Colorado Cities Soar in Milken Institute’s Best Performing Cities Report 2023

The Milken Institute, a global non-partisan think-tank, has provided its index-based Best Performing Cities report since 1999. The index is created by ranking 400 American cities across three categories: access to economic opportunity, labor markets and the impact of high-tech industries.

The index gives a good assessment of community-level economic vitality. While job growth is important, by including insights into wage growth, housing affordability and broadband access as well as high-tech industry indices, the report informs us of different communities’ adaptations to a modern economy. 

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While we know most of Colorado’s cities have performed well over decades when compared to the nation, it’s less clear how the state performs relative to its closest competition in the Rocky Mountain region (Colorado, New Mexico, Arizona, Utah, Nevada, Idaho, Montana and Wyoming). The 2023 Best Performing Cities report does this with 2021 data. 

All Colorado cities (Boulder, Colorado Springs, Denver, Fort Collins, Grand Junction, Greeley and Pueblo) have performed well in recent years. Averaging the rankings for each city from 2021 and 2023 to exclude the pandemic year and calculating where that ranking lies among all large cities and small cities (for Pueblo and Grand Junction) in the U.S., we see that the lowest-ranked Colorado city is Greeley. This is largely due to a softer carbon-based energy economy. But even Greeley falls in the top half of all large cities, and during boom times for carbon energy after the Great Recession, Greeley ranked 10th out of the 200 largest US cities. 

The rest of Colorado’s cities rank in the top 20 percent of the nation’s cities except for Boulder (21st percentile) and Pueblo (34th percentile). This is impressive until we compare Colorado’s cities to other Rocky Mountain states. Utah and Idaho are especially impressive given those states’ cities rank in the top 7 percent except for Pocatello, Idaho, which comes in at the 26th percentile of small cities.  

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When the change in city rankings is viewed over the last decade, several trends stand out. First, the shift away from a carbon energy economy is evident as Farmington, New Mexico and Wyoming’s cities dropped dramatically along with Greeley. Second, smaller cities are performing better as are those closer to California (Phoenix, Las Vegas, Prescott and Reno).

These factors have moved Idaho’s cities up dramatically since 2013 by an average of 51 percentile points. In contrast, Utah’s cities have consistently remained in the top 10 percentile over the decade except for St. George, which jumped into the top category. The steady high performance by Utah is observable across data sources and is generally attributed to low taxes and a favorable business climate. Governor (now Senator) Hickenlooper once quipped it was hard not to feel competitive with Utah. 

In 2013, Denver, Fort Collins and Boulder all ranked in the top 10 percentile while Colorado Springs, Pueblo and Grand Junction were lagging with rankings in the 38th, 40th, and 46th percentiles respectively. Since then, these laggards are the only Colorado cities to move up in the rankings. Colorado Springs now ranks ahead of Boulder and Fort Collins and is closing the gap with Denver (including Aurora and Lakewood). Especially notable in the improving Colorado cities is their strong performance relative to average wage growth as opposed to job growth.  

What’s behind the rankings and trends?  Affordable housing indices (costs relative to incomes) appear to play a role only in Utah and some Idaho cities that are only recently seeing high growth. Colorado’s poor ranking for housing affordability may have become a hinderance to continued strong economic and population growth, but the data is deceiving since it compares local incomes to housing costs. Pueblo ranks last in the state along with Boulder in housing affordability. Colorado Springs and Grand Junction have worse affordability indices than Denver due to Denver’s higher wages.  

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Colorado shines when it comes to broadband access as defined by the percentage of households with internet. Colorado’s average city ranking is in the top 20 percent while the next best statewide city averages in Arizona, Utah and Idaho are only in the top 40 percent of the nation.  

Other than total job and wage growth rates, the major performance drivers for the Milken index are high-tech industries, which are indicative, in theory, of long-term economic vitality. Colorado cities perform well in the top 25 percent of the nation’s cities (comparable to Arizona and Utah) in the municipal GDP growth rate of high-tech industries. In terms of high-tech industry concentration, Colorado’s cities, excluding Grand Junction and Greeley, averaged in the top 15 percent of the nation. This is great until one looks at Utah, where all cities averaged in the top 8 percent. 

Thinking about the future, proximity to California, great broadband, a favorable business environment, water availability, climate adaptation and possibly women’s reproductive rights are likely to determine the best-performing cities in the Rocky Mountains.   

Tom Binnings is a senior partner at Summit Economics in Colorado Springs. He has more than 30 years of experience in economic and market research for public policy, strategic planning, business analytics and project finance. He can be reached at [email protected].