Metro Seattle climbs from No. 17 to No. 8 in latest “Best-Performing Cities” report.

Add another report to your file of “good economic news” stories about metropolitan Seattle.

The region has climbed 9 slots in the new Best-Performing Cities 2018 report from the Milken Institute. The numbers impress, particularly the wage and tech metrics, as the chart below shows.

 

Last year’s report, which ranked Seattle No. 17, included a caution, which we noted at the time.

And a possible caution for Seattle,

As rising wages and rents raised the cost of doing business in cities like San Francisco, Seattle, and San Jose, some rms chose to relocate or expand away from these regions, distributing opportunities to other parts of the U.S. Managing growth and making continued quality investments in infrastructure and education will be key to these cities prospering in the long term.

The metro profile says,

Seattle-Bellevue-Everett,WA, climbed nine spots to No. 8.The metro’s strong wage growth is what propelled it in this year’s ranking as it came in seventh and fourth in five-year and one- year wage growth, respectively. Per capita income in the metro was $72,574 in comparison to the national per capita income of $50,392 in 2017.

Much of the wage growth in Seattle-Bellevue-Everett can be attributed to the area’s tech boom. Amazon and Microsoft continue to expand and provide high-paying jobs; however, Amazon chose to tap into East Coast talent pools for HQ2. Seattle startup trucking app Convoy recently received $185 million in Series C funding from Google’s VC operations. Non-store retailers added 25,700 jobs in the five years ending in 2017, while the professional, scientific, and technical industries added 23,800 jobs. However, the metro’s cost of living continues to increase and there is a shortage of housing, causing tech companies to look elsewhere for expansion. Housing is a major issue for Seattle specifically as vacancy rates and housing inventories are very low relative to state and national numbers. New construction is increasing, but not keeping pace with demand. Construction of buildings and specialty trade contractors together added 31,600 jobs in the metro from 2012 to 2017.

The University of Washington (UW), Seattle Pacific University, and Seattle University contribute to the educated labor force. UW in particular is well known for its research and innovation and is widely regarded as one of the best public universities
in the country.The university received $1.62 billion in research funding in 2017 and receives the most federal research funding in the country.

Writing about the report, Seattle Times business columnist Jon Talton says,

In fact, residential real-estate prices are cooling and the recent go-go years of apartment construction are producing enough supply to lower rents somewhat. Metro Seattle’s cost advantage over the Bay Area continues to attract high-end jobs and tech outposts, on top of homegrown research institutions. Amazon and Microsoft are still expanding here.

But the deeper story is the continued diversity of the metropolitan economy. Tech is the sexy story. But the region remains a major manufacturing center with Boeing and the aerospace cluster, and also shipbuilding. With two major deep-water ports, short sailing times to Asia, and extensive railroad and warehouse sectors, we’re a big player in trade and logistics. Corporate headquarters such as Starbucks, Paccar and Costco — plus Microsoft and Amazon — mean decisions get made here, and in some cases corporate stewardship is forthcoming.

Other Washington metro areas also climbed rapidly in the Milken rankings:

Olympia-Tumwater, WA, was the second biggest gainer in our 2017 ranking.This year, it leaps 20 spots to stand at No. 19. Its strong performance in one-year job and wage growth and the five- and one-year high-tech GDP growth measures all contribute to its improvement in rank.

The Tri-Cities posted among the nation’s biggest leaps, up 36 in the rankings to No. 85.

As you see, there’s a ton of data in the report, clearly presented. Milken has a purpose in mind:

The goal of our Best-Performing Cities index is to help businesses, investors, industry associations, development agencies, government officials, academics, and public-policy groups monitor and evaluate how well their metro is promoting economic vitality relative to the rest
of the country.The index also provides benchmarking data that can inform approaches to improving a region’s performance over time.The index can serve as a tool for understanding real estate, consumer, and business opportunities by indicating where employment is stable and expanding, wages and salaries are increasing, and economies and businesses are thriving.1

A shared understanding of their region’s competitiveness will help communities create a strategic economic vision focused on industries with the capacity to stimulate sustained growth and prosperity. By targeting local sectors with a robust competitive advantage, communities can seek to reduce the impact future dips in the business cycle have on local employment and economic activity. Regions that better link education and training programs to the workforce needs of employers will attract businesses and create more opportunities for residents. Developing new industries and companies will require fostering entrepreneurship and innovation through research institutions, incubators, and funding programs.

The data presented make a good start for that important benchmarking exercise.