Q&A Tuesday: Acclaimed city scholar explains Reno is the Biggest Little City this year for business

Reno was selected this year as Inc. Magazine's No. 1 city for doing business in America out of 274 metropolitan areas. The author of the article, and an internationally recognized authority on global, economic, political and social trends, Joel Kotkin said plenty of people are drawn to Reno by low housing prices and the friendly business environment. That steady migration has resulted in a 14.1 percent increase in business services jobs and a 6.1 percent increase in financial services jobs since 2001.

What pulled Reno to the top of the heap? Kotkin said it was all in the numbers.

The rates were calculated from 274 metropolitan statistical areas, as defined by the Bureau of Labor Statistics. How did the process work?

We used a scientific method in doing this. We try to take out the subjectives usually used by people because they make assumptions that often are not true. We looked at job growth over time, and we looked for varied industries that had job growth over time. We really tried to have the numbers speak for themselves and not put subjectives in there. For example, people look at a university in a city and assume that a lot of intellectuals are attracted to that area. That may not be true.

You mention in your article that the rating may not come out fair. San Francisco came in at No. 188. Why would such a city commonly looked to as a business center have such a low rating?

It has crappy job growth. I think people who try and do business in San Francisco say it's not such a great place to do business. Why? San Francisco is overregulated, very expensive and very difficult to get people to come there, unless they are young and in that phase in their life and have money. It's very hard to build middle management in a place where the median home price is a million dollars.

You write that lower housing and labor costs, more favorable regulatory environments, and, in some cases, lower taxes, provide an ideal place for doing business in smaller cities. Can you give an example how Reno was able to succeed in those areas?

All you have to do is talk to people in those companies, and they'll tell you why: being able to afford living and working there.

Nevadans see Reno is getting too expensive, that locals are getting priced out of the housing market, so how can that be?

Everything is relative. One of the dangers lurking is that your area will become much more expensive to live in. Coping with success is sometimes as difficult as coping with failures.

You describe an important shift in the "new new economy" as the Bright Flight, what does that mean?

In the 1990s, young, educated people were moving to places in the South like Charlotte or Las Vegas in the West. But what's really interesting is, we think they are now moving away from high-cost urban centers to more affordable cities. The job growth is strong in the high-end sectors of these other places.

What age group should cities be attracting?

The critical group is in their 30s because that's when people are starting to settle down. Someone who is 25 is a harder sell. People in their 20s move around more often. Sometimes, cities make an idiot of themselves trying to be hip and cool and attract those in their 20s. But they don't stay.

Joel Kotkin is the author of the newly published, critically acclaimed "The City: A Global History." He is also an Irvine Senior Fellow at the New America Foundation.

His article, "The Best Places for Doing Business in America 2005" appeared in the May issue of Inc. Magazine. It's available at www.inc.com/magazine/20050501/bestcities.html.

He is the keynote speaker at the 21st Annual Governor's Industry Appreciation Awards, Nov. 8 at the Reno Hilton. Kotkin will address how Northern Nevada maintains its favorable business climate and quality of life. For information on the event, visit http://www.edawn.org.