- San Francisco fell from the top in a ranking of the cities with the best economic performance.
- The pandemic has shifted power away from traditional technology centers with high costs of living.
- However, a shift to cheaper cities like Miami and Austin could ultimately hurt their affordability.
- You can find more stories in Insider’s business section.
San Francisco fell from its place as the “top performing” city in the US as the coronavirus pandemic devastated tech-centric regions.
In the Milken Institute’s annual report released Wednesday, the tech hub in the Bay Area fell 23 spots due to a lack of short-term job opportunities that came with its notoriously high cost of living.
“The pandemic is having an oversized impact on cities where the economic impact of the flow is occurring
are exacerbated by high housing costs, “the think tank’s executive director Kevin Klowden said in a press release.
The ranking – which takes into account job creation, wages, and the cost of living – found that the top performing and economically viable cities have shifted from traditionally dominant coastal towns like California and Massachusetts to cities in the south and Intermountain West.
According to Milken’s ranking, smaller cities outside of the traditional technology centers saw the greatest increases in 2020. Palm Bay, Florida and Austin, Texas ranked second and third on the list. Salt Lake City jumped 21 spots to fourth, and Provo-Orem, Utah – a location recently attended by tech giants like Qualtrics, Vivint, and SmartCitizen – overtook San Francisco as the top performing city that year.
Remote working has made expensive hubs like California less attractive
Since the beginning of the pandemic, a work-from-home boom has resulted in a mass exodus from high-cost-of-living cities as millions of Americans have moved from urban areas to smaller towns and suburbs.
Even executives look outside of traditional technology centers. In January, a survey of 150 C-Suite executives found that one in four wanted to relocate their business to a cheaper location.
Over 30 major financial institutions, including Goldman Sachs Group, have researched Florida real estate, and Bay Area-based technicians have found that living in the Bay Area is becoming less and less beneficial with companies like Twitter announcing employees can work from there home even after the pandemic restrictions are lifted.
While cities outside of traditional tech hubs have benefited from the relocation of people and power, some proponents fear that the new interest could make these cities more affordable as housing costs rise.
The impact of switching to cheaper cities can already be seen in Miami, which has fallen 38 places on the list due to the rising cost of living. Property prices in the city are up 29% in the last year as billionaires from Silicon Valley and Wall Street flock to Florida.
Recreation is a delicate balance between job opportunities and affordability
The recent volatility in the economy during the pandemic has boosted cities focused on accessibility and affordability, according to the Milken Institute, which added housing affordability and broadband access as ranking variables for the first time this year.
“As we found from our ranking, cities do best when they adopt innovative strategies that allow high-tech industries to grow while maintaining an affordable cost of living,” said Misael Galdamez, senior policy analyst at the institute, in the Press release. “This alignment provides a basis for subway areas to become more resilient to economic shocks.”
The report also showed how the pandemic shifted the balance of power between cities, as former top cities like San Jose, Seattle and Dallas could no longer be in the top 10 spots for job creation, growth and innovation.