The Puget Sound metro area finished 2013 well positioned for growth in the coming year. That’s according to two reports released last month. With Friday’s vote securing the 777X for the region, Boeing machinists make the predictions a certainty.
The Milken Institute ranks metropolitan Seattle as the sixth best performing city in 2013, up from No. 13 in 2012. And an analysis of the nation’s 52 largest metros by the Praxis Strategy Group ranks the region No. 14 in economic momentum going into 2014. As the metro area goes, so goes the state. The three metro counties account for 60 percent of total state employment; 42 percent in King County and nine percent each in Pierce and Snohomish.
So it’s not just Seahawks swagger on Main Street. Business is good and improving, primarily because of the health of our two key economic sectors. The metro economy rests on the twin peaks of aerospace and technology.
What researchers measure determines what they find, so let’s consider the details.
Milken’s index looks back to 2007 and examines growth in jobs, wages and salaries, and high tech. Winners in the innovation economy, then, automatically fare well. Ahead of Seattle are Austin, Provo, San Francisco, San Jose and Salt Lake City. The tech emphasis is justified. A report by the Washington Research Council last year found that tech accounts for nearly two-thirds of the state’s job growth since 1990 and more than half the growth in employee compensation.
The focus on performance, the analysts say, eliminates the subjectivity coloring rankings that consider things like business costs, transportation, and education. But, as they say, past performance is no guarantee of future results. The cost and policy factors ignored in this index are not ignored by businesses making investment and location decisions.
Milken’s chief research office and study co-author Ross DeVol implicitly acknowledges their importance.
“Some of the leading tech metros were successful despite being high-cost, high-regulation locations,” he says in a press release.
Seattle’s rise in the rankings — up seven places in a year — Milken attributes to job growth in aerospace and software. The region’s tech concentration is 5th in the nation. The analysts speculate that growth in commercial air travel should fuel future Boeing expansion here. With the machinists’ vote, the prophecy gains currency.
Mark Schill with the Praxis Strategy Group also reviewed the last five years to identify places with economic momentum. He considered economic and job growth, changes in household income, unemployment, population, domestic migration, births and educational attainment. The numbers were pulled together for Forbes columnist and urban analyst Joel Kotkin, a Praxis consultant.
There’s some overlap in the results. Seattle falls down the list a bit. Austin and Salt Lake City still rank in the top five.
Kotkin notes that the strongest economies are in the Southeast, Texas, the mountain states or the plains. San Jose is the only coastal city in the top 10.
“Most of the strongest local economies,” he writes, “combine the positive characteristics associated with blue states — educated people, tech-oriented industries, racial diversity — with largely red, pro-business administrations.”
The strength and synergy of this region’s aerospace-tech clusters cushioned our economy during the downturn and leave us in a strong position during the recovery. But the Praxis data identify a couple of areas of weakness.
As Kotkin writes, “Places like Nashville, Denver and Salt Lake are all getting smarter faster, increasing their numbers of educated people faster than ‘brain’ regions such as Seattle, San Francisco, Boston, New York, Chicago and Los Angeles.”
Bright young adults have options and they are mobile. Vibrant metro areas in Texas and the Southeast boast major research institutions, diversified tech economies, and lower costs of living — all appealing to students graduating with heavy student loan burdens. A successful region cannot afford to lose its appeal to the next innovation generation.
As we enter 2014, the region has reason to celebrate a growing economy. The year will see continuing disputes about low wage jobs, persistent unemployment, and barriers to opportunity. We can welcome those debates and look for sensible ways to assure that everyone has a chance to succeed here. Fortunately, with a growing economy, we’re in good shape to meet the challenge.
Richard S. Davis is president of the Washington Research Council. His email address is rsdavis@simeonpartners.com
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