Bloomberg named 12 American cities as upcoming “Boomtowns” in a list released last week. Four of the cities come from a state with zero income tax while nine of them are in red states, with Republican governors.
New Orleans led the list with 15.6 percent population growth and an employment rate almost two points below the national average. Bloomberg credited booming tourism and growth in the movie-making and construction industries. But policies friendly to small businesses and a post-Katrina insurgence of entrepreneurs and artists also played a role. Only Austin, Texas, topped The Big Easy, with a GDP compound annual growth rate of 3.26 percent.
Surprisingly, San Jose, Calif., and Portland, Ore., made the cut even though they have both experienced economic turbulence for different reasons. San Jose is one of the most expensive cities in the nation. Although it boasts a vibrant technology industry, it has a painfully high cost of living. The city stayed afloat during the recession because of international demand for U.S.-made tech products.
Portland, in contrast, has become a bohemian destination for lifestyle-oriented entrepreneurs in their 20s who prefer to work on their own ideas rather than accept jobs. That explains why the city has an 8.3 percent unemployment rate and why it just spent $1 million on public transportation. Still, urban analyst Aaron Renn said the city continues to grow. The cost of living is lower than San Francisco and it’s a good option for entrepreneurs with stable but flexible work options, he said.
The future of both San Jose and Portland depends on their ability to diversify and attract a mixed-income population. Currently, the only people who can survive in San Jose are the rich or exceptionally talented, while Portland is increasingly only attracting those reluctant to accept a traditional job.
On the other hand, San Antonio, Texas, Charlotte, N.C., Raleigh-Durham, N.C., and Nashville Tenn., thrive because they offer quality amenities and a low cost of living, Renn said. They’ve attracted major corporations—Apple in Austin, Texas, for example—and consequently have become hubs for job-seekers.
Oklahoma City, Okla., Washington, D.C., and two other Texas cities, Houston and Dallas, round out the list.
What can we take away from the Bloomberg analysis? Renn says cities that want to succeed need to do three things: Invest both in qualitative and quantitative growth, maintain stable regulations and friendly policies towards home building, and maintain a balanced quality to price ratio. Successful cities are “not Wal-mart,” Renn said. “But they’re not trying to be Neiman-Marcus either.”