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August 8, 2019

Most Dynamic Micropolitans

By Ross DeVol and Jonas Crews

Main Street America—and its small towns—is a central component to understanding the economic forces at work across the United States. Dotting the U.S. map—in the Heartland1 and beyond—are 531 small towns, better known as micropolitan statistical areas, which comprise of one or more counties with at least one city with more than 10,000 but less than 50,000 in population.

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Table of Contents

  1. Introduction
  2. Top 20 Most Dynamic Micropolitans
  3. Z-Score
  4. Overview
  5. 1. Pecos, TX
  6. 2. Summit Park, UT
  7. 3. Jackson, WY-ID
  8. 4. Heber, UT
  9. 5. Bozeman, MT

Introduction

The Most Dynamic Micropolitan Index, which ranks the 531 micropolitan areas across the U.S., analyzes the economic performance and indicators that impact the social and economic fabric of America.

Micropolitan statistical areas are important for understanding the economic forces at work across the American landscape. Micropolitan statistical areas are defined as a geographical area consisting of one or more counties with one city comprised of at least 10,000 but less than 50,000 in population.2 There are 531 micropolitan areas included in our analysis. The Census Bureau has been collecting data on micropolitan areas for several decades, but there has been a dearth of analysis on their economic performance and the factors affecting them. The common perception is that most of these communities’ economies are shrinking and have been losing population for decades or at least since the Great Recession began in 2008. While the overall economic performance of micropolitans has been lagging metropolitan areas, many micropolitans are thriving and adding jobs at a prolific pace. Micropolitans are, in many ways, the key to appreciating the economic and social fabric of America. Some of these micropolitan areas are potential metropolitan areas in the future.

Our Most Dynamic Micropolitans Index is an objective measure of the relative performance of micropolitan areas across the nation. The Most Dynamic Micropolitans Index aspires to provide fact-based metrics on near-term, medium-term and prospects for long-term growth. There is a range of potential applications for this index. The index allows economic development officials to monitor their micros’ vitality against others nationally or within their region and state. While international and national economic and geopolitical factors can influence growth patterns, the index provides an objective evaluation of whether development strategies have the desired effect. Additionally, Most Dynamic Micropolitans assists public-policy groups, elected officials, academics and other researchers and businesses in monitoring and assessing small community vitality across the nation. If economic outcomes are not benchmarked, it is difficult to understand how a community is performing. Most Dynamic Metropolitans provides that benchmark, allowing changemakers to discern and address economic weaknesses.

Micropolitan areas can pursue a variety of economic development strategies to achieve their goals for business expansion, job creation and generating a tax base. Each micropolitan area must carve out its pathway forward, but should be aware of what factors have contributed to the success of other communities to understand if best practices may apply to its situation. We believe that the Most Dynamic Micropolitans fill a gap in identifying which smaller communities are thriving and which are struggling to provide economic opportunity to their residents. If our nation is to succeed, micropolitan communities need to feel that they can participate in our economic growth.

The Most Dynamic Micropolitan rankings are performance-based metrics such as job growth, wage and income gains and a new metric, the proportion of total jobs at young firms. This measure captures which communities are building economic opportunity for their residents and for those that might desire to in-migrate. Our index is comprised of two types of metrics: recent economic development metrics and backward-and forward-looking metrics of longer-term economic development.

Top 20 Most Dynamic Micropolitans

  1. 1Pecos, TX
  2. 2Summit Park, UT
  3. 3Jackson, WY-ID
  4. 4Heber, UT
  5. 5Bozeman, MT
  6. 6Hailey, ID
  7. 7Findlay, OH
  8. 8Hood River, OR
  9. 9Breckenridge, CO
  10. 10Fredericksburg, TX
  11. 11Uvalde, TX
  12. 12Vineyard Haven, MA
  13. 13Cullowhee, NC
  14. 14Lewisburg, TN
  15. 15Key West, FL
  16. 16Glenwood Springs, CO
  17. 17Edwards, CO
  18. 18Ellensburg, WA
  19. 19Rexburg, ID
  20. 20Calhoun, GA

Measures of recent economic development are 2015-2016 personal income growth, 2016-2017 average annual pay growth, and 2015-2016 job growth. Measures of longer-term economic development are the 2016 level of per-capita personal income, 2011-2016 growth in personal income, 2013-2017 growth in average annual pay, 2012-2016 job growth, and the 2016 ratio of employment at firms five years or younger to employment at all firms (young firm employment ratio). The level of per-capita personal income can be viewed as a measure of longer-term economic development because it is the stock of all prior welfare improvements.

