AEI Ten Best and Worst Metro Areas for STEM Jobs

A new AEI study ranks the 30 metros with the highest number of Science, Technology, Engineering, and Math (STEM) jobs in 2018 in terms of economic vitality and affordability.

Besides the number of STEM jobs that a metro had in 2018, the study also took into account total job growth since 1990 and affordability for first time buyers in 2017. Dallas-Fort Worth was ranked the best and Los Angeles and Sacramento were tied for the worst.

Key findings

  • While total STEM employment is important, total employment growth and relative affordability for first time buyers (FTBs) are also key in ranking STEM-employment heavy metro areas. Total employment growth of any type since 1990 is a useful metric, since a robust job market is generally indicative of employment opportunities of all types, including STEM jobs. The relative affordability for first time buyers (FTBs) is also important, since this is a consideration for many recent STEM graduates. The FTB metric is also a good proxy for cost of living generally.
  • While the San Francisco, San Jose, and Seattle (SF, SJ, & S) metros are usually top of mind for their high numbers of STEM jobs, the New York City, Washington, DC, Los Angeles, Boston, and Chicago metros all had more STEM jobs than did SF, SJ, & S, and the Dallas-Fort Worth and Houston metros had about the same number as SF, SJ, & S.
  • The Dallas-Fort Worth and Houston metros respectively garnered the #1 and #2 overall rankings for best STEM metros. This was due to each scoring in the top 10 on all three metrics – total STEM employment, total employment growth and relative affordability for first time buyers (FTBs).
  • Los Angeles (#29), San Francisco (#23), and San Jose (#26) all lagged in the overall rankings. While high in total STEM employment ((Los Angeles (#3), San Francisco (#6), and San Jose (#8)), all were at the bottom in terms of FTB affordability ((Los Angeles (#29), San Francisco (#28), and San Jose (#30)). Los Angeles also scored poorly in overall employment growth (#29), while San Francisco (#20) and San Jose (#19) both had below average overall employment growth.
  • For recent grads and younger STEM employees, FTB affordability is a key concern. Four of the top 10 STEM employment metros also rank in the top 10 in terms of FTB affordability (Columbus (#4), Houston (#6), Chicago (#8), and Dallas (#9), with Charlotte being close at #11).
  • As noted in the individual metro thumbnails below, a vibrant new home construction sector is key to supporting a high rate of employment growth and achieving FTB affordability. For example, Dallas, ranked #1 overall, has seen employment grow at more than twice the national average since 1990 (ranked #4) and maintained FTB affordability (ranked #9). New construction sales in Dallas accounted for 24.6% of all home sales in the 4th quarter of 2018, well above the national rate of 11.2%. The same was true for new construction sales at both the entry-level and move-up home segments. Further, between 2013 and 2018, new construction has added 5.5% to the Dallas, TX metro housing stock. This is higher than the nation, for which the new construction contribution over the same time period was 2.2%. Contrast this with Los Angeles, ranked #29 (tied) overall. It has seen overall employment growth since 1990 of less than one-third the national rate (ranked #29), combined with one of the most unaffordable housing markets in the country (ranked #29). New construction sales accounted for only 6.5% of all home sales in the 4th quarter of 2018, well below the national rate of 11.2%, The same was true for new construction sales at both the entry-level and move-up home segments. Further, between 2013 and 2018, new construction has added 1.1% to the Los Angeles, CA metro housing stock. This is one-fifth the rate for Dallas and half the rates for the nation, for which the new construction contribution over the same time period was 2.2%.
  • The relative restrictiveness of land use regulation separates many of the metros with high rate of employment growth and good FTB affordability from those which lag on these metrics.Seven of the 10 Best Metro Areas for STEM jobs had top half FTB rankings combined with less restrictive land use regulations as ranked by Demographia:
    • Dallas-Fort Worth (FTB #9),
    • Houston (FTB #6),
    • Atlanta (FTB #12),
    • Austin (FTB #14)
    • Chicago (FTB #8)
    • Charlotte (FTB #11)
    • Columbus (FTB #4)
  • Six of the 10 Worst Metro Areas for STEM jobs all had bottom third FTB rankings combined with more restrictive land use regulations as ranked by Demographia:
    • San Francisco/San Jose (FTB #28 & #30),
    • Portland (FTB #24),
    • San Diego (FTB #27)
    • Los Angeles (FTB #29)
    • Sacramento (FTB #23)

To view the full report, please click here.

 

Edward J. Pinto

By Edward J Pinto

American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s Center on Housing Markets and Finance.  Along with AEI resident scholar Stephen Oliner, Pinto is creator of the Wealth Building Home Mortgage, a new approach to home finance designed to serve the twin goals of providing to a broad range of homebuyers – including low-income, minority, and first-time buyers – with a more reliable and effective means of building wealth than currently available under existing policies, while maintaining buying power similar to a 30-year loan.  He is currently researching approaches to increase the supply of market rate economical apartments for hourly wage earners. Active in housing finance for 45 years, he was an executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done ground breaking research on the role of federal housing policy in the 2008 mortgage and financial crisis.  He is now conducting research on the current house price boom that began in 2012. Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign. He can be reached at pintoedward1@gmail.com.