The Milken Institute is out with its annual Best-Performing Cities Index, and San Francisco takes the top spot for 2020. The non-profit think tank measured the economic vitality of 200 large metro areas and 201 small cities based on job creation, wage growth, high-tech GDP growth, plus other innovation and industry metrics.
“San Francisco’s legacy of innovation, research universities, and abundance of skilled labor and tech startups highlight the depth and dynamism of the region’s economy,” Kevin Klowden, executive director of the Milken Institute Center for Regional Economics, told Yahoo Finance.
Klowden notes the many of the cities on the list have something in common. “The top-performing cities have cohesive strategies that allow them to weather economic storms and leverage their assets for sustained growth,” he said.
Reno, which ranks 4th on the 2020 list, has jumped seven places since Milken’s 2018 index, and Tesla (TSLA) and its gigafactory are a big reason for the jump. Klowden says that former Nevada Governor Brian Sandoval made a significant effort to lure tech companies to the state, and when Tesla needed a home for its production facility, geography worked in the state’s favor.
“When Tesla was looking to build the gigafactory, it had to be on the rail and highway lines leading to their main factory in Fremont, California. And there aren’t a ton of places that fit that,” he said.
Klowden tells Yahoo Finance that cities that top this year’s list are primarily in the Sunbelt and have an eye on the future when it comes to its workforce. One way this is done is by creating jobs that are less likely to be phased out by technology.
“It’s this interesting case, where if you look at the places that have done well, with the exception Boise and Seattle, ... are the places that have seen real growth in the of future-facing jobs,” he said.
“It’s the ability to create jobs that are less likely to be ‘computerd out’ and less likely to be taken out by a lot of the current economic challenges. Those are the ones that do well,” he said.
“Every major, thriving city that’s on this list that has been strong for quite a while,” he added. “They have to deal with growth problems, and it’s how you manage that growth that really becomes a significant issue. And if you can manage that growth, then it means that you’re going to be thriving for quite a long time.”
Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.