The young firm employment ratio has implications for long-term future economic growth as new firms develop new products and drive innovation. It provides information on the ability of entrepreneurs to start new businesses and scale them—critical for future job and wage gains. The time period of each metric is restricted to data availability, with the most recent data incorporated and longer-term growth rates having as close to a five-year span as possible. We limited the medium-term job and pay growth measures to a four-year period to include more micropolitan areas. A recent expansion in the number of micropolitan areas did not include a revision in the historical data to make it consistent with the updated definitions. In subsequent versions of the Most Dynamic Micropolitans, we will capture the latest five-year period.

We standardize all metrics via z-scores. That is, we calculate the mean and standard deviation of a metric across all micropolitan areas, subtract the mean of the metric from each micropolitan area’s metric value, and divide that difference by the standard deviation of the metric. The result is a number telling us how many standard deviations above the mean (positive z-score) or below the mean (negative z-score) a micropolitan area’s metric value is. A micropolitan area’s index value is its average z-score across all eight economic development metrics. If a micropolitan area has a positive average z-score, then, on average, it performs better than the mean micropolitan area for each metric.

While most of our metrics are commonly used indicators of economic development, the young firm employment ratio is a relatively new measure. We use factor analysis to loosely test our hypothesis that the ratio is an indicator of longer-term economic growth. Factor analysis is a statistical tool that can derive categories, called factors, from several variables by finding the ways clusters of variables move together. A factor analysis on all of our metrics tells us that we generally have the two factors we claimed to have above: one closely relating to variables such as 2015-2016 growth in personal income and 2015-2016 job growth, and one most closely relating to per-capita personal income, 2011-2016 personal income growth, and the young firm employment ratio. Thus, our hypothesis regarding the young firm employment ratio seems valid.

Beyond the new firm employment ratio, we incorporate new data on regional price parities from the Bureau of Economic Analysis (BEA). These regional price parities are indexes indicating whether goods and services are generally more or less expensive than the national average. Therefore, the indexes can be used to adjust income measures for differing inflation rates and differing levels of purchasing power across regions. Unfortunately, the BEA only provides regional price parities down to the granularity of metropolitan areas. However, the BEA does provide regional price parities for the non-metropolitan areas of each state, which include micropolitan areas. We use the non-metropolitan indexes to adjust the income data underlying the level of per-capita personal income and the two personal income growth rates.

Z-Score

Measure Time Period Source
Young Firm Employment Ratio 2016 Census Bureau
Per-Capita Personal Income 2016 Bureau of Economic Analysis
Medium-Term Job Growth 2012-2016 Census Bureau
Short-Term Job Growth 2012-2016 Census Bureau
Medium-Term Average Annual Pay Growth 2013-2017 Bureau of Labor Statistics
Short-Term Average Annual Pay Growth 2016-2017 Bureau of Labor Statistics
Medium-Term Personal Income Growth 2011-2016 Bureau of Economic Analysis
Short-Term Personal Income Growth 2015-2016 Bureau of Economic Analysis

Overview

There were common industry and structural characteristics explaining why some micropolitan areas performed well, and others did not during the evaluation period of 2011 to 2017 measured in this analysis. The most striking industry example is the strong growth in micropolitan areas with a heavy reliance on the travel/tourism/recreation sector boosted by the recovery in the hospitality industry. Over 100 micropolitan areas had a reliance on travel and tourism in excess of the national average.

Industry Characteristics

Travel and tourism purchases were postponed during the Great Recession of 2007-2009. Pent-up demand for travel and tourism was generated and when the economy improved, these deferred purchases accelerated at a rapid pace. This was especially the case for tourism-destination locations where visitors travel long distances to enjoy their amenities. Communities with proximity to national parks performed well, an example being Jackson, Wyoming-Idaho, near Yellowstone. Sought-after ski resorts benefitted from increased tourism spending such as Summit Park, Utah. Warm-weather tourist locations including Key West, Florida, and Vineyard Haven, Massachusetts, witnessed strong growth. Even regional tourist locations such as Oxford, Mississippi, and Branson, Missouri, gained an advantage.

Micropolitan areas with thriving professional, scientific and technical services were aided in the rankings. These include categories such as scientific research services, engineering services, accounting and business management consulting services. Professional, scientific and technical services have been among the fastest-growing industries since 2011. Communities with a high concentration of these activities were aided by the secular shift underway in the national economy. Examples of communities include Bozeman, Montana, and Tullahoma-Manchester, Tennessee. Professional and technical services serve as important anchors for communities with a high concentration as they pay above-average wages and provide strong economic spillovers. Only a limited number of micropolitan areas have a concentration of professional, scientific and technical services greater than the national average, but they influence growth across a broad swath of communities.

