For decades, the Midwest was known as the industrial heartland of the nation, and the place where the goods, tools and machinery that drove the U.S. economy were produced. But, as a wave of deindustrialization hit the region starting in the 1980s, Midwestern cities were faced with the challenge of rebuilding their fortunes in a new age of tech dominance.
So, to better gauge the progress made — and as a follow-up to our previous analysis on Midwestern and Northeastern cities in the decade after the financial crisis — we ranked the 20 best Midwestern metro areas for tech development, according to nine metrics. Specifically, our analysis included data on the local ratio of tech businesses; tech employment within the wider local economy; and the number of patents granted, as well as unemployment rate and educational attainment. For a breakdown of all of these indicators, along with data sources and other details, please consult our methodology.
Keep reading to find out more about each metro’s overall score, as well as the various performances of entries across each indicator.
Madison Ranks Best in Midwest, Chicago Snags 3rd With Highest Earnings for Tech Workers
Madison, Wis., led the ranking with a total of 66 points and strong performances across several metrics. For instance, the metro boasted the highest ratio of tech employment opportunities among all of the entries with 71 of every 1,000 occupations being within this sector. Professionals employed by tech businesses in Madison can also expect to be well-paid for their knowledge and skills as the Wisconsin metro area had the second-highest earnings for jobs in this industry on the list (roughly $89,000 per year).
In second place, Ann Arbor, Mich., also did well in terms of providing attractive employment opportunities for top tech talent with the third-highest job density on the list for this sector. More important, Ann Arbor landed in first place for its tech establishment density with 46 of every 1,000 firms registered within the Michigan metropolitan area falling under the tech category.
The Chicago metro area closed out the top three with a total of 59 points. And, by earning top scores for two individual metrics relating to patenting, Chicagoland showed its continued strength as a center for industry and innovation. Furthermore, of the 20 best metros in this ranking, the MSA was home to the highest number of tech patents (more than 8,000), as well as the largest pool of organizations and companies that contributed to tech innovation between 2018 and 2022.
However, it wasn’t just the highest-ranking entries that stood out due to great performances. As a matter of fact, Columbia, Mo., (#7 overall) was the leader in tech company growth after witnessing a 14% increase in the number of firms in this sector between 2017 and 2021. Additionally, Columbia was also the highest-scoring entry across the life-quality index, which looked at the unemployment rate, educational attainment across each metro area and the regional price parity.
In a similar vein, the highest increase in tech employment occurred in Rochester, Minn. (18th place), while Sioux Falls, S.D., recorded the most significant percentage growth in median tech earnings (45%).
Ann Arbor Metro Outranks Minneapolis & Chicago for Tech Establishment Density
Already known as a hub for automotive and mobility-related tech, Ann Arbor, Mich., claimed the first spot for its tech business density — 46 out of every 1,000 companies in the metro area fell under that category. In addition, Ann Arbor is home to a wide range of companies in terms of their size — from the likes of Toyota Motor North America R&D Headquarters to startups like May Mobility, Censys and Blumeria.
Next, the Minneapolis metro came in second for this metric, albeit at a 15-point difference: The latest records available showed that 31 out of every 1,000 firms registered in the area were labeled as tech businesses. Notably, some of the tech companies that currently have a presence in this Minnesota metro include the likes of health care technology innovator Optum; fintech developer Pennymac; and agricultural and forestry machinery and technology service provider John Deere.
Not to be outdone, Madison, Wis., scored a very close third in this category, just 0.1 points behind Minneapolis. Here, the University of Wisconsin-Madison plays a key role in the metro’s tech sector growth as it funnels well-educated graduates and professionals involved in cutting-edge research toward the various tech companies that call Madison home.
Outside of the top three places in terms of tech business density, the margins between the remainder of the entries were rather tight. For example, in the Chicago and Columbus, Ohio, metro areas, roughly 26 out of every 1,000 registered firms fell under the tech category, whereas, in Kansas City, Mo.; Lincoln, Neb.; and Detroit, the ratio was closer to 21 out of 1,000.
Columbia, Mo. & Lansing, Mich. See Double-Digit Growth of Tech Business Sectors In 5 Years
Between 2017 and 2021, Columbia, Mo., led the ranking in terms of percentage growth of tech establishments among the metros in our list. More precisely, Columbia recorded a 14% increase in the number of local tech firms during the surveyed period. But, in addition to being a fertile ecosystem for burgeoning companies, Columbia is also a good business environment for growing established companies. In particular, EquipmentShare — founded in 2015 — is a nationwide construction solutions provider playing a big role in the local business scene. And now, the company is ready to take the next step with plans to create more than 500 new jobs and expand into a new headquarters in Columbia.
