Based on high housing costs and slipping job growth, California cities like San Diego and Los Angeles have proven less resilient during the pandemic, according to a ranking of economic vitality.
In the report, Best-Performing Cities 2021: Foundations for Growth and Recovery, San Diego placed 49th, to place among Tier 2 cities.
Los Angeles ranked 93rd, dropping to the third tier of large cities, down 40 rungs from its 2020 ranking. San Francisco and San Jose fell the most steeply from last year’s rankings, to land at 24th (from the top spot) and 22nd (from fifth) respectively.
In the southwest, the Phoenix-Mesa-Chandler metro area ranked the highest, at seventh among large cities.
“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 Santa Monica.
Variables evaluated by the center in producing the rankings include jobs, wages and tech growth. This year analysts added housing affordability and broadband access.
Metropolitan areas that were able to offer cheaper housing and more jobs moved up the ranks with Provo-Orem, Utah leading the large cities and Idaho Falls, Idaho grabbing the top spot among smaller cities.
Job growth in both top-performing cities was driven by high-tech industry, while Provo-Orem in particular benefited from migration from California, according to the report.
Cost-prohibitive housing has forced both high-and low-wage workers out of San Diego, the Bay Area, Silicon Valley and Los Angeles’ Silicon Beach, as residents seek a combination of opportunity and affordability, analysts wrote.
The onset of the coronavirus exacerbated this trend, which may outlast pandemic lockdowns.
“The shift to remote work that took place over the course of 2020 has become permanent in many firms and industries, including some of the highest-profile high-technology firms in the country,” the report finds.
However, researchers for the non-partisan, nonprofit think tank point to the opportunity for public policy to improve economic outcomes despite businesses closures and reductions in income related to the pandemic.
With attention to “the relationship among investments, policy choices and economic outcomes,” according to the report, “cities can begin to make better choices that will support economic growth as well as making those gains accessible to all their residents.”
The Best-Performing Cities Index calculates separate rankings for 400 larger and smaller municipalities. Analysts at the Milken center link high-tech industry growth to the affordable cost of living.
“This alignment provides a foundation for metro areas to become more resilient to economic shocks,” said Misael Galdamez, a senior policy analyst.
The aim of the report, published annually since 1999, is to allow policymakers, business leaders and residents to easily compare economic performance. This year, cities were grouped into five tiers to make analysis across peer groups easier, with only 13 metro areas in the top tier.
Five Utah cities made the first tier, including Salt Lake City, which jumped up 21 spots to number four.
The top 5 Tier 1 large cities:
- Provo-Orem, Utah;
- Palm Bay-Melbourne-Titusville, Florida;
- Austin-Round Rock, Texas;
- Salt Lake City, Utah, and
- Raleigh-Cary, North Carolina.
The top 5 Tier 1 small cities:
- Idaho Falls, Idaho;
- Logan, Utah-Idaho;
- The Villages, Florida;
- St. George, Utah, and
- Daphne-Fairhope-Foley, Alabama.