Manufacturing activities had an important influence on the Most Dynamic Micropolitans rankings. Many manufacturing industries experienced a high rate of recovery from the recession. Communities with major automotive parts production performed well. Communities with a concentration of machine tools and other capital good producers generally witnessed a boost to growth. Production of consumer durables other than automotive expanded at a strong pace and assisted micropolitans with these operations. Findley, Ohio; Lewisburg, Tennessee; and Calhoun, Georgia, are examples of micropolitans with heavy reliance on manufacturing operations. Further, 18 of the top 20 micropolitans with the highest concentration of manufacturing are based in the 20 Heartland states.

After recovering from 2012 to 2015, oil prices collapsed in 2016 and harmed the economic performance of micropolitans with a heavy reliance on oil exploration. The exception being several communities in the Permian Basin, such as Pecos, Texas, with high productivity shale deposits or those located close to them such as Uvalde, Texas. Micropolitan areas with non-shale oil activities generally were harmed as drilling activity plummeted due to low prices. Former high growth areas of North Dakota such as Williston and Dickinson witnessed a substantial moderation in their economic expansion.

Another factor constraining economic performance across a number of micropolitans was a heavy reliance on mining activity, primarily coal mining. Coal’s share of electricity generation has plummeted in recent years as natural gas has replaced it in the generation mix. This has affected micropolitans in the eastern and western interior. Gillette, Wyoming, located in the center of the Powder River Basin, is the most dependent micropolitan in the nation on coal mining.

Gillette’s reliance on coal mining is a remarkable 135 times the national average. Given the difficulties in the industry, it is not surprising to see Gillette ranked 525th out of the 531 micropolitans included. Logan, West Virginia, and Middlesborough, Kentucky, are examples of other communities closely tied to coal mining.

Over the entire period of 2012 to 2017, communities dependent on agricultural crop production performed slightly better than the median micropolitan area. However, this was mainly attributable to stronger crop prices in the early part of this period. Prices of agriculture products have fallen since 2014 and harmed the economic fortunes of those agricultural-based communities—most of whom reside in the American Heartland.

Tariffs implemented by China, placed on imports of American agricultural products in retaliation for U.S. tariffs placed on Chinese imported products, will harm the performance of many ag-dependent micros in the future.

Structural Characteristics

Structural components play a critical role in determining the long-run growth of micropolitans and influenced performance over our period of measurement. Those communities with awareness and culture of entrepreneurship were among the overall leaders and elevated the position of a number of others. We included a measure of entrepreneurship, the share of total employment represented by firms five years of age or fewer, in our metrics for Most Dynamic Micropolitans. Therefore, it should not be a surprise that communities scoring high on this measure performed well in our index. However, the relationships are intertwined and seemingly causal in nature. When you look at micropolitans on other measures of economic performance such as job growth and gains in average annual wages, they are closely correlated with communities with a high proportion of total employment at young firms. Micropolitan areas that support entrepreneurs and small businesses are more dynamic and resilient in the face of economic change.

Micropolitans with research universities and four-year colleges witnessed superior advances, holding other factors constant. While research universities do not influence micropolitan economies to the extent they do small and medium-sized metropolitan areas (there are fewer research universities in micropolitans), they exert a considerable impact. Several micropolitan areas with research universities serve as examples. South Dakota State University in Brookings, the University of Mississippi in Oxford and Montana State University in Bozeman epitomize how research universities can support economic growth based upon innovative endeavors. These three universities had faculty engaged in the commercialization of their research and founded companies which led to job creation. All communities benefit from the availability of talent created by their universities. For example, Rexburg, Idaho, has seen a rapid expansion in enrollment at Brigham Young University-Idaho with 35,000 students—now the largest in the state. The human capital assists in attracting firms and developing knowledge-intensive industries.3

Micropolitan areas with community colleges that are developing curriculum to meet the needs of local employers reap the rewards. Employers need to constantly adapt to the changing skill requirements of their industries to remain competitive. Those community colleges rapidly adjusting curriculum offerings support their students in obtaining employment at firms in their region. Employers creating apprenticeship programs linked to the curriculum at community colleges assist retention of graduates.

