In order to discover the best untapped cities for startups, Fundera gathered data on 50 mid-sized cities with a population under 500,000 residents. They measured each city’s access to a talented labor pool, average labor cost, office space cost, average cost of living, and proximity to a larger startup ecosystem. Their findings indicate that cities with high potential for startup success exist across the country.
Great cities for freelancers are relatively inexpensive—for example, housing costs and state income tax rates are low. They also have a vibrant and growing freelancer culture: self-employment is generally on the rise, and the city has plenty of places that cater to the freelancer crowd, such as coffee shops. With all that in mind, Fundera put together a list of the best cities to be a freelancer in 2020. Fundera analyzed data on job growth, self-employment rate and change, unemployment rate, housing costs as a percentage of income, state income tax rate, and even the percentage of coffee shops per capita in the biggest 50 cities in the country by number of workers.
Here are some of the key takeaways:
- Low housing costs was an excellent predictor of success in these rankings: Only four of the top 15 cities had higher-than-average housing costs.
- There were no Northeastern in the top 15, and only one Mid-Atlantic city (Washington, D.C.) made the top 20.
- Though cities from across the country made the list, they tended to cluster in a few key states. Texas and California were represented by four different cities, respectively, while Arizona had two as well.
Read on to see the complete ranking of the best cities for freelancers. This information may be most useful to new or established freelancers, as well as businesses that are looking to take advantage of an emerging local workforce not constrained by traditional barriers.
1. Atlanta, Georgia
The top city on our list, Atlanta, is known as the financial and cultural hub of the American South. It’s a city that supports a large and growing freelance culture, and it boasts a high quality of life that residents don’t need to overspend on in order to afford. Atlanta has a self-employment rate of 11.1%, which grew by 0.4% from 2017-2018. With relatively low housing costs (at just 22.9% as a percent of income for self-employed incorporated business owners, on average) and a state income tax rate that isn’t prohibitive, Atlanta helps freelancers to get the most for their money.
2. Oakland, California
Across the East Bay from, and in the shadow of, a city that has become synonymous with tech and high prices, Oakland has emerged as an economic and cultural powerhouse of its own in recent years. (Native Oaklanders will contend that they’ve always been one, of course.) Oakland has well-above-average job growth (4.8%), a high self-employment rate (12.6%), and an abundance of amenities that help power a strong freelance culture.
3. Tucson, Arizona
Nestled deep in the heart of the Southwest, Tucson is one of the rising stars of the freelance world, with a growing freelance population no doubt fed by the University of Arizona. Not only did Tucson see well-above-average job growth (4.0%), the self-employment also jumped an impressive 1.1%, the second-highest increase of all the cities we measured. A fairly low state income tax rate and below-the-median housing costs help catapult Tucson into the top three.
4. El Paso, Texas
Here begins a run of Texas-area cities, starting with El Paso, located near the border with Mexico in the western part of the state. What makes El Paso so appealing to freelancers, besides its state income tax rate of zero, is its remarkably low average housing costs, at just 23.2% of median income. The city also has a sizable and growing freelance community (a self-employment rate of 8.6%, which grew 0.3% last year).
5. Houston, Texas
The country’s most diverse and fourth-largest city rounds out the top five on our list. No doubt Houston is also buoyed on the list by low tax rates and low housing costs. That’s not the whole story, however: Houston’s population is on the rise, and job growth is spiking along with it. Employment is strong, and opportunities to work with major companies in the construction, healthcare, and oil and gas industries abound.
6. Dallas, Texas
Both Dallas and nearby Fort Worth make this list, and for good reason: Dallas has very low average housing costs (just 18.7% of median income) and one of the lowest unemployment rates on this list at 4.3%. In addition, Dallas’ freelancer scene is growing: It grew by 0.7% last year, as more and more people recognize how much further their earnings go in such a low-cost city.
7. Albuquerque, New Mexico
Another Southwest standout, Albuquerque is the largest city in New Mexico, with an intriguing mix of cultures and climates. Albuquerque has a sizable freelance population already at 9.9%, and saw a growth spurt of 0.7% in self-employment last year. The city also boasts a large percentage of coffee shops and other places for freelancers to gather and get their work done.
8. Las Vegas, Nevada
One of the more unique cities to appear on this list is Las Vegas, a city that on its face is not thought of as a freelancer hub. It’s also unique in that it also saw a decline in job growth from 2017-2018, at -2.4%. On the other hand, there was a 1.1% boost in self-employment rate in Las Vegas last year, and all of Nevada’s residents benefit from a 0% state income tax rate. Depending on your freelance field, Las Vegas could be an intriguing—if distracting—place to live.
9. Phoenix, Arizona
In many ways, Phoenix flies under the radar. It’s the fifth-most populous city in the country, and one of the largest by size as well. It’s also, believe it or not, already a booming freelance hub. Job growth in Phoenix rose by a monster 5.6% in the period we have data for, and the self-employment rate is above 10%.
10. Long Beach, California
Los Angeles (which is just a couple of spots down on this list) has a huge number of freelancer workers. No doubt some spillover is what helps make nearby Long Beach so attractive to freelancers. Despite high prices and tax rates, Long Beach has seen a spike in the number of freelancers it counts among residents, with a 1.7% growth in self-employment. A high percentage of coffee shops (1.4%) also helps nurture the city’s freelance population.
11. Fort Worth, Texas
We’re headed back to Texas, this time to Fort Worth, which came in behind Dallas due to its declining job growth numbers (-1.0%) and higher unemployment rate (6.1%). On the other hand, Fort Worth’s freelance population is growing, the cost of living is fairly cheap, and no state income tax means your dollar goes further.
12. Los Angeles, California
Whether they’re freelancing while they wait to land that juicy TV pilot role, or they’ve built a career as a freelance marketing guru in Hollywood, Los Angeles is truly a freelancing fulcrum. The city has the highest self-employment rate of any on this list, at 16.8%—a number that grew steadily by 0.4% last year. Of course, prices and taxes are high here. But if you’re going to spend a lot of money to live somewhere as a freelancer, it may as well be a city where you’re surrounded by like-minded individuals and the weather is outstanding.
13. Oklahoma City, Oklahoma
We go from the glitz and glamor of LA to Plains living, with Oklahoma City as another under-the-radar choice for freelancers. Prices and unemployment are low, and taxes are modest. Already, OKC has a notable freelance population, with a 10% self-employment rate and a surging job growth rate of 4.5%.
14. Fresno, California
Nestled between a number of California’s epic national parks, no one can argue that Fresno isn’t a beautiful place to live and work. As California cities go, Fresno may be one of the better bargains: Housing costs as a percentage of income are relatively low compared to places like Los Angeles and Oakland. Fresno also has a surprisingly high unemployment rate at 9% and had no job growth—which may encourage residents to move into freelancing as a way to make ends meet.
15. Portland, Oregon
Considered one of the best places to live in the United States, Portland has a strong economy, a large and established freelance culture (13.3% self-employment rate) and a coffee shop ecosystem that caters to its contractor crowd. Prices and taxes are fairly high in Portland, but if you can afford life in the Pacific-Northwest, there are few cities more enjoyable.
About Fundera:
Fundera exists to help business owners make smarter financial decisions. We do this by helping small businesses confidently shop, compare, and understand the financial solutions they need to succeed.