Last week's jobs report for July showed unemployment dropping from 7.6% to 7.4%, which marks the lowest rate since December 2008. Good times, right? Not exactly. The rate fell in part because more and more Americans have ceased looking for work. Wage growth has been anemic and the recovery from the recession has been the slowest since World War II. The U.S. economy is sputtering along at 2% growth.
But there are places with strong business climates, fueled by low costs and educated labor forces. With that in mind, Forbes crunched the numbers for our 15th annual list of the Best Places For Business And Careers.
Des Moines, Iowa, tops our list this year. It is the only place that ranks among the top quartile in at least nine of the 12 metrics we graded the cities on. Highlights for the Des Moines metro area include business costs that are 17% below the national average and an educated workforce where 36% of the population has a college degree and 92% possess a high school diploma.
Iowa’s capital city has a strong foothold in finance and insurance with the highest concentration of financial services employment in the country, and employers are doubling down on the area. Wells Fargo has added more than 4,000 jobs in Des Moines over the past 10 years and recently announced a new $100 million expansion in the area. Principal Financial, headquartered in Des Moines, is putting $250 million into an expansion of its downtown campus.
Facebook and Microsoft announced plans in April to invest $300 million to build its fourth owned and operated data center. The facility in Altoona, part of the Des Moines metropolitan statistical area, is expected to be up and running by the end of next year. Microsoft is investing $678 million to expand its existing state-of-the-art data center in West Des Moines, which opened in 2009. A big carrot in Iowa for data centers and other businesses with heavy energy usage: Energy costs are 22% below the national average, according to Moody’s Anayltics.
It is not just the service economy thriving in Des Moines. The metro area had record merchandise exports last year of $1.2 billion, up 22% over 2011. Top categories include agricultural products, plastics and rubber products, processed foods, machinery and chemicals.
Provo, Utah, ranks second on the strength of a humming economy, which grew 6% last year to $18 billion. The metro area also had the country's top job growth of 5%. Brigham Young University is a stabilizing force for the area and the largest employer in Provo.
Raleigh, N.C., has been a perennial in our top five and this year ranks third. Employers are able to tap the top universities in and around the metro area like Duke, the University of North Carolina and North Carolina State. They provide a steady stream of educated, young cheap labor. College attainment levels in Raleigh are 41%. People continue to flock to Raleigh, which had the second highest rate of net migration of any metro area over the past five years.
San Antonio leads five Texas cities in the top 25 of our list. San Antonio, like much of Texas, benefits from business costs that are 19% below the national average. Job growth in the Alamo City has been strong in healthcare and bioscience, as well as energy and information technology. Becton Dickenson, Boeing, Centene and United Healthcare Group all added at least 250 jobs in San Antonio last year (see "Austin Is Top Spot For Future Job Growth").
San Antonio also boasts one of the healthiest city governments as the only U.S. city with more than a million people to receive an AAA bond rating on its debt from the three major ratings agencies. The city is booming, with net migration into the Alamo City of 285,300 over the past 10 years. Other Texas locales that rank highly on our Best Places list include Dallas (No. 13), Austin (No. 14), Fort Worth (No. 15) and Houston (No. 25).
To gauge the best places for business in the U.S., we rate the 200 largest metro areas on a dozen factors related to jobs, costs (business and living), income growth, quality of life and education of the labor force. Forbes uses data from economic research firm Moody’s Analytics, the U.S. Census and demographer Bert Sperling, who runs Sperling’s BestPlaces (click here for a more detailed methodology).
California cities dominate the bottom of our ranking, taking four of the last five spots. Salinas, Stockton, Merced and Modesto are all plagued by flat or negative income growth, sky-high unemployment and an uneducated labor force (only 12% of adults have a college degree in Merced).
Atlantic City brings up the rear, ranking 200th. The New Jersey gambling and convention destination has been hammered by the economic downturn and increasing gambling options in surrounding states. The numbers paint an ugly picture. Unemployment has hovered near 13% and employment has fallen 1.9% annually the past five years. Business costs are 8% above the national average and there has been a steady net migration out of the area since 2007.