Micropolitan areas with a portfolio approach to economic development seem to perform better. Communities actively recruiting firms from other locations to relocate or start local establishments appear to achieve stronger economic growth. Also in their portfolio approach are supporting indigenous expansion and startup activity. Communities with economic development officials actively engaged in scanning for best practices in regulatory and tax policies, technical assistance, strategies for workforce development and business retention and recruitment exhibit stronger economic growth.4

Micros located closest to metropolitan areas that are witnessing higher growth perform better as well. A higher economic link creates a positive spillover effect. This may be a result of commuting patterns, supplier relationships or numerous other inter-relationships. Over the period analyzed, there is no evidence that larger micropolitan areas are witnessing better economic growth than smaller ones.

Quality of place attributes like arts, cultural, recreational and lifestyle amenities impart an advantage for communities that possess them and focus on expanding them. They retain more residents who might otherwise seek career opportunities in other locations. Quality of place also includes good K-12 education, access to quality health care, crime rates and a variety of other factors. An expanding body of research demonstrates a correlation between arts and culture and economic success.

1. Pecos, TX

15,281

2017 Population

2.6273

Overall Z-Score

1st

Young Firm Employment Ratio

482nd

Short-Term Personal Income Growth

Hailing from the Heartland, Pecos, Texas, is our inaugural Most Dynamic Micropolitans leader. Pecos leads economic growth across the nation in multiple measures of performance. Among those metrics where it was first: job growth from 2012-2016; average annual pay growth from 2013-2017; average annual pay growth in 2017; and the share that firms five-years-old or less represented of total employment. Pecos and micro-encompassing Reeves County are at the epicenter of the shale oil exploration boom enabled by technological advances in hydraulic fracturing and horizontal drilling techniques.

Located at the Western edge of the Permian Basin—the most productive oil basin in the country—Reeves County contains the most hydrocarbon-abundant portion called the Delaware Basin. The economic boom has been so strong that many officials believe that the official population count of 15,300 understates the true population by up to 9,000.5 This is because many oil-drilling and related workers are living in RV parks and motels and don’t have a permanent address. Before the recent surge in oil exploration, Pecos’ claim to fame had been that it is home of the world’s oldest rodeo and the West of the Pecos Museum with eight-foot-tall cowboy boots in front.6 Some might know it best as the home of the mythical figure, Pecos Bill.7

Although a small micropolitan area, it is difficult to grasp Pecos’ rapid pace of economic growth and the reverberations on the community and Reeves County. As oil workers flocked to the area, they were forced into “man camps,” which are encampments of hurriedly built dormitories. For example, employment in real estate and rental and leasing has more than doubled between 2010 and 2016.8 In some respects, growth bears a resemblance to that of the California Gold Rush but with access to fast food. Dairy Queen estimates that its store in Pecos sold 149,898 hamburgers in 2017—the most of any location in Texas for six years in a row.9

However, today’s oil boom isn’t just a bunch of roughnecks roaming the countryside and drilling for oil. An operator of a modern rig occupies a booth, and monitors a set of computer displays and guides the drill bit with a joystick. Highly-trained petroleum engineers use computer algorithms of the local geology profile to maximize the release of oil deposits deep in the rock structure. Employment in professional and technical services, where petroleum engineering jobs are recorded, rose 77.9 percent between 2010 and 2016. Recent evidence suggests that this figure is much higher. The oil deposits are so dense in the rock of Reeves County that when an operator finishes drilling a well, the rig rises on its four pads and “walks” to the spot where it will drill next. In August 2018, Baker Hughes counted 79 active rigs in Reeves County, the most of any county in the nation.

The supply chain supporting oil exploration is providing an added boost to Pecos’ economy. 140 train cars carrying fracking sand arrive on a regular basis from Midwest locations. A huge transition yard houses the sand where it is then transloaded to trucks that carry it to drilling locations. Thousands of additional trucks haul in water, tanks, pumps, pipe and everything else that a drilling operation requires. Jobs in transportation and warehousing more than doubled between 2010 and 2016; before the most recent fracking boom. There are reports that truck drivers logging long hours can secure six-figure incomes.10 The hospitality sector is undergoing a massive expansion in capital investment. Holiday Inn Express, La Quinta, Hampton Inn, Baymont Inn and Comfort Suites are building new properties and two existing ones are expanding in Pecos.11 Main Street in Pecos is in the midst of adding mixed-use facilities that include retail, restaurants, business and personal services and loft-style housing.

