The best — or least worst — cities for jobs in ’09

By Joel Kotkin

updated 7:01 a.m. ET April 21, 2009

Over the past five years, Michael Shires, associate professor in public policy at Pepperdine University, and I have been compiling a list of the best places to do business. The list, based on job growth in regions across the U.S. over the long, middle and short term, has changed over the years — but the employment landscape has never looked like this.

In past iterations, we saw many fast-growing economies — some adding jobs at annual rates of 3 percent to 5 percent. Meanwhile, some grew more slowly, and others actually lost jobs. This year, however, you can barely find a fast-growing economy anywhere in this vast, diverse country. In 2008, 2 percent growth made a city a veritable boom town, and anything approaching 1 percent growth is, oddly, better than merely respectable.

So this year perhaps we should call the rankings not the "best" places for jobs, but the "least worst." But the least worst economies in America today largely mirror those that topped the list last year, even if these regions have recently experienced less growth than in prior years. Our No.1-ranked big city, Austin, for example, enjoyed growth of 1 percent in 2008 — less than a third of its average since 2003.

The study is based on job growth in 333 regions — called Metropolitan Statistical Areas by the Bureau of Labor Statistics, which provided the data — across the U.S. Our analysis looked not only at job growth in the last year but also at how employment figures have changed since 1996. This is because we are wary of overemphasizing recent data and strive to give a more complete picture of the potential a region has for job-seekers.

The top of the complete ranking — which, for ease, we have broken down into the two smaller lists, of the best big and small cities for jobs — is dominated by one state: Texas. The Lone Star State may have lost a powerful advocate in Washington, but it's home to a remarkable eight of the top 20 cities on our list — including No. 1-ranked Odessa, a small city in the state's northwestern region. Further, the top five large metropolitan areas for job growth — Austin, Houston, San Antonio, Ft. Worth and Dallas — are all in Texas' "urban triangle."

The reasons for the state's relative success are varied. A healthy energy industry is certainly one cause. Many Texas high-fliers, including Odessa, Longview, Dallas and Houston, are home to energy companies that employ hordes of people — and usually at fairly high salaries for both blue- and white-collar workers. In some places, these spurts represent a huge reversal from the late 1990s. Take Odessa's remarkable 5.5 percent job growth in 2008, which followed a period of growth well under 1 percent from 1998 to 2002.

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Of course, not all the nation's energy jobs are located in Texas, even if the state does play host to most of our major oil companies. The surge in energy prices in 2007 also boosted the performance of several other top-ranked locales such as Grand Junction, Colo., Houma-Bayou Cane-Thibodoux, La., Tulsa, Okla., Lafayette, La., and Bismarck, N.D.

Looking at the energy sector's hotbeds, however, doesn't tell the whole story. Another major factor behind a city's job offerings is how severely it experienced the housing crisis. There's a "zone of sanity" across the middle of the country, including the region around Kansas City, Mo., that largely avoided the real estate bubble and the subsequent foreclosure crisis.

Still other factors correlating with job growth — as evidenced by Shires' and my current and past studies — are lower costs and taxes. For example, the area around Kennewick, Wash., is far less expensive than coastal communities in that same state, and residents and businesses there also enjoy cheap hydroelectric power. Compared with high-tech centers in California and the Northeast, such as San Jose and Boston, places like Austin offer both tax and housing-cost bargains, as do Fargo, N.D. and Durham-Chapel Hill, N.C.

College towns also did well on our list, particularly those in states that are both less expensive and outside the Great Lakes. Although universities — and their endowments — are feeling the recession's pinch, they continue to attract students. In fact, colleges saw a bumper crop of applicants this year, as members of the huge millennial generation, encompassing those born after 1983, reach that stage of life. More recently, college towns have emerged as incubators for new companies and as attractive places for retirees.

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