Phoenix Among Nation’s Top Performing Cities, New Report Shows

PHOENIX, AZ — The COVID-19 pandemic substantially changed how and where people do their jobs, according to a new report released Monday that includes the Phoenix metro area among the best-performing cities in the country.

The 2022 Milken Institute Best Performing Cities Index includes data from 2020, which the Santa Monica, California-based think tank said allowed for the first-of-its-kind analysis in the context of a global health crisis.

Again this year, the index noted a shift in high-tech jobs away from the largest coastal cities to more-affordable inland cities with thriving local economies. And that shift helped put the Phoenix-Mesa-Scottsdale at No. 4 on the list of top 10 large cities, up from No. 7 in 2021.

The Phoenix metro area performed well on job growth and wage growth within the past year, with local high-tech industries continuing to expand and provide high-wage jobs.

Tech companies like Nikola Motor Co., Microsoft, Uber, DoubleDutch and Gainsight have all recently increased their footprints in the Phoenix area. Phoenix's booming economy is helping to attract more people every day, making it the fastest growing city in the U.S. for the fifth year in a row in 2021. Phoenix also ranks No. 4 among large cities for lowest median age, behind Salt Lake City, Austin and Denver.

One of the largest liabilities for Phoenix, of course, is strong housing demand that pushed up housing prices by 30 percent last year.

Traditional high-tech hubs — most notably, San Jose, California, and Durham-Chapel Hill, North Carolina — remained strong and vibrant, the index showed, but are no longer the only places to find high-paying tech jobs. That spreads economic success across more of the country, according to the index.

Job creation, wage growth and production growth — particularly in the high-tech sector — are the core elements of the index, published annually since 1999. Last year, the Milken Institute added data on housing affordability and broadband access to account for the shift to remote work.

The source of data for those measures has changed due to pandemic-related delays in the release of the U.S. Census Bureau’s American Community Survey, the 2021 source. Instead, the Milken Institute used the National Association of Realtors’ Housing Affordability Index and Federal Communications Commission data on access to broadband providers.

To provide a snapshot of which places performed the best across the measurements, they’re grouped among five tiers for both large and small SMAs — or statistical metropolitan areas — based on their index scores.

“The COVID-19 pandemic has foundationally altered the way we live and work, and that has had a direct impact on our cities,” Kevin Klowden, executive director of the Milken Institute’s Center for Regional Economics, said in a news release.

“When comparing urban areas, access to opportunity is an essential consideration, especially in light of the growing inequalities made apparent by the pandemic,” he said.

The Provo-Orem area, whose tech employers include a suite of West Coast technology companies, was the top large city on the 2021 list, too. Already an established hub for technology startups, it maintained its top spot with the highest levels of employment growth and wage growth over the last five years. Here’s how the Top 10 large cities shake out:

1. Provo-Orem, Utah
2. Austin-Round Rock, Texas
3. Salt Lake City, Utah
4. Phoenix-Mesa-Scottsdale, Arizona
5. Palm Bay-Melbourne-Titusville, Florida
6. Seattle-Bellevue-Everett, Washington
7. San Jose-Sunnyvale-Santa Clara, California
8. Fayetteville-Springdale-Rogers, Arkansas-Missouri
9. Colorado Springs, Colorado
10. Dallas-Plano-Irving, Texas

Among small cities, Logan, Utah — home to several high-tech medical manufacturing industries — moved into the Top 10 in nearly all measurements of job and wage growth. Here’s the index for small cities:

1. Logan, Utah
2. St. George, Utah
3. Coeur d’Alene, Idaho
4. Redding, California
5. Idaho Falls, Idaho
6. Walla Walla, Washington
7. Sioux Falls, South Dakota
8. Gainesville, Georgia
9. Champaign-Urbana, Illinois
10. Bend-Redmond, Oregon, and Abilene, Texas (tie)

Among other key findings in the report:

• Asheville, North Carolina, had the largest drop in rankings among big cities from 2021 to 2022. For the second year in a row, it ranked near the bottom of the index for short-term job growth, an indication of the volume of jobs lost at the start of the pandemic.
• San Luis Obispo, California, saw a similar drop due to low rankings in housing affordability.
• Even with the “urban exodus” during the pandemic that caused population declines in New York City, Los Angeles and other large cities, cities such as Austin, Texas, and Seattle registered notable growth rates.

“Our report shows how patterns of economic activity are growing and changing across the nation’s cities,” report author Charlotte Kesteven, a senior policy analyst at the Center for Regional Economics, said in the news release. “Comparing their performance provides an essential starting point for policymakers and local leaders to better evaluate their economies and plan for future economic success.”