The Pecos Economic Development Corporation (PEDC) is attempting to recruit retail businesses to the community to provide more local goods and services. Further, to aid the housing shortage, PEDC plans on using some of the land it owns for building more starter homes. The housing shortfall has made it difficult to recruit health care and education professionals. The economic activity and tax base are escaping Pecos because many are commuting long distances during the week and returning to visit their families on weekends. Officials estimate that sales tax revenue has doubled between 2016 and 2018 and plan on addressing needed infrastructure investment.

Planning officials welcome the boost to local economic fortunes from the fracking explosion but recognize how they must reinvest proceeds to reduce the region’s dependence on energy. There are plans to develop a small business incubator. The office space for the incubator would include over 3,000 square feet of office space. The incubator project is based upon an emerging partnership with Sul Ross State University. Odessa College Pecos was established in 1999 after a doctor and wife donated a building to house the extension site.12 It offers credit and certificate courses and is known for its certified nursing aide program. Pecos has a Texas A&M Agricultural Research Center.13 The Pecos Research and Testing Center performs research and testing services for explosives and specialty vehicles.14 Oil price declines late in 2018 highlighted the necessity of diversifying Pecos economic base, providing further incentives to nurture the development of more innovative-focused research and promote entrepreneurship.15

2. Summit Park, UT

41,106

2017 Population

2.5842

Overall Z-Score

44th

Young Firm Employment Ratio

55th

Short-Term Personal Income Growth

Summit Park, Utah, takes second in our initial Most Dynamic Micropolitans. It leads other members of the Wasatch Back among the national leaders. The prosperous community of Park City is included in the micropolitan area. Wealthy people from around the nation own homes in the western portion of Summit County near Salt Lake City. At $91,500, median family income in Summit Park is the highest among micropolitans in the country. Per-capita income stands at $111,000 versus $50,300 for the nation. This variation is attributable to non-labor income from royalties, realized capital gains, dividends and bond income. Vacation properties comprise 43 percent of the area’s housing stock with one in six worth a minimum of $1 million.16 This is one of the premier skiing destinations in the nation with Park City Mountain Resort now the largest in the U.S.17 Summit Park had consistently strong scores across performance metrics, but distinguished itself by having the second-highest personal income in 2016 and personal income growth over the five years from 2011 through 2016. Rapid economic growth has propelled a high rate of net migration into the region. Even with this significant growth, the community has been recognized for its environmental stewardship. It is one of three counties in the nation to establish a goal to transition to 100 percent renewable electrical energy by 2032.18

By many measures, Summit Park is the most dependent micro or metro on travel and tourism. Employment in the travel and recreation-related industry represents 41.0 percent of the total in Summit Park including accommodation and food services, arts, entertainment and recreation. In 2016, tourism-related tax revenues rose 8.5 percent, while leisure and hospitality taxable sales grew 9.2 percent.19 Indications are that strong growth continued over the past several years. (Economic growth driven in West Coast tech clusters has boosted income gains and discretionary spending on consumption of recreational experiences). Roughly, two-thirds of travel and tourism-related spending in Summit Park is from outside Utah.

Job growth in arts, entertainment and recreation averaged 4.6 percent from 2011 through 2016. Deer Valley ranked as the top ski resort in North America by Ski Magazine for 2018. Further, it is expanding and modernizing its existing biking and hiking trails to enhance summer visitation and better balance its seasonal pattern. The Lodge at Blue Sky, a new four-season resort under construction, features a Nordic ski track and a horse arena.20 Another major contributor to the travel and tourism economy is the Sundance Film Institute & Festival, founded by Robert Redford. The 10-day January festival promotes independent filmmakers and attracts more than 40,000 attendees. This collection of communities has developed a premier brand in the travel, recreation and arts space—permitting premium pricing.

Summit Park’s economy is diversifying and one of the fastest-growing sectors is professional and technical services. The category includes a variety of research, accounting, engineering and other highly compensated positions. Between 2010 and 2016, jobs and earnings in professional and technical services increased at an average annual rate of 7.9 percent and 12.6 percent, respectively. Another area of economic diversification includes employment in the management of companies, which more than doubled between 2010 and 2016; translating into average annual growth of 17.1 percent.21 Average annual earnings in this category were $105,600 in 2016.

Summit Park has one of the highest educational attainment levels among micropolitan and metropolitan areas in the nation. It is home to Utah State University with the University of Utah and Brigham Young University located nearby. A remarkable 52.1 percent of residents over the age of 25 have a Bachelor’s degree or higher and 20.7 percent hold a Graduate or Professional degree versus 11.5 percent for the U.S. overall.22 Triumph Group, the largest non-tourism-related private sector firm designs, tests, manufactures and supports power drive and actuation systems, propulsion and accessory drives of aviation and other components in Park City.23 Triumph Group added knowledge-based economy jobs explaining why manufacturing wages are so high.

