Best U.S. Places for Business and Careers

May 21, 2003 -- These are the worst of times for many metro areas in America.

By dint of a 4 percent drop in tax receipts, deficits now total $95 billion for the 50 states, with California leading the way (a $31 billion shortfall), followed by New York ($12 billion).

A lot of it comes down to lost jobs: The national unemployment rate recently jumped to 6 percent, from less than 4 percent three years ago. But what's bad news for cities and job seekers may be a great opportunity for companies looking to lower their costs of doing business — as Toyota did in Huntsville, Ala. — and hire from a pool of talented workers.

To reflect these changing times, we changed the way we compile our ranking of Best Places for Business and Careers, turning to analysts at Economy.com, the West Chester, Pa.-based economic and financial research firm.

In this, our fifth annual survey, we still kept a careful eye on income and job growth. But because businesses are watching their expenses so scrupulously — and find it difficult to raise prices — we gave special attention to Economy.com's cost-of-doing-business index, which includes the prices of labor, energy, taxes and office space.

We also looked closely at the qualifications of the available pool of labor, taking into account each area's concentration of college graduates and Ph.D.s. For the first time our rankings also characterized the attractiveness of a region by figuring in crime rates, housing costs and net migration.

For detailed information on each of the 150 largest metro areas, go to www.forbes.com/bestplaces. There you will also find a ranking of 168 smaller metro areas, along with information about them.

1. Austin, Texas

Population: 1,313,000 Job Growth: 3.1 percent Income Growth: 5.8 percent Net Migration: 2.7 percent Cost of Doing Business Index 1: 94.1; Rank: 48 Housing Affordability Index 2: 133; Rank: 64 Educational Attainment3: 36.7; Rank: 9 Advanced Degrees4: 1,171; Rank: 9 Crime Rate5: 4,713; Rank: 74

The vast University of Texas system keeps Austin (and local firms like Dell, Motorola and IBM) supplied with a fresh crop of college grads and Ph.D.s each year. UT's main campus, located here, enrolls 49,000 students, 25 percent in graduate and professional degree programs. And if you consider net migration to an area as an indicator of how alluring it is, Austin shines, ranking third in the country, at 2.7 percent a year.

2. Boise, Idaho

Population: 452,000 Job Growth: 3.3 percent Income Growth: 2.9 percent Net Migration: 2.4 percent Cost of Doing Business Index1: 85.8; Rank: 5 Housing Affordability Index2: 140; Rank: 53 Educational Attainment3: 26.5; Rank: 57 Advanced Degrees4: 495; Rank: 75 Crime Rate5: 3,965; Rank: 41

With costs 14 percent below the national average, Boise has been able to attract and keep tech titans Micron Technology and Hewlett-Packard. The tight labor supply has loosened over the past three years, with unemployment jumping to 5.8 percent from 3.3 percent.

3. Raleigh-Durham, N.C.

Population: 1,232,000 Job Growth: 2.1 percent Income Growth: 2.9 percent Net Migration: 2.1 percent Cost of Doing Business Index1: 92.6; Rank: 37 Housing Affordability Index2: 120; Rank: 89 Educational Attainment3: 38.9; Rank: 6 Advanced Degrees4: 1,734; Rank: 2 Crime Rate5: 5,061; Rank: 86

Raleigh-Durham's Research Triangle Park is fed by three top-notch institutions (Duke University, University of North Carolina and North Carolina State), resulting in one of the highest concentrations of college grads and Ph.D.s in the country. The high proportion of university employment in the area also significantly reduces employment volatility.

4. Atlanta, Ga.

Population: 4,263,000 Job Growth: 2.1 percent Income Growth: 3.8 percent Net Migration: 2.0 percent Cost of Doing Business Index1: 97.3; Rank: 73 Housing Affordability Index2: 156; Rank: 22 Educational Attainment3: 32.0; Rank: 16 Advanced Degrees4: 650; Rank: 35 Crime Rate5: 4,768; Rank: 76

The telecom downturn hit the region hard, but home building remains strong: For 11 straight years the Atlanta metro area has led the nation in housing construction. Atlanta is host to 14 companies in the Forbes 500, behind just New York, Houston and Chicago.

