The Milken Best Performing Cities list tells us to move west of the Mississippi and/or embrace Columbia, Missouri

The Milken Institute released its annual Best Performing Cities list this week. Here’s the methodology, and here’s the list of “best large cities” and “best small cities.” There are a bunch of cool features, including the ability to compare different cities, but let’s get into some of the trends and all that, which are interesting, if potentially limited.

Big Cities: The top five were Austin, Provo, San Francisco, San Jose, and Salt Lake City. That means the entire top five list was west of the Mississippi — and two were in Utah! If you expand it to 10, it’s Seattle, Dallas, Houston, Boulder and Greeley — so again, the entire top 10 is concentrated west of the Mississippi. America’s wealth is primarily concentrated in the I-95 corridor along the Atlantic, but the process of Milken’s “Best Performing Cities” is heavily weighted towards high-tech-based metro areas. Two of the seven biggest chunks in the methodology revolve around the strength and growth of those industries, which tend to be centered away from I-95, which is primarily (this is a generalization/stereotype but often true) finance/banking centers. All the top cities have numerous pros and cons — Austin has one of the best job growth numbers in America since 2009, for example, but their traffic triangle is a mess right now. San Francisco is the hub for tech/innovation in the U.S. right now (and has been for a while), but people are living in communes because it’s too expensive. Housing affordability is a major issue by the Bay, which down-shifts the relevance of the Milken Rankings a little bit: it’s great if SF and San Jose are “best-performing cities,” but how great is it if no one can live there?

Small Cities: Columbia, Missouri — home of the University of Missouri — jumped from No. 10 in 2012 to No. 1 in 2013. Here’s the rundown that Milken gave. The presence of a major university definitely helps — they have a business incubator, for example — and they’re emerging as a telecommunications hub. It’s a little bit similar to what’s happening in Indianapolis with the proximity to Bloomington and a couple of success stories coming out of there.

If you look at the rest of the rankings for small cities, North Dakota and Texas dominate that list — which represents a trend line brought up by Richard Florida in The Atlantic Cities

These latest Milken rankings add additional evidence to the arguments that I made in my recent Atlantic essay on the “Boom Towns and Ghost Towns of the New Economy” — that the American economy is being reshaped around the twin pillars of knowledge hubs and gas and energy centers. Thirteen metros that Milken defines as tech hubs made it into the top 25, while nine of them benefited from the energy boom in shale and natural gas, especially places like Greeley, Colorado, and Houston, Texas. As the report concludes, “technology and energy were the forces powering this year’s top performers, even more so than in 2012.”

The Other Big Takeaway: There were positive associations between the Milken cities and “share of adults that are college grads” (.41 correlation) and “share of the labor force made up of knowledge, professional and creative workers” (.35). The main author of the Best-Performing Cities is Ross DeVol; he e-mailed The Atlantic regarding their analysis articles and said “It really is a talent/human capital story this year (as relates to tech).” That part I find interesting: often, you see companies who view the world now as kind of a “poach is greater than develop” paradigm — meaning, if you need a good person for a gig, you’ll go out and find that person, rather than develop said person internally. This has benefits, but it can cause a lot of issues too — it can basically de-motivate everyone you already have in-house, because it’s clearly not a place that focuses on promoting from within, for example. Rarely, though, is the focus in companies on the people; it’s typically on the product/output or the bottom line. It often seems to me that the people are superfluous to the process in the eyes of many. I’m not sure why this is — I think one reason is that the most logical place for people issues to be tasked through is Human Resources, and we’re still in an era (gradually shifting from it, but still in it) where people at the C-Suite Level came up viewing HR as “personnel,” and don’t feel it should be empowered. That’s one thing I’ve seen in places I’ve worked. Another is simply a disconnect between HR and the direct managers that would oversee a new hire; often the communication is crappy and the wrong people end up coming in for interviews. That’s a whole ‘nother issue, though.

This Milken list has flaws, sure — but what it says is that (at least as relates to tech) you need to focus on getting good people to your city (or keeping them around your city) and you build up the community off of them and their accomplishments/savvy. That’s how I read it anyway. I think as the oil industry starts to literally dry up in the next three decades or so, you’re going to see more drastic shifts in these kinds of lists — for example, the focus might be on cities that are best-equipped for electrical car movements. For example, Des Moines jumped 42 spots in this Milken ranking. Des Moines is 1 hour and 40 minutes from U-Iowa and 35 minutes from Iowa State — and it has a manageable grid. Could that be a city of the future, if they keep their talent close to home and don’t lose ’em to the coasts? For sure.

Another quick thing to take away: four of the top 20 cities on “big cities” were in Colorado; if you couple that with the two Utah cities that made the top five, that means that, via Milken, about 33 percent of the best-performing cities are in the Rocky Mountain zone. That’s interesting, although not necessarily surprising.

Ted Bauer