How We Pick the Best Cities

By Michael Shires

This year's rankings continue the methodology used last year, which emphasizes the robustness of a region's growth and allows the rankings to include all of the metropolitan statistical areas for which the Bureau of Labor Statistics reports monthly employment data. They are derived from three-month rolling averages of U.S. Bureau of Labor Statistics "state and area" unadjusted employment data reported from November 1996 to January 2008.

The data reflect the North American Industry Classification System categories, including total nonfarm employment, manufacturing, financial services, business and professional services, educational and health services, information, retail and wholesale trade, transportation and utilities, leisure and hospitality, and government.
"Large" areas include those with a current nonfarm employment base of at least 450,000 jobs. "Midsize" areas range from 150,000 to 450,000 jobs. "Small" areas have as many as 150,000 jobs. Two communities in last year's top midsize MSA group grew enough that they are now considered large MSAs: Birmingham, Ala., and Oklahoma City. In the smaller MSAs, Asheville, N.C., moved from the small to midsize category.

This year's rankings use four measures of growth to rank all areas for which full data sets were available from the past 10 years -- 335 regions in total. The Bureau of Labor Statistics, however, no longer reports employment detail for MSAs with employment levels less than 30,000 in its monthly models (a total of 59 MSAs were dropped). As a result, this year's rankings can be directly compared to the 2007 rankings for MSAs for the large and midsize categories, but there are some adjustments needed for year-to-year comparisons in small MSA category. In instances where the analysis refers to changes in ranking order, these adjustments have been taken into account.

The index is calculated from a normalized, weighted summary of: 1) recent growth trend: the current and prior year's employment growth rates, with the current year emphasized (two points); 2) mid-term growth: the average annual 2002-2007 growth rate (two points); 3) long-term trend: the sum of the 2002-2007 and 1996-2001 employment growth rates multiplied by the ratio of the 1996-2001 growth rate over the 2002-2007 growth rate (two points); and 4) current year growth (one point).