No. 6 Olympia, Washington

State government drives growth and Evergreen State college fuels the creative spirit in our number-six pick.

Population: 233,113

Income Growth: 22%

Cost of Living Index: 105

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Median Household Income: $55,129

Percentage of Workforce in Creative Class: 36%

Olympia is a cultural diamond in the rough of the Pacific Northwest. Mischaracterized sometimes as a sleepy government town, Washington's state capital -- just 60 miles southwest of Seattle on the southern tip of Puget Sound -- enjoys a thriving visual and performing-arts scene.

Walk down the city's main street, Capitol Way, and you'll discover fashion boutiques, art galleries showcasing the works of local painters and sculptors, coffee houses, and nightclubs. Don't miss Brotherhood Lounge -- better known as Broho -- which features a variety of music, from alternative and indie rock to DJs that spin punk, garage, soul and vintage country.

Trendy? Yes. Profitable? Indeed. Despite the recession, Olympians and visitors are still spending briskly on the arts and eating out. Jenny Shaw, manager of the Urban Onion Restaurant and Lounge, in the Theater District in the heart of downtown, feels lucky that she and her staff haven't felt the recession blues. "Revenues were up 20% in 2008," says Shaw.

But it's the state government that continues to be the keystone of Olympia's economy; it employs about half of the city's working population. Education is another big driver of the city's growth and character. Evergreen State College, a liberal-arts school specializing in the social sciences and visual and performing arts, helps fuel the creative spirit. Saint Martin's University, a private school located in neighboring Lacey, is known for engineering and applied sciences.

NEXT: No. 7 Madison

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Marc A. Wojno
Contributing Writer, Kiplinger's Personal Finance
Wojno was formerly research director for data-intensive projects such as Kiplinger's college and mutual fund rankings. He has worked as a newswire reporter and newsletter editor for Dow Jones, covering convertible bonds, REITs and mutual funds. He also served as market research manager for Keane Federal Systems, an IT consultancy. He received a BA in communications and computer science as well as a MBA from George Washington University.