Peer Pressure: Benchmarking Peer Cities

June 9, 2014

Pressure comes in all forms – in life, work and in business. Communities and cities also experience pressure – from residents and citizens that want their community to be great.

For over a decade, the Greater Louisville Project has benchmarked Louisville’s performance and progress in 3 key areas – Education, 21st Century Jobs and Quality of Place – against peer cities.  These ‘peers’ are cities that cluster around common indicators and embody similar socio-economic characteristics. Just as businesses compare performance against their competitors, the GLP measures our community’s progress and performance against peer cities, keeping us focused on a shared agenda for long-term progress.

As market shifts and other factors influence a company’s list of competitors, changes in data, economic performance and even MSA boundaries determine why some of Louisville’s peer cities remain on the list, some drop off, and others are introduced.  For the last decade, Louisville’s peers have included Dayton, OH; Raleigh, VA; Jacksonville, FL; and Richmond, VA.  These four have dropped from the cluster of peers due to numerous factors. For example, in looking at educational attainment metrics, Dayton has experienced a significant drop in their percentage of adults earning bachelor’s degrees, while Raleigh has moved well beyond our rate of producing adults with degrees.  In both of these cities, workforce demographics have also greatly changed. Dayton has seen a loss of manufacturing jobs at a rate that appears to be higher than the rest of the nation, and though Raleigh has also experienced a decline in manufacturing jobs, the increase in higher-wage high-tech jobs has somewhat mitigated these losses.

Ten cities from the original list remain peers for the next decade: Birmingham, AL; Charlotte, NC; Cincinnati, OH; Columbus, OH; Greensboro, NC; Indianapolis, IN; Kansas City, MO; Memphis, TN; Nashville, TN; and Omaha, NE.  These cities continue to cluster and share common attributes that allow us to effectively benchmark and compare in effort to measure key areas of performance. Louisville ranks in the middle of the pack of these cities, providing a balanced look at how we’re progressing.

Along with the 10 from the original list, additions to the 2014 list that will serve as our peers include Grand Rapids, MI; Greenville, SC; Knoxville, TN; Oklahoma City, OK; St. Louis, MO; and Tulsa, OK. In looking at Louisville’s position among these new peers, we see that Louisville holds its spot among the middle of the pack in bachelor’s degree attainment.  New peer city St. Louis joins our cluster with this decennial census as they experienced a significant increase in bachelor’s degrees, bringing them much closer to the rate in Louisville than in the past. Additionally, new peers Greenville, SC; Oklahoma City, OK; and Tulsa, OK have similar startup density to Louisville, putting them in cluster around economic indicators.

Building a city that provides opportunity for all, attracts the best talent, creates thriving neighborhoods, and produces strong companies are all factors in the game of economic development and the making of a great city.  Competition among peers can be tough as companies and residents make choices on where to locate, grow and impact community.

Criteria and review of many data points provides a scoreboard for how we’re stacking up in areas of educational attainment, workforce, health outcomes, and more.  How we perform against peers in addressing strategic challenges allows community leaders to set goals and transform them in to action that drives improvement, positions for long-term progress and helps all build a Greater Louisville.

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Natural Breaks Algorithm

For each indicator, Greater Louisville Project assigns cities into one of three groups (high-performing, middle-of-the-pack, and low-performing) based on how they compare to other cities. The assignment is based on how cities naturally cluster on that indicator. Sometimes, the differences between cities are very small, and the difference between a city ranked 5th and 6th could simply be a matter of the sampling error that arises from using survey data. Thus, rather than always make a division that declares the top 5 to be the top tier, we use a natural breaks algorithm to look for a cluster of cities that is outperforming the rest, a cluster that is about average, and a cluster that is lagging. This clustering gives us a better indication of where Louisville is thriving and where Louisville has room to learn from cities that are doing better.

Z-Scores

Z-scores (or standardization) is a way to combine data with different units of measurement into a single index. The z-score is a measure of how far away a city (or census tract, etc.) is from the average city. In order to be comparable across different units of measurement, the z-score is the distance from the mean measured in standard deviations (e.g. if Louisville has a z-score of 1 it means Louisville is 1 standard deviation above the mean of its peer cities).

Data from the Robert Wood Johnson Foundation's County Health Rankings use z-scores and all z-scores are relative to the mean of Louisville's peer cities. (On the County Health Rankings site z-scores are relative to all the counties in each state - thus z-scores reported by GLP will be different, because we are using a different reference group). The Greater Louisville Project also uses z-scores in our multidimensional poverty index, which compares each census tract to the mean of all census tracts in Louisville.