Next up, Lansing, Mich., boasted a 10% increase in the number of local tech establishments, while Springfield, Mo., saw a hike of roughly 9%. In this case, Springfield’s third-place finish in this category was also the metro’s best performance across the indicators considered in this study.
Closing out the top five, Sioux Falls, S.D., and Fargo, N.D., each witnessed an 8% bump in their shares of tech companies within their metropolitan areas.
At the same time, Columbus, Ohio, stood out for the 44 new tech companies that it welcomed in the course of the last five years, making this the largest increase by numbers across the top 20. Without a doubt, landing the massive new Intel chip factory last year will be a massive boom to Columbus’ attempt at establishing itself as a leading tech and manufacturing center, both nationally and internationally.
Yet, despite these positive trends, several entries in the ranking struggled and, ultimately, lost tech businesses. For instance, Chicago was hit by an exodus of major companies in 2022, including investment firm Citadel, Boeing and insurance giant Allstate. And, while most of the high-profile exits wouldn’t be labeled as tech companies, large shifts across adjacent industries can cause a ripple effect throughout the local economy.
Tech Employment in the Midwest: Madison Home to Most Tech Workers; Rochester Minn. Sees 47% Jump in Tech Jobs Since 2017
Echoing their great performances in terms of tech-firm density, the Madison, Wis.; Ann Arbor, Mich.; and Minneapolis metropolitan statistical areas also scored among the top five for tech employment opportunities. Naturally, their pecking order was reshuffled somewhat for this metric with the Wisconsin metropolitan area taking the lead ahead of its neighbors to the east and west.
Meanwhile, professionals on the lookout for tech jobs can find a good match for their skillset given Madison’s share of 71 out of 1,000 occupations being in the tech industry.
Next, the Des Moines, Iowa, metro area placed second with 53 out of every 1,000 jobs labeled as tech. Likewise, Ann Arbor, Mich.; Minneapolis; and Rochester, Minn., followed suit with similar ratios all above the mark of 50 tech jobs per 1,000 jobs.
Otherwise, in terms of tech employment growth, no other entry had a higher percentage increase than Rochester, Minn., where approximately 47% of people were working in tech occupations by 2021 than in 2017. Here, Digital Fleet — a Midwest tech firm that moved into a Rochester warehouse last summer — has been one of several companies attracted by the metro’s cost-effectiveness and glut of talent.
Not far behind, the Lansing, Mich., metro boasted a 45% growth rate across the surveyed period due to a statewide effort to convince tech companies to invest, recruit and build a presence in the area. More recently, Gov. Gretchen Whitmer and Lt. Gov. Garlin Gilchrist expressed their support for a proposed technology hub within Michigan as part of a $500 million nationwide investment program to encourage tech industry development.
Interestingly, third place marked a 10-point drop-off in terms of percentage increases as the Des Moines, Iowa, metropolitan area recorded a 32% rise in tech employment between 2017 and 2021.
At the same time, Detroit and Indianapolis earned the next-best scores for percentage growth in tech employment with hikes of 26% and 25%, respectively. That said, when looking at tech employment growth in terms of numbers, the top five was flipped. Specifically, there was a significant disparity between the number of tech employees in Detroit (more than 76,000) and Indianapolis (38,000), compared to Rochester, Minn. (6,000); Lansing, Mich. (11,400); and Des Moines, Iowa (20,000). On top of that — and despite the similar percentage growth — the Detroit metro added more than double the number of employees as Indianapolis did since 2017 (roughly 16,000, as opposed to 7,800).
Chicago Entices Tech Talent with Median Earnings in the $90,000s; Sioux Falls, S.D. & Fargo, N.D., Lead in Income Growth
Unsurprisingly, when it came to raw numbers, some of the largest metro areas in the Midwest ranked highest in the list of yearly earnings for tech employees. Namely, Chicago was in the pole position with an annual median income of $92,000, followed by Madison, Wis., in second place with roughly $89,000 and Minneapolis in third with $87,000.
Even so, there was a notable exception in the ranking as earnings in one smaller metro came quite close to the three larger contenders mentioned above: The 227,000-resident Rochester metro area in Minnesota placed fourth with an $84,000 median incomes for its tech industry workers to land just a couple of thousand dollars short of the podium.
Finally, the Indianapolis metro landed in fifth place with its performance for the median tech earnings metric being one of the best across the indicators used in our study.
