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The Economy of San Francisco is Booming, According to a Report

San Francisco has been ranked first in a new list of cities based on their economic vitality. Is it, however, a growth that is inclusive?

According to a new analysis, the San Francisco metro region outperforms all other significant U.S. cities in terms of economic strength.

The West Coast tech powerhouse scored top in the Milken Institute’s 2020 Best-Performing Cities Index, which was issued on Wednesday. It was driven by its “capacity for innovation, unique ecosystem, and extraordinarily robust wage growth.”

The index, which has been published yearly since 1999, analyzes job creation, wage growth, and innovative industries in 200 large metros and 201 small areas to determine economic vitality. The index is designed to show policymakers, investors, and businesses where and how regional economies are doing well.

According to the research, San Francisco, which last topped the list in 2014, was praised for its “talented workforce, ample venture capital, and support for innovation and entrepreneurial culture.” The city’s growing IT and biotech industries, as well as high-tech GDP growth, increased its ranking.

San Francisco wasn’t the only metropolitan city with a strong tech sector to do well in the rankings. The top ten also included Provo-Orem, Utah; Austin-Round Rock, Texas; and San Jose-Sunnyvale-Santa Clara, California.

Milken also ranked the best small cities, with Western metros performing particularly well. Bend-Redmond, Oregon, was voted No. 1 for the fourth year in a straight, thanks to robust income and job growth, a well-diversified economy, and burgeoning car technology and hemp businesses, according to the report. Six of the top ten best-performing small cities, including St. George, Utah, Coeur d’Alene, Idaho, and The Villages, Florida, were also retiree communities.

Three additional significant California metro areas, in addition to San Francisco, were listed in the top 25: San Jose, Oakland, and Riverside-San Bernardino.

In a press statement, Lenny Mendonca, chief economic and business advisor to California Governor Gavin Newsom, said, “We are proud of the historic growth – fuelled by our innovation – that we are experiencing in California.” “Growth, on the other hand, is impossible without inclusiveness. It’s about both, and we’re committed to ensuring that the strength of our economy and the possibilities it generates are enjoyed by more people in more regions across our state.”

However, in the case of San Francisco, some experts doubt if the city’s expansion has been truly inclusive. According to the Public Policy Institute of California, which evaluated 2018 U.S. Census Bureau statistics, the city has the largest income inequality in the state. The organization discovered that top earners in the Bay Area earn 12.2 times as much as those at the bottom of the economic ladder.

According to the Brookings Institution’s 2019 Metro Monitor, which evaluates the economic performance of 100 U.S. cities based on growth, prosperity, and inclusion, the San Francisco region scored No. 84 in terms of race inclusion from 2007 to 2017. The region was placed No. 98 in terms of the gap in median earnings between whites and employees of color, which widened by $6,680 during the same time period.

In an email, Amy Liu, vice president and director of Brookings’ Metropolitan Policy Program, said, “I would caution the idea of a ‘best-performing economy’ in which the local economy only works for a few.” “Workers of color, who make up the majority of the Bay Area workforce, continue to earn salaries that are insufficient to cover the region’s high cost of living. Thirty percent of workers are deemed working poor, and the wage gap between white and non-white workers continues to increase.”

When evaluating a city’s economic success, Kevin Klowden, executive director of the Milken Institute Center for Regional Economics, argues that inclusion is important, and that metros like Provo-Orem scored well in the rankings. “You’re looking at towns that are rising in part because high-tech and life science employment are luring them, but they’re also more affordable,” he says.

Klowden continues, “San Francisco is an example of a city that has done exceptionally well but is also suffering from the consequences of its own success. It has recently been a strong performer, but it was not a strong performer during the recession. It has done an excellent job of making itself appealing to both existing businesses and startups, but there are limitations.”