5. Madison, Wis.

Population: 433,000 Job Growth: 2.1 percent Income Growth: 3.9 percent Net Migration: 0.3 percent Cost of Doing Business Index1: 96.6; Rank: 70 Housing Affordability Index2: 115; Rank: 100 Educational Attainment3: 40.6; Rank: 3 Advanced Degrees4: 1,925; Rank: 1 Crime Rate5: 3,419; Rank: 24

The idyllic home of the University of Wisconsin has the highest concentration of Ph.D.s in America — 2 percent of the adult population have doctorates — an irresistible draw for companies interested in drug development services and stem-cell research.

6. Provo, Utah

Population: 377,000 Job Growth: 2.3 percent Income Growth: 3.2 percent Net Migration: 0.3 percent Cost of Doing Business Index1: 93.5; Rank: 42 Housing Affordability Index2: 112; Rank: 103 Educational Attainment3: 31.5; Rank: 19 Advanced Degrees4: 1,245; Rank: 6 Crime Rate5: 3,392; Rank: 23

Provo is a magnet for much of Utah's high-tech activity, fueled in part by the presence of Brigham Young University. An added bonus for executives looking to relocate: Some of the best skiing spots in the U.S., including Alta, Park City and Snowbird, are just a short drive away.

7. Omaha, Neb.

Population: 723,000 Job Growth: 1.7 percent Income Growth: 5.4 percent Net Migration: 0.1 percent Cost of Doing Business Index1: 81.2; Rank: 2 Housing Affordability Index2: 165; Rank: 15 Educational Attainment3: 28.0; Rank: 43 Advanced Degrees4: 520; Rank: 68 Crime Rate5: 5,656; Rank: 102

Warren Buffett's hometown offers an ideal climate for nearly everyone: high income growth coupled with some of the lowest business costs around (19 percent lower than the national average).

8. Des Moines, Iowa

Population: 463,000 Job Growth: 1.1 percent Income Growth: 4.9 percent Net Migration: 0.6 percent Cost of Doing Business Index1: 87.8; Rank: 12 Housing Affordability Index2: 143; Rank: 49 Educational Attainment3: 28.7; Rank: 36 Advanced Degrees4: 480; Rank: 79 Crime Rate5: 4,482; Rank: 61

What's not to like? Des Moines' per capita income of $33,200 is $4,000 higher than Iowa's mean, but business costs are still 12 percent below the national average. Unemployment: currently 4.1 percent.

9. Dallas, Texas

Population: 3,646,000 Job Growth: 1.9 percent Income Growth: 3.6 percent Net Migration: 1.7 percent Cost of Doing Business Index1: 94.5; Rank: 52 Housing Affordability Index2: 151; Rank: 31 Educational Attainment3: 30.0; Rank: 25 Advanced Degrees4: 538; Rank: 63 Crime Rate5: 5,750; Rank: 103

The long wild ride, courtesy of the telecom and energy industries, finally seems to be calming down. Dallas remains a bedrock of Southwest strength for a range of financial services.

10. Washington, D.C. — Northern Virginia

Population: 5,054,000 Job Growth: 2.4 percent Income Growth: 3.8 percent Net Migration: 1.0 percent Cost of Doing Business Index1: 106.0; Rank: 115 Housing Affordability Index2: 112; Rank: 106 Educational Attainment3: 41.8; Rank: 2 Advanced Degrees4: 1,355; Rank: 4 Crime Rate5: 3,900; Rank: 38

Talk about polarization: This area has the highest business costs of our top 10 metros (6 percent above the national average), but a highly educated labor supply (42 percent have college degrees).

Footnotes:

1: US Average=100. 2: Proportion of the median priced home that a household earning the median income could afford to purchase at prevailing mortgage rates. 3: Share of Population over age 25 with a bachelor's degree or higher. 4: PhDs per 100,000 residents. 5: Per 100,000 residents.

For more, go to Forbes.com..