Economic development/diversification has increasingly focused on entrepreneurship in recent years. Economic Development in Summit County actively promotes entrepreneurship and offers support services.24 Summit Park was 44th out of 531 micropolitans in the nation on the share of jobs represented by firms that were five years of age or less. The economic success of Summit Park has made housing very expensive and poses a challenge in recruiting a non-professional workforce. Local employers are offering creative ways to address the housing issue by providing housing and transportation subsidies and end-of-season bonuses.25

3. Jackson, WY-ID

34,646

2017 Population

2.4876

Overall Z-Score

12th

Young Firm Employment Ratio

376th

Short-Term Personal Income Growth

Jackson, Wyoming-Idaho, is third in our Most Dynamic Micropolitan areas in the nation. It is a premier lifestyle-recreation destination that has used its stunning beauty to drive tourism, attract remote telecommuters and lure wealthy semi-retirees. The Jackson micro area includes Teton Counties of both Wyoming and Idaho. These two counties’ economies are closely linked by travel and tourism driven by Yellowstone National Park and Grand Teton National Park. At $148,900 in 2016, per-capita income in Jackson is the highest in the nation. Since 2000, real personal income has increased an average 4.8 percent per year to provide perspective; Jackson’s per-capita income rose 76.4 percent over that period while the U.S. overall recorded a gain of 15.4 percent. Non-labor income accounts for an astonishing 74.1 percent of total personal income in Jackson. As recently as 2000, non-labor income represented 57.1 percent of personal income.26

However, high net-worth residents are not driving all of the income gains in the area. Median family income rose 5.1 percent in 2016. Proprietors represent a high share of total employment at 35.2 percent. Many proprietors chose to locate in the area as they can provide their services from any geography. However, rapid in-migration has driven housing costs higher and many employees that work in the travel and tourism industry must live in remote locations and commute.

Jackson is heavily dependent on travel and recreation-related activities. When including real estate rental and leasing, the broad travel and tourism industry represents 32.9 percent of total employment. Accommodation and food services added jobs at an annual rate of 3.2 percent from 2010 to 2016. While many of these positions are not high paying, they provide employment opportunities that can augment other sources of income such as farming or ranching. Jackson’s tourism industry is not as dependent on winter sports as many other Rocky Mountain locations as tourists from around the U.S. and world flock to the national parks in the summer to enjoy the scenic beauty of the region. For example, Jackson Hole Mountain Resort is the largest employer in the winter, while Xanterra Parks Resort/Yellowstone is the top summertime employer.27 Snowmobiling is the most popular winter sport, although strict limits were placed on this activity.28 In 2016, Teton County, Wyoming, welcomed 1.66 million domestic and international visitors that spent $1.02 billion and generated $54.8 million in state and local tax revenues.29 Visitors paid 57.1 percent of the local sales tax. Total travel spending rose 4.7 percent in 2016.

Visual arts, music and dance, are vibrant in Jackson’s thriving art scene, which was recently recognized as the second-most vibrant arts community for its size by the National Center for Arts Research.30 The Fall Arts Festival has evolved into a 10-day event that attracts artists, galleries, restaurants, musicians and tourists. There are over 30 galleries in Jackson and this event now achieves national recognition in the art scene.

As more high net-worth individuals have moved to Jackson, the opportunities to provide financial services locally have increased. Further, some sophisticated investors have been attracted to the region that serve clients around the nation. Since 2010, jobs in finance and insurance averaged growth of 4.7 percent. Average annual wages of $77,400 in financial activities are the highest of any major industry sector. These jobs assist in diversifying the regional economy and provide more stability over the business cycle. Professional and technical services are another source of better-paying jobs, and between 2010 and 2016 there was a 27.3 percent gain in employment in this industry group. Wyoming has a major competitive advantage for attracting these individuals and proprietors as it has no personal or business income tax.

State and local officials are seeking to diversify the economy through a focus on entrepreneurship. The Wyoming Legislature passed the Economically Needed Diversity Options for Wyoming (ENDOW) in 2017. Silicon Couloir is a Jackson-based non-profit entrepreneurial support firm. Silicon Couloir collaborates with Central Wyoming College to provide a 10-week, intensive startup-business development course for residents that requires over 200 hours of immersion.31 It hosts regular networking events, an intensive leadership course and holds a Pitch Day. Silicon Couloir has an affiliated group of angel investors that provides financial and business advice. Investment bankers with global experience are included in this group. These connections provide Jackson with a leg up on many other micropolitans and even metropolitans. Jackson is 12th in the nation in the proportion of total jobs at young firms.

