Incomes for educated workers are growing fastest in these metros:
1. El Paso, TX
2. Bakersfield, CA
3. Omaha-Council Bluffs, NE-IA
4. Virginia Beach-Norfolk-Newport News, VA-NC
5. Des Moines-West Des Moines, IA

The news coming out of dusty border city El Paso, Texas, is usually pretty grim. The metro suffers from 9.5% unemployment, declining high-school graduation rates and inadequate infrastructure. But a closer look reveals an employment picture that, at least in one way, is improving. In the past four years, incomes for college graduates there have steadily grown more than any other major metropolitan area.

Indeed, it’s not always the most affluent or economically robust cities where incomes for professionals have jumped the most, according to data provided by Seattle-based Payscale, an online provider of employee compensation data with a database of 18.5 million employee profiles. Median pay rose in El Paso by 19.4% to $49,100 since 2005, handily outpacing the 8% national growth for college grads.

Closely following El Paso are Bakersfield, Calif., an oil town packed with engineers, where incomes are up 18.5%; Omaha, Neb., a national center for large insurance carriers like Mutual of Omaha, which saw an 18.4% jump; and Virginia Beach, Va., home to U.S. military bases including Naval Air Station Oceana, where the median rose 17.3%.

This list offers a different view of the economy than the national jobs landscape. In some urban areas where growth industries like government, health care and education are prevalent, college graduates have seen modest, but steady, income growth.

Payscale.com studied the compensation of college graduates for about 1.5 million people in the 100 most populous Metropolitan Statistical Areas in the country. It ranked metros on the compounded income growth between December 2005 and December 2009 to arrive at the cities where Americans are getting richer.

Metros in the top 10 are scattered throughout the Northeast, Midwest, South and Hawaii, showing that income growth has more to do with what you do than where you live. Incomes in the best-performing metros are heavily influenced by the dominant industries there–and in particular, whether those industries pay well for college graduates.

A city like Phoenix, whose economic fortunes have changed dramatically for the worse in the past three years, is a surprising member of the top 10. But the tumbling housing industry, while it cost many building jobs, had less of an impact on college graduates. Some of the few jobs that remain are top-earning ones. Cynthia Kroll, senior regional economist at the Fisher Center of Real Estate and Urban Economics at the Haas School of Business, University of California Berkeley, compares it to the trimming of low-wage jobs in Silicon Valley after the dot-com bust early in the decade.

“When the crash comes, and you lay off 75%, you tend to keep the higher-paid jobs. So your salary base goes up,” says Kroll. “It’s not that highly skilled people don’t also get laid off, but the mix is going to be weighted toward the more experienced, more skilled workers that you’re going to need when growth comes back.”

Cities like Charlotte, N.C., benefit from one of the country’s strongest industries, and one that counts highly skilled workers among its ranks: Education. Charlotte is home to a half-dozen universities.

These trends are another indicator that the country is in the midst of a significant and in many places painful transition from a manufacturing economy to one driven by service and technology jobs. The change has mixed implications for educated workers. Jobs have been lost in industries that were often unionized, which raised salaries, and fewer union jobs may drag incomes down on the whole.

“As those industries have shorn jobs, the proportion of families with middle incomes has declined,” says Douglas Hall, director of the Economic Analysis and Research Institute at the Economic Policy Institute, an economics-based think tank in Washington, D.C. “Manufacturing’s role in the economy has changed, and we haven’t wrapped our heads around what the implications are.”

The lack of strong regional patterns in the metros becoming richest reveals more than anything how varied local economies are. Only a close look at the mix of industries in every city, and its political and economic underpinnings, explains the direction in which incomes are moving.

“Bakersfield and El Paso are really different from Virginia Beach. That in itself is interesting” says Kroll. “It may well be a different story in each place.”

excerpts from Financially Fit by Francesca Levy