Back in 1993, Stata Corp. was a Santa Monica, Calif.,-based software developer and distributor that faced a problem similar to many companies located in high cost areas.
“We were growing and, while we could attract people who already lived in Southern California to work for us, we could not attract those who lived outside because of the high cost of living,” said Bill Gould, president of the company. “This was especially a problem for us because the type of professionals we hire — individuals with M.S. or Ph.D. degrees who are knowledgeable in statistics and an applied area, and who are well-versed in computer programming — are difficult to find and so the whole nation (and even the world) form the labor pool from which we draw.”
Gould did what any business owner would do when faced with a problem related to his company’s location. He moved.
The company relocated from Santa Monica to College Station, Texas, in 1993.
College Station is home to Texas A&M University. The College Station-Bryan Metropolitan Statistical Area is also one of this year’s “5-Star Quality of Life Metros.”
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If companies want to be able to attract and retain the best employees without having to pay exorbitantly high salaries, they must be located in places that offer, among other things, good schools, affordable housing and low crime. |
“It was a requirement that we be located near a university,” Gould said. “It is not merely that we recruit from the university because, in all honesty, we can and do hire from universities all over. It is that, given our business, we participate academically, such as by attending and giving seminars, or forming joint offers of employment, participating in sabbaticals and a host of other things.”
The metro’s proximity to Houston (about 90 miles away) was also an important factor for Gould.
“Moving any business across the country is difficult,” he said. “One of the things that tipped the scales in favor of College Station was that it was located nearby to Houston and Austin.”
But Gould was looking for more for his company than just location factors. It was also important to him that his employees be able to afford to enjoy a decent quality of life.
“As with any growing business, our problem is to attract people, and housing affordability, standard of living and low crime rates do that,” Gould said. “One of the prime reasons we left Los Angeles was the difficulty in attracting people who lived outside the area.”
Gould’s story is not an uncommon one. Being located in a place where employees can afford to enjoy a decent standard of living has long been an important site location factor. People just didn’t associate it with the term “quality of life,” which generally centered on images of culture and recreation.
Real quality of life, however, is where people can afford to live and work on the salaries their employers can afford to pay.
For companies, the corollary is true. If they want to be able to attract and retain the best employees without having to pay exorbitantly high salaries, they must be located in places that offer, among other things, good schools, affordable housing and low crime.
That’s why, for the seventh straight year, Expansion Management is publishing its Quality of Life Quotient™ ranking of metropolitan statistical areas (MSA) throughout the country.
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How We Measured Quality of Life
This year’s Quality of Life Quotient (QLQ) compares 362 MSAs according to nine broad categories. Each category, in turn, consists of anywhere from two to 10 factors drawn from a variety of government and proprietary sources. For this study, we used the MSA definitions established by the Office of Management and Budget in June 2003.
Low crime rates. It goes without saying that a feeling of personal safety is absolutely critical to a family’s quality of life. In this category, we used data from the FBI’s annual crime statistics, focusing primarily on violent crime and property crime.
Affordable housing. Along with good schools and safe streets, affordable housing is the most important ingredient to quality of life. It’s a natural desire among people to want to live in a nice home. Unfortunately, housing costs vary dramatically from city to city, and in some metros, home ownership is virtually impossible for many middle class families. This creates upward pressure on wages and salaries, thus adding to a company’s operating costs. Obviously, a good way to lessen those pressures is to locate in a place with lower housing costs.
Among the factors included in this category are average home prices (from Coldwell Banker Real Estate Corp.) and fair market rental rates (from the Department of Housing and Urban Development).
Quality public schools. Being able to send one’s children to good (and safe) schools is one of the main ingredients to quality of life. Private schools tend to flourish in areas with poor public schools because people will sacrifice a lot for their children’s future. Being able to send their kids to excellent local public schools — rather than having to bear the added expense of a private education — means that those families will be able to devote that portion of their income to things that will enhance their overall sense of quality of life.
MSA public school rankings are based upon data from Expansion Management’s annual Education Quotient™ comparison of 2,800 secondary school districts nationwide. (To read the full Education Quotient article, published in our December 2004 issue, visit our Web site at www.ExpansionManagement.com.)
Reasonable standard of living. Many metros enjoy a low cost of living mainly because nobody makes any money and the poverty rate is sky high. In other metros, the average person makes a great salary but can’t afford much more than a studio apartment and one night a month at McDonald’s. Clearly, there has to be a happy median.
To get a good feel for the overall standard of living enjoyed by residents of a metro area, we look at a broad range of factors such as median family income, per capita income and per capita disposable income, as well as comparing the relative cost of living, state and local tax burden, and unemployment rates.
Spouse employment opportunities. For whatever reason, whether it’s because both spouses are skilled professionals or they both need to work to make ends meet, the two-income family is the norm in our country.
Personnel specialists have been telling us for years that spouse employment opportunities are an important factor when it comes to an employee’s final decision on whether to move to a new location.
To measure the relative flexibility of the local job market, we used unemployment statistics — the most current month, as well as the average rate for the past 12 months — from the Bureau of Labor Statistics.
Adult education levels. Living in a community of reasonably well-educated people is a desirable thing for most employers because that is where their employee base comes from.
In today’s work place, having workers who are able to quickly grasp concepts and implement ideas is the difference between successful companies and empty buildings.
These are also usually the entrepreneurial hot spots of our country, as well. It is no accident that the MSAs with the lowest unemployment rates, year in and year out, are also home to major research universities.
Traffic and commuting. Being stuck in traffic for several hours a day is not conducive to quality of life, no matter how much money one makes.
It is definitely a factor, and anyone who tells you he uses his hour-long commute to work in the morning to better prepare himself for the day’s activities — and, likewise, uses the hour commute home at night to ramp down from a hectic day — has never known the joy of a 10 to 15 minute commute to work.
Continuing education opportunities. This is an important factor for employer and employee alike. Whether it’s for degree-completion, a change of career field, to improve one’s job skills or simply for the sheer joy of learning something new, adult education is one of the fastest growing sectors in American life. For employers, the availability of a range of education venues is important, too.
While colleges and universities are more prominent, local community colleges play a key role in work force training programs set up by employers in cooperation with (and in certain instances paid for by) state and local economic development agencies.
Having a mix of post-secondary educational institutions is a major plus for a community, particularly if they are able to service needs ranging from basic community college courses all the way to Ph.D. degrees in scientific and technical disciplines.
Commercial air access. Convenient access to commercial air service is becoming a “hard screen” for many companies looking for a future location.
The same is true for employees. Low prices for air travel enable families to substitute a long automobile trip with a quick flight home to visit the relatives. In general, the greater the number of flights and carriers serving an airport, the lower the price for air fares.
Once all the scores were tabulated, the top 20 percent of MSAs were designated as “5-Star Quality of Life Metros,” (page 10) while the next 20 percent were designated “4-Star Quality of Life Metros” (page 12).
Does this mean that communities that don’t meet the criteria for 5-Star or 4-Star Quality of Life Metros don’t offer a good quality of life? Of course not. After all, most people like where they live and, besides, quality of life can be found just about anywhere if you spend enough money.
Our QLQ simply shows you a way to quantify what most people still consider a highly subjective area (i.e., quality of life). Bill Gould of Stata Corp. perhaps put it best.
“We wanted to relocate to an area where one could have both a career and a family,” he said.
When all is said and done, that’s really what quality of life is all about.
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