4. Heber, UT

32,106

2017 Population

2.0627

Overall Z-Score

2nd

Young Firm Employment Ratio

2nd

Short-Term Personal Income Growth

Another micropolitan, part of the Wasatch Back is Heber, Utah, (Wasatch County) and it comes in fourth among the Most Dynamic Micropolitans in the nation. Heber is located on the eastern part of the Wasatch Range just a 25-minute commute from the Provo/Orem metropolitan area and a 45-minute commute from the Salt Lake City metropolitan area. Heber’s long-term growth is remarkable with the population doubling from 15,421 in 2000 to 32,106 in 2017.32 In 2016, population growth was 4.6 percent, ranking third among counties in the U.S. The micropolitan area has benefited from its proximity to Provo/Orem as lower housing prices and a high quality of life draw college professors and professionals and their families eastward. The high level of commuting into Provo/Orem could result in Wasatch County being absorbed into the metropolitan statistical area after the 2020 Census is completed. While not as dependent on travel, tourism and recreation as its northern neighbor, Summit County, the sector accounts for 22.1 percent of Heber’s economy, nearly double the national average.33 The recent expansion in the Salt Lake City airport has made it easier to travel to the Heber area, contributing to the rapid increase in tourists.

Heber recorded some impressive performances among the metrics included in our study. It was third in medium-term personal income growth and fourth in medium-term job growth. Heber’s personal income growth was second in the nation in 2016. Growth in employment was 6.6 percent in 2016. Young firms’ share of total employment was more than four standard deviation units above the national average in 2016, placing it second in the nation among micropolitans. Heber hosted two Olympic venues in the 2002 Winter Olympics at Soldier Hollow, cross-country skiing and the biathlon, and has become a mecca for the sports. The Heber Valley is known as Utah’s Switzerland because Swiss settlers originally settled.34 Approximately half of the skiers come from nearby urban areas, but the area has a strong contingent of skiers from out of state. Snowbird Mountain is a world-class skiing venue attracting thousands every year.35 The Heber Valley Railroad is a strong tourist attraction.

Median family income is $71,000 in Wasatch County. There has been a rapid gain in professional and technical services employment in recent years. Between 2010 and 2016, earnings in professional and technical services rose from $25.6 million to $43.8 million, a gain of 58.5 percent or an annual increase of 9.7 percent. These are high paying jobs and boosted measures of wages and income in Heber. With the University of Utah and Brigham Young University close by, Heber has a reservoir of human capital to draw from. At 43.8 percent, it has a very high proportion of adults with a Bachelors’ degree or higher. As the population has expanded rapidly, construction activity has surged, mostly residential construction, but commercial activity has grown too. Construction jobs have averaged growth of 9.2 percent per year between 2010 and 2016.

Heber is working hard to diversify its economy and provide more professional employment opportunities for its residents. Berg Engineering is an important employer in the region and several other engineering firms are expanding.36 Among its targeted industries are software development and information technology, professional services, healthcare and medical services and advanced manufacturing.37 Additionally, its Small Business Development Center Utah Valley University campus and Business Resource Center provide entrepreneurial support and mentoring. Through a combination of recruiting existing firms from Salt Lake City and Provo/Orem and launching more firms itself, Heber expects to continue to be among the fastest-growing micros over the next several decades. Given the lack of available land in nearby urban areas and a thoughtful, well-articulated development strategy, Heber seems likely to continue on this high-growth trajectory.

5. Bozeman, MT

107,810

2017 Population

1.6853

Overall Z-Score

13th

Young Firm Employment Ratio

9th

Short-Term Personal Income Growth

Bozeman, Montana, is fifth in our Most Dynamic Micropolitans. Bozeman is among the top tourism/recreational-dependent destinations in the nation with Yellowstone National Park to its immediate south. However, Bozeman has a highly diverse economy with many more elements than travel and tourism, and its industry composition resembles that of a much larger metropolitan area. The Bozeman area has a thriving photonics/optics cluster, a substantial software and information processing presence, a bioscience sector and major healthcare services operations. The area has specialized in outdoor recreational product design and manufacturing that broadens the economic impacts of its skiing and outdoor enthusiast cluster.38 Moreover, Montana State University (MSU) is churning out more graduates, and conducting more research with the aim of spinning out additional companies and providing entrepreneurial training to students and faculty.39 These activities have fostered job creation over the 2012-2016 period that was 12th among all micropolitans in the nation.

