MW: How we ranked our best metro areas for business
By Russ Britt, MarketWatch
LOS ANGELES (MarketWatch) -- There was one wrinkle to this year's ranking of the best cities for business as MarketWatch looked at several small-business categories instead of just the one examined a year ago.
The change seemed to boost the fortunes of a number of cities in our survey, while casting others, particularly troubled regions of South Florida, further down in rankings.
As with last year, the rankings are purely result-oriented and are based on available data in eight categories from various government agencies and financial organizations, as well as two business publications: Fortune and Forbes.
No subjective criteria such as "quality of life" were included; these rankings are purely by the numbers. And we took the nation's top 50 metropolitan areas, all of which except for Tucson, Ariz., had populations of 1 million or more.
A metro area is generally a central city and all its surrounding suburbs, though that can be extended quite a distance, particularly in expansive western cities such as Los Angeles and San Francisco. Many workers in those cities, though, often commute an hour or two each way to work, so we figure that a metro area ends where the concrete runs out.
Here's how the rankings worked this year:
Companies located in the 50 metro regions from four lists - the Fortune 1000, Forbes private companies, S&P 500 and Russell 2000 - are counted up and averaged against a region's population. Population figures are as of July 2007, the latest available. Fortune and Forbes lists are from earlier this year. And S&P and Russell lists are as of August.
In the small-business category last year, we only looked at numbers of establishments. This year, we looked at that, plus numbers of larger firms with several operations in a region, payroll and numbers of overall employees. Numbers are from the U.S. Census Bureau, but a note of caution: the most recent figures are from 2005.
Population growth was measured using numbers which simply came from the census bureau. They measure the latest figures available on individual metro areas, from July 2007, against the time of the last census taken in April 2000.
Job growth also was checked in each region, taking the population growth from April 2000 to July 2007 and measuring that against the numbers of new jobs created during that time. Job figures came from the Department of Labor.
Finally, Labor Department unemployment figures from three intervals - June jobless figures from 2000, 2004 and 2008 - were the final metric thrown into the mix.
Cities are ranked against each other in all eight categories. The city with the highest concentration of Russell 2000 companies, for example, gets a score of 50 while the one with the lowest gets 1 point. A city's score in all categories are added together for that area's final score.
Shortcomings to our survey stem mostly from unavailable - or undiscovered - data. Cities such as Los Angeles or Orlando undoubtedly would rank higher were there reliable figures on tourism available for each of the metro areas.
Further, other regions such as Virginia Beach, San Diego and San Antonio get somewhat shortchanged because there appear to be no readily available data yet that measures military installations and their impact on the local economies. That's what unemployment figures are supposed to mitigate, but may not cover it all.