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It pays to be relatively small and grow at a brisker clip compared to many other cities, Columbus has learned.
That combination of factors served to boost Columbus to a No. 2 national ranking among 179 small metro areas in the 2013 Milken Best-Performing Cities rankings. The study, done by the Milken Institute in Santa Monica, Calif., is designed to show where and why jobs are being created and maintained across the United States.
“The tremendous manufacturing, engineering and design strengths of our employers and regional workforce are greatly boosting the local economy,” said Jason Hester, executive director of the Columbus Economic Development Board.
The study ranks cities on a variety of measurements, including one- and five-year job growth, one- and five-year gains in wages or salaries, high-tech economic output and the percentage of job growth over the most recent year. All the data are boiled down to a single index so the cities can be ranked in order of perceived economic strength.
“Columbus has shown impressive gains over the past few years, largely thanks to its manufacturing job growth,” said Minoli Ratnatunga, one of the Milken study’s authors.
Ratnatunga said Columbus’ job and wage gains were both strong.
But she said the overall high ranking also was aided by being one of the five smallest metro areas in the small-city portion of the rankings. The Columbus metro area, which consists of all of Bartholomew County, has a population of 79,129 people, and the small city rankings includes many cities two and three times that size.
Since only four cities among the 179 small cities reviewed had smaller populations than Columbus, any job and wage gains registered here lead to bigger percentage shifts compared with the rest of the peer group, and that moves a community up the charts, Ratnatunga said.
“A small shift can create a large percentage change in the growth rates,” she said, “and that can move Columbus up or down relatively quickly.”
Ratnatunga said most of Columbus’ employment growth has come via manufacturing.
“A lack of industrial diversity means that when your core group of businesses do well, you grow a lot; and when they don’t grow, you don’t do so well. There’s volatility,” she said.
Communities with a more diverse economy or with recession-resistant employers heavily represented by education and health care, for instance, tend to fluctuate less in the rankings.
Compared with a year ago, Columbus gained 13 spots in the Milken rankings.
“Columbus has a robust manufacturing base with strengths in machinery and transportation equipment manufacturing,” the study says.
Columbus trailed only Columbia, Mo., in the annual small-city rankings.
“Columbia jumped nine spots to finish first among the small cities. It had strong performances across the board, with growth in high-tech GDP and the number of high-tech industries driving its top ranking,” Milken’s study said. “The University of Missouri provides critical support for local retail outlets and high-tech industries such as telecommunications.”
Hester said he’s ecstatic with Columbus’ No. 2 ranking, and he plans to use it in courting potential businesses for relocation or expansions.
“We’re at record employment the last three months, and we’ve been seeing positive job growth for five years,” Hester said. “It speaks to a very strong local economy.”
Roughly 86 percent of Columbus’ 2012 economic output was linked to durable goods manufacturing, Hester said, and about two-thirds of job announcements so far this year have been linked to manufacturers in the transportation and auto sectors.
Milken also ranks 200 large metro areas; and Austin, Texas, led the pack on that separate scorecard.
On a national scale, the Milken study found the strongest job growth in communities with strong ties to high-tech industries, those that can benefit from spinoff business spawned by university research and other cities seeing gains from energy-related businesses.
“Technology and energy were the biggest forces behind America’s booming metros,” the study’s authors wrote.
“Some of the leading tech metros were successful despite being high-cost, high-regulation locations,” said Ross DeVol, chief research officer at Milken Institute.
“Cities like San Francisco, San Jose, Calif., and Cambridge, Mass., have developed research and development assets and infrastructure that makes it easier to innovate there than in lower-cost locations,” he said.
Some other fast-growing cities — both big and little — gained due to the “surging U.S. energy sector that is lighting up local economies,” the study said.
The shale oil and gas boom aided several cities, including Houston; San Antonio; Corpus Christi, Texas; Bakersfield, Calif.; and Fargo and Bismarck, N.D., Milken reported.
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