Skiing is the major winter recreation with its Big Sky ski resort among the largest in the nation and several easily accessible smaller ski resorts.40The economic effects of the large tourism/travel sector are apparent in several industry categories. At 8,075 in 2016, accommodation and food services represented 9.9 percent of total employment and recorded average annual growth of 6.4 percent between 2010 and 2016.41 In 2016 and 2017, tourists spent $660 million in Gallatin County (Bozeman micropolitan,) generating an important part of its tax base. Expansion of its airport has supported further gains in travel and tourism. Growth in travel and tourism spills over into real estate and rental and leasing as well as arts, entertainment and recreation, which all account for a larger share of employment in Bozeman than for the U.S. overall. Bozeman’s economy is supported by a substantial agricultural sector as well.

Bozeman has a remarkable complement of photonics/optics firms (over 30 in total) making it among the national leaders on a per capita basis.42 Most of these companies were founded by Montana State University graduates or faculty. MSU has strong research capabilities in optics. MSU’s Optical Technology Center (OpTec) and affiliated nonprofit Spectrum Lab are critical components of the cluster. OpTec serves as a networking hub for research and development talent and Spectrum Lab is effectively an incubator for applications for faculty and firms in the cluster. Large employers include Lattice Materials Corporation, ILX Lightwave, Quantel and FLIR. All these firms had 50-100 employees.43 These companies pay high wages and support other jobs in the community. Biotechnology firms play a role in Bozeman’s economy. Among the key names are Microbion, ProPharma Group and ADVR Inc. Despite several international biotech firms closing operations, many former staff have started new companies in the area. Montana State University recruited internationally known stem cell scientist Dr. Renee Reijo Pera from Stanford University to become Vice President for Research and Economic Development,44 displaying MSU’s commitment to aiding the biotech sector.

Bozeman is home to a collection of software and IT service companies with a specialization in enterprise software (SaaS). This distribution model is based upon a third-party provider hosting the applications over the internet. The primary catalyst of this sector forming was when Greg Gianforte started RightNow Technologies, a customer relationship firm, in 1997. This firm grew to 1,100 employees with 500 of them based in Bozeman.45 Oracle acquired RightNow in 2012 for $1.5 billion. Oracle is the area’s anchor tech firm and has expanded some operations in Bozeman. Many RightNow alumni started a group of new software firms.

Bozeman has a strong entrepreneurial ecosystem as the Kauffman Foundation has documented. MSU has been a major player in supporting a strong entrepreneurial culture and success. MSU’s Jabs Entrepreneurial Center raises awareness of entrepreneurial opportunities while the Blackstone Launchpad and the 406 Labs Accelerator provide hands-on coaching, support services and intensive program support to launch new enterprises.46 MSU contributes to a high level of educational attainment in the community with 48 percent of residents 25 years and older with Bachelor’s degrees or above.47 MSU churns out a number of engineers. Bozeman has a variety of cultural amenities such as the Bozeman Symphony, the Montana Ballet Company and the Museum of the Rockies, which has one of the largest displays of dinosaur fossils in the nation.48

Full write-ups on the top 20 Most Dynamic Micropolitans are available in the full report.

Read The Full Report

Ross DeVol

President and CEO, Heartland Forward

Jonas Crews

Research Associate, Heartland Forward

Endnotes

  1. Our definition of the Heartland includes the Census Divisions of the East North Central (Ohio, Michigan, Indiana, Illinois and Wisconsin), West North Central (Minnesota, North Dakota, South Dakota, Nebraska, Iowa, Missouri and Kansas), West South Central (Arkansas, Oklahoma, Louisiana and Texas) and East South Central (Kentucky, Tennessee, Alabama and Mississippi.)

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  3. DeVol, Ross. “How Do Research Universities Contribute to Regional Economies?” Walton Family Foundation, Sept. 2018. https://8ce82b94a8c4fdc3ea6db1d233e3bc3cb10858bea65ff05e18f2.ssl.cf2.rackcdn.com/da/5d/7d56ea9a46de8d0ab5d0e5159ba5/new-research-universities-contribute.pdf

  4. DeVol, Ross and Shelly Wisecarver. “Micropolitan Success Stories from the Heartland.” Walton Family
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  5. Jasper, Simone. “Economic growth brings challenges, benefits to Pecos.” Midland Reporter – Telegram, 18 August 2018. https://www.mrt.com/business/oil/article/Economic-growth-brings-challenges-
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