SF and San Jose top list of best cities for wages, job growth and successful companies

Gina Hall, Contributor

Source: Silicon Valley Biz Journal

San Francisco and San Jose topped the list of best performing cities in 2014, according to a new report out from the Milken Institute on Thursday.

In the report titled “Best-Performing Cities: Where America’s Jobs are Created and Sustained,” San Francisco (including San Mateo and Redwood City) claimed the No. 1 ranking, jumping two spots to oust Austin, Texas from first place on the 2013 list. San Jose (including Sunnyvale and Santa Clara) remained in 4th place, the same spot as the year before.

San Francisco’s professional, scientific and technical services sector accounted for 45 percent of all jobs created over the five years ending in 2013, according to the report. The median wage for such professionals is $91,400 — 30 percent above the national average of $70,900.

“What propelled San Francisco above 2013 first-placer Austin, Texas, was its No. 1 finish in wage growth over both the past five-year and one-year periods,” the authors wrote. “Young, technology-skilled workers are flocking to the city.”

San Jose topped the list back in 2012 and the authors applauded the region’s continued commitment to research and innovation.

“Several metros with dense urban areas … have the innovation advantage: They are able to offset high costs, an unfavorable tax structure and a burdensome regulatory environment thanks to the clustering of talent,” the authors noted.

The massive amount of venture capital flooding into startups was one of the major factors in Silicon Valley’s appeal. Venture capital funding to companies in the area hit $12 billion in the first half of 2014 alone, making up 53 percent of the U.S. total funding in that time period.

And it’s not just startups fueling growth. Older tech companies are spurring job creation with massive expansions into San Francisco. The authors pointed out that Silicon Valley-based Oracle employs 7,000 people in San Francisco, while LinkedIn has agreed to lease an entire 26-story building south of Market Street set to open in 2016. In addition, Salesforce will move into a new 67-story skyscraper, which is expected to be the tallest building on the West Coast when completed in 2017.

However, not all large companies are rising with the tide.

“Large IT firms in [Silicon Valley] have struggled with the changing technology platform,” the authors observed, noting that Hewlett-Packard is breaking up into two firms, Cisco is laying off 6,000 employees worldwide and Intel hasn’t made chips for mobile devices until recently.

“Fortunately, the Valley has Facebook, Google, Oracle, Apple and a variety of firms establishing new sectors and capturing market share from traditional players. Software and biotech have been strong,” the authors wrote.

The report also made note of the growing income gap that has been causing housing issues in both San Francisco and San Jose.

“San Francisco’s biggest challenge is that rising commercial and residential rents are forcing some lower-margin tenants and residents out of neighborhoods,” the authors observed. “Many fear that the gentrification could change the social fabric of the city.”

For the complete report, go to http://www.best-cities.org

The top ten cities on the list are:

1. San Francisco-San Mateo-Redwood, California
2. Austin-Round Rock-San Marcos, Texas
3. Provo-Orem, Utah
4. San Jose-Sunnyvale-Santa Clara, California
5. Raleigh-Cary, North Carolina
6. Salt Lake City, Utah
7. Houston-Sugar Land-Baytown, Texas
8. Fort Worth-Arlington, Texas
9. Dallas-Plano-Irving, Texas
10. San Antonio-New Braunfels, Texas

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