growth, particularly among leisure and hospitality. El Centro led the small city drops with a 114 spot change, driven by high economic disparities.
Have you recently moved to a new state? Reach out to this reporter at nsheidlower@businessinsider.com.