Des Moines Tops List of the Best Places for Business and Careers in U.S.

Des Moines Tops List Of The Best Places For Business And Careers 

Last week's jobs report for July showed unemployment dropping from 7.6% to 7.4%, which marks the lowest rate since December 2008. Good times, right? Not exactly. The rate fell in part because more and more Americans have ceased looking for work. Wage growth has been anemic and the recovery from the recession has been the slowest since World War II. The U.S. economy is sputtering along at 2% growth.

But there are places with strong business climates, fueled by low costs and educated labor forces. With that in mind, Forbes crunched the numbers for our 15th annual list of the Best Places For Business And Careers.

Des Moines, Iowa, tops our list this year. It is the only place that ranks among the top quartile in at least nine of the 12 metrics we graded the cities on. Highlights for the Des Moines metro area include business costs that are 17% below the national average and an educated workforce where 36% of the population has a college degree and 92% possess a high school diploma.

Iowa’s capital city has a strong foothold in finance and insurance with the highest concentration of financial services employment in the country, and employers are doubling down on the area. Wells Fargo has added more than 4,000 jobs in Des Moines over the past 10 years and recently announced a new $100 million expansion in the area. Principal Financial, headquartered in Des Moines, is putting $250 million into an expansion of its downtown campus.

Facebook and Microsoft announced plans in April to invest $300 million to build its fourth owned and operated data center. The facility in Altoona, part of the Des Moines metropolitan statistical area, is expected to be up and running by the end of next year. Microsoft is investing $678 million to expand its existing state-of-the-art data center in West Des Moines, which opened in 2009. A big carrot in Iowa for data centers and other businesses with heavy energy usage: Energy costs are 22% below the national average, according to Moody’s Anayltics.

It is not just the service economy thriving in Des Moines. The metro area had record merchandise exports last year of $1.2 billion, up 22% over 2011. Top categories include agricultural products, plastics and rubber products, processed foods, machinery and chemicals.

In Pictures: Best Places for Business and Careers

Complete Coverage: Best Places for Business and Careers

Provo, Utah, ranks second on the strength of a humming economy, which grew 6% last year to $18 billion. The metro area also had the country's top job growth of 5%. Brigham Young University is a stabilizing force for the area and the largest employer in Provo.

Raleigh, N.C., has been a perennial in our top five and this year ranks third. Employers are able to tap the top universities in and around the metro area like Duke, the University of North Carolina and North Carolina State. They provide a steady stream of educated, young cheap labor. College attainment levels in Raleigh are 41%. People continue to flock to Raleigh, which had the second highest rate of net migration of any metro area over the past five years.

San Antonio leads five Texas cities in the top 25 of our list. San Antonio, like much of Texas, benefits from business costs that are 19% below the national average. Job growth in the Alamo City has been strong in healthcare and bioscience, as well as energy and information technology. Becton Dickenson, Boeing, Centene and United Healthcare Group all added at least 250 jobs in San Antonio last year (see "Austin Is Top Spot For Future Job Growth").

San Antonio also boasts one of the healthiest city governments as the only U.S. city with more than a million people to receive an AAA bond rating on its debt from the three major ratings agencies. The city is booming, with net migration into the Alamo City of 285,300 over the past 10 years. Other Texas locales that rank highly on our Best Places list include Dallas (No. 13), Austin (No. 14), Fort Worth (No. 15) and Houston (No. 25).

To gauge the best places for business in the U.S., we rate the 200 largest metro areas on a dozen factors related to jobs, costs (business and living), income 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).

California cities dominate the bottom of our ranking, taking four of the last five spots. Salinas, Stockton, Merced and Modesto are all plagued by flat or negative income growth, sky-high unemployment and an uneducated labor force (only 12% of adults have a college degree in Merced).

Atlantic City brings up the rear, ranking 200th. The New Jersey gambling and convention destination has been hammered by the economic downturn and increasing gambling options in surrounding states. The numbers paint an ugly picture. Unemployment has hovered near 13% and employment has fallen 1.9% annually the past five years. Business costs are 8% above the national average and there has been a steady net migration out of the area since 2007.

U.S. Taxpayer's Share of Greek Debt

 Complete default benefits the Europeans and leaves the U.S. on the hook for the balance.

The Bank for International Settlements Quarterly Review for June, 2011 is the first black and white publication I’ve seen on the actual size of the Greek, Irish and Portuguese (PIG’s) debt problems as well as how much the United States and individual tax payers may be on the hook for if it all goes pear shaped.

There are four interesting points concerning these debt issues. These include, who owns the debt, who insured the debt, who profited along the way and finally, who may be left holding the bag.

Initially, Europe is responsible for approximately 95% of the debt of these countries. Most of this would be born directly by Germany and France. However, these countries have purchased Credit Default Swaps (CDS) from U.S. banks to protect themselves on approximately half of the debt they own. This means that if the countries in question end up defaulting on their loans the U.S. banks that sold the credit default insurance will be on the hook for making France and Germany whole again.

The data in the tables is pretty extensive but the end numbers look like there is roughly $890 billion in loans that are in danger of defaulting. The U.S. exposure to these losses both directly and via credit default insurance that U.S. banks have sold is about $200 billion. More than half of that is in Greece, which will be the first to default. U.S. banks are on the hook for approximately $100 billion in credit default insurance to PIG countries with about $35 billion directly insuring Greek loans. The total outstanding credit default insurance sold by U.S. banks to European countries is more than $1.5 trillion dollars.

A quick recap - Germany and France bought Greek debt then turned to U.S. banks to buy insurance on the debt Greece and other countries sold them. U.S. banks collected the fees and sold the insurance even as they were recovering from their own bad loans and accepting bailout money to heal their balance sheets. The fees they collected went on to pad their bottom line and allowed them to post record 2010 earnings. These earnings allowed banks to payout record bonuses for a second consecutive year.

The pending default of Greece will leave U.S. banks on the hook for at least $35 billion dollars. Ireland will add $54 billion and Portugal another $41 billion. These banks also hold direct debt to the tune of another $63 billion. When the market moves on Greece, it will move on these other countries as well. It is simple stampede mentality. Remember the collapse of ’08?

The AIG bailout was due to their inability to meet $85 billion in obligations. It was deemed, “too big to fail.” Bank of America and Citigroup each received $45 billion in TARP money following the sub prime implosion. JP Morgan, Goldman, Wells Fargo and others required governmental assistance as well. Total U.S. bank exposure to Portugal, Ireland and Greece is more than $193 billion.

There are only two arguments left to decide in the coming debacle. First, will we have a partial or a complete default? Complete default benefits the Europeans and leaves the U.S. on the hook for the balance. Secondly, when France and Germany come to the U.S. seeking their insurance payouts will our banks be able to afford them. I don’t believe these banks, funded with taxpayer money and using our savings accounts as collateral for making the loans have the resources to cover their losses. Therefore, the taxpayer may be left holding the bag…again.