Austin has fallen from its top spot in a prestigious national economic ranking, highlighting growing challenges despite continued strength in its technology sector, according to a new report released Tuesday by the Milken Institute.
The Texas capital dropped five positions in the annual Best-Performing Cities index but maintained its decade-long presence among the top 10 large metropolitan areas, driven by robust wage growth and a thriving high-tech industry.
Austin led all major U.S. metropolitan areas in five-year job growth and ranked fourth in one-year job growth. The city posted a remarkable 68.2% increase in wages over five years, surpassing the next-highest large city by more than 10 percentage points.
The technology sector has been particularly strong, with Austin ranking sixth nationally in high-tech concentration, the highest among Tier 1 large cities. The information sector grew by 52.8% from 2018 to 2023, dramatically outpacing the national growth rate of 6.7%.
However, the report identified significant challenges that could threaten Austin’s economic momentum. Short-term job growth has plummeted, with the city falling from 22nd to 104th position — last among Tier 1 large cities in this metric.
Housing affordability has emerged as a critical concern. Austin now ranks 143rd among large cities in housing affordability, the lowest among top-tier metropolitan areas. While recent construction efforts have helped address housing supply shortages, the report suggests affordable housing remains scarce.
The city’s tech sector continues to show diversity and strength, particularly in computer systems design, corporate management, and data processing. The presence of the University of Texas has helped maintain a skilled workforce pipeline.
Local economists suggest Austin’s future growth may depend on addressing its affordability challenges while maintaining the economic diversity that has fueled its rise as a technology hub.
The Milken Institute’s Best-Performing Cities index evaluates metropolitan areas based on 13 economic metrics, including labor market conditions, high-tech growth, and access to economic opportunities.