Best Small Cities for Business And Careers
Fargo, N.D. is identified by many Americans solely based on the popular 1996 Coen brothers’ movie, which earned seven Academy Award nominations. Another generation was introduced to the film’s exaggerated Minnesota/N.D. small-town accents this year with the launch of Fargo as a TV series on FX in April. Sports fans might connect with Fargo as the hometown of one-time home run king Roger Maris. But Fargo is on the minds of many for another reason these days: a strong business climate.
Fargo heads our annual look at the best small places for business and careers. The Fargo metro area scored strongly across the board, including solid job growth the past five years at 1.8 % annually (fourth best out of 184 small metros). Its labor supply is among the most educated when measured by high school and college attainment. Unemployment was a scant 3% last month, and Fargo’s $14 billion economy grew faster than any other metro in the U.S. in 2013 at 7.3%. The outlook is bright also with the economy expected to expand 5.5% a year through 2016, ninth fastest among smaller metros, according to Moody’s Analytics.
North Dakota’s entire economy is on fire thanks to the fracking boom, but Fargo, located on the Minnesota border 300 miles away from the nearest oil well, is much more than just a product of the Bakken Shale. The Fargo metro, which stretches to the Minnesota city of Moorhead, is the industrial center of southeastern North Dakota and northwestern Minnesota. Jobs in healthcare, education and tech are surging and 55% of the population is younger than 35. STEM jobs are up nearly 40% since 2001, compared to 3% nationally. Last month’s TEDxFargo event attracted more than 800 people.
Sanford Health is the biggest employer in the area with nearly 7,000 employees. The company based in Sioux Falls, S.D. operates 39 hospitals and 223 clinics and is the largest employer in both South and North Dakota.
North Dakota State University brings stability to the Fargo economy. It employs more than 4,000 people and has developed into a major research university. The NDSU football team is a source of pride after three straight national titles in Division 1’s Football Championship Subdivision. Roughly 60% of NDSU students are from out of state, but more than half take jobs in North Dakota after graduation.
Other big Fargo employers include Microsoft and Case New Holland, which makes tractors and farm equipment. Microsoft’s entree to Fargo came through the acquisition of Great Plains Software for $1.1 billion in 2001. Today, Microsoft employs 877 people in Fargo (it is not expected to be hit by the software giant’s recent announced layoffs) and nearly 700 others who work for vendors of the company. Hi-tech employment accounts for 4.3% of Fargo jobs, double the typical smaller metro.
Forbes crunched the numbers on every metro area and division to determine the best and worst business climates. The best small places are based on the 184 metro areas with populations less than 260,000 people (we rate the 200 largest metro areas here led by Raleigh, N.C.). Areas are ranked on a dozen factors related to job growth (past and future), costs (business and living), income and economic growth, quality of life and education of the labor force. Forbes uses data from economic research firm Moody’s Analytics, the U.S. Census and demographer Bert Sperling, who runs Sperling’s BestPlaces (click here for a more detailed methodology).
In Pictures: Top 20 Small Places for Business and Careers
College Station, Tex., home to the main campus of the Texas A&M University System, ranks second. The metro area, which includes Bryan, Tex., is known as the Research Valley and capitalizes on A&M’s expertise in engineering, energy and biosciences. Business costs are 25% below the national average, according to Moody’s, and 36% of adults have a college degree (30% is the national average).
Heisman Trophy winner Johnny Manziel was his own economic stimulus for the area. Texas A&M donations hit a record $740 million during the 2013 fiscal year, more than $300 million better than any year in school history. Manziel moved onto the NFL as a first round pick of the Cleveland Browns, but the good times are expected to continue in College Station. Moody’s forecasts job growth to average 3.7% a year through 2016, eighth best in the U.S. among smaller metros.
Sioux Falls, S.D. has been one of the top performing communities in the U.S. over the past decade and this year ranks No. 5 (it ranked first in 2013). “South Dakota is a very good place to do business,” boasts S.D. Governor Dennis Daugaard in an interview with Forbes. He cites the state’s low taxes, cheap labor, affordable energy and business-friendly regulatory environment as primary reasons. South Dakota carries a low debt load and lacks the pension liabilities that plague other states. “The good tax climate that South Dakota offers is likely to remain so because we don’t have the burdens that we have to lay on the backs of business,” says Daugaard.
The Sioux Falls metro represents more than one-third of both the South Dakota population and economy, and it is a hub for healthcare, financial services and retail. Net migration into the area has been strong (12th best) and business costs are 23% below the national average.
Citigroup moved its credit card operations to Sioux Falls in 1981 to take advantage of South Dakota’s softening of its anti-usury laws. Wells Fargo, Capital One and others followed suit and today South Dakota leads the nation in bank assets with $2.7 trillion, according to the FDIC.
The Sioux Falls medical community is driven by Sanford Health and Avera Health, who are the two biggest employers in the area. “We’re going to find the cure for breast cancer in Sioux Falls, and for Type 1 diabetes,” said Sioux Falls Mayor Mike Huether in a 2013 interview with the National Journal. Leading the charge is South Dakota banker and philanthropist Denny Sanford. He has donated more than $1 billion to healthcare and medical research with $700 million earmarked for the renamed Sanford Health, headquartered in Sioux Falls.
In Pictures: Top 20 Small Places for Business and Careers
Complete Coverage: Best Places for Business and Careers
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