Additionally, among the top 20 entries, Sioux Falls, S.D., tech earnings witnessed the most spectacular percentage increase between 2017 and 2021, growing by 45%. Granted, the South Dakota metro might not be quite as competitive as its more populous Midwestern neighbors in terms of current wages, but the $20,000 bump in median Sioux Falls tech earnings recorded during a five-year period is a sign of the positive evolution of the sector in the Mount Rushmore state. In particular, the biotech industry has been building up momentum in the South Dakota tech scene with companies such as SAB Biotherapeutics and South Dakota Biotech among the biggest names.
Further north, Fargo earned second place with a similar growth rate in both percentage (40%), as well as in actual dollar value. In particular, agriculture tech plays a key role in the industry’s growth in the Fargo metro area, as companies such as Bushel and FarmQA strive to improve crop productivity and quality for an expanding global population.
The next three entries in the ranking were Columbia, Mo. (32% increase); Madison, Wis. (28%); and Springfield, Mo. (27%). That said, all three metro areas had significantly higher baselines in the $57,000 to $69,000 range.
8,000+ Tech Patents Granted to 773 Different Organizations Across Chicago in Last 5 Years
Innovation has always been a hallmark of U.S. economic growth and, for decades, the corporate patenting model and small business invention have been important vehicles of change and adaption. Therefore, the following section will analyze both the rate of innovation within the metros in our ranking (measured through the number of patents granted for each entry between 2018 and 2022), as well as the pool of organizations and companies that played a role in said innovation (determined by the number of entities that contributed to the patents being granted within a five-year period).
Notably, between 2018 and 2022, 8,243 patents were granted to various organizations across the Chicago metropolitan area — the highest number across the ranking. In particular, 2020 proved to be the most active year in terms of patenting as the pandemic pushed many to seek solutions to new challenges.
One of the 2,059 patents granted in Chicago during that year was Narrative Science’s breakthrough on Applied Artificial Intelligence Technology for Performing Natural Language Generation (NLG), which claimed it would enable a user to quickly structure story outlines without the use of any coding. According to a study by the Becker Friedman Institute, COVID-19 also shifted many patented innovations toward technologies that supported working from home or a hybrid work scenario.
Moreover, Chicago also topped the list for the number of organizations that contributed to its patent inventory across the surveyed period: 773 entities across the Illinois metro were involved in patenting — roughly 77% more than runner-up Minneapolis and more than double the number of contributors to Detroit’s total of patents granted between 2018 and 2022.
To that end, more than 6,000 patents were approved in Detroit during the same period, landing the Michigan metro area in second place. In this case, the highest number of patents were submitted just before the pandemic began (1,525 in 2019), although the Detroit metro maintained its rate of innovation throughout the pandemic with 1,500 patents in 2020 and 1,306 in 2021. Additionally, nearly 300 companies contributed to Detroit’s total number of patents in that period — the third-highest number in the ranking.
In third place, Minneapolis patent numbers approached 3,000, with 2020 being its most prolific year. Here, Maplewood, Minn.-based 3M Co. was one of the primary sources in a series of advancements that were patented across the state, along with Medtronic, Ecolab, Mayo Foundation and the University of Minnesota. What’s more, the Minneapolis metro also boasted the second-largest pool of contributing organizations and companies to patents submitted during the five-year timeframe (436).
Finally, Cincinnati and St. Louis closed out the top five with 962 and 955 patents, respectively. Of these, St. Louis logged 186 organizations that contributed to its patenting inventory, while Cincinnati boasted 143.
Balancing Opportunities & Cost of Living: Columbia, Mo., Tops Life-Quality Index
Throughout the course of the last decade, disparities in terms of the quality of life have been growing between what urban theorist Richard Florida coined “superstar cities” and the rest of the country, including many previously bustling urban centers across the former Rust Belt. However, it’s not all bad news because companies can now weigh the pros and cons of what these places can offer in terms of their lower cost of living, employment prospects and strong educational infrastructure.
In this way, Columbia, Mo., managed to lead the life-quality index by earning the second-lowest cost of living and the third-highest number of residents older than 25 who had a bachelor’s degree or higher. The metro also had a 2.5% unemployment rate, which placed it firmly within the top half of the ranking for this metric.
Following closely, Fargo, N.D., landed in second place, thanks to top-five finishes across all three indicators that made up the life-quality index. In fact, with an unemployment rate of roughly 2%, Fargo was outperformed by only Sioux Falls, S.D., although by very slim margins. Labeled as one of the most recession-proof cities in the U.S., Fargo prides itself on a diverse economy that generates strong demand for top talent.
Furthermore, the metro area is a great option for those looking for a more affordable place to live as it ranked fourth for price parity among the entries on our list behind two Missouri metros (Springfield and Columbia), as well as Rochester, Minn. Lastly, Lincoln, Neb., secured third place, with Rochester, Minn., and Madison, Wis., rounding out the top five.
