(FORTUNE Magazine) – IF YOU'RE LIKE most managers, you're already grappling with what's to be the critical business problem of the Nineties: a shortage of skilled workers. The baby bust -- the decline in the birthrate that began 25 years ago -- is shrinking the supply of entry-level labor. Many job applicants can't read or multiply simple numbers. Those you do hire require expensive training and retraining to keep pace with technological changes. What to do, and where to go? Don't despair. In certain places in the U.S. you can still find plenty of the smart, enthusiastic, loyal workers you need. Minneapolis/St. Paul, Atlanta, and Sacramento, California, are among those that rose to the top in an extensive FORTUNE survey of the metropolitan areas with America's best workers. Brace yourself for a surprising No. 1: Salt Lake City. What, the home of only one FORTUNE-listed company (the Service 500's First Security)? That reputedly cloistered cowtown somewhere out there between Colorado and Nevada? Yes, indeed. Consider what companies that move major operations there are finding: -- Sears' Discover Card has just started its largest operations facility in the Salt Lake City metropolitan area. Says general manager David C. Richard: ''These are overwhelmingly enthusiastic employees. You start to wonder, is this for real? I've been with Sears for 27 years in Los Angeles, Phoenix, Las Vegas, and Columbus, and truly, this is the greatest market I've been associated with.'' -- McDonnell Douglas reports that Salt Lake City's workers have better math and reading skills than those in most other places in which it operates. Employee turnover at the company's aircraft assembly plant there runs 0.5% per year, vs. 12% at its other facilities. -- American Express's Travelers Cheque Operations Center, where 2,000 employees process checks for customers worldwide, is the model for high productivity and low turnover among the company's dozens of service centers around the globe. FORTUNE began its search for America's best workers (see city profiles on following pages) by asking the New York City-based corporate relocation consulting firm Moran Stahl & Boyer to survey human resources executives at companies in the 50 largest U.S. metropolitan areas. A thorough questionnaire solicited their views on worker quality, availability, commitment, computer literacy, and other labor-related issues. Says MS&B vice president Karen Gerard: ''Availability and quality of labor are turning into the No. 1 issue for companies considering whether and where to relocate.'' (For the views of top chief executives, see the CEO Poll.) WITH MS&B's help, FORTUNE studied the survey results plus data on the factors that make or break a labor market: SAT scores, high school graduation rates, population trends, labor costs, and others. Interviews with CEOs, plant managers, personnel directors, educators, mayors, and other government officials helped FORTUNE narrow the field and predict trends. In all, hundreds of experts were consulted.

The ideal labor market stands out in three ways: It has plenty of workers, they possess advanced skills and a strong work ethic, and local governments put forth gung-ho efforts to help corporate newcomers find and train the people they need. Salt Lake City gets an A+ in all three categories. Not a single city in the Northeast or Middle Atlantic region made FORTUNE's top ten. Reason: Expensive labor and poor inner-city schools hinder hiring and employee retention. Minneapolis/St. Paul offers the twin benefits of well-educated workers -- the area has America's best high school graduation rate -- and a terrific work ethic. Trouble is, city and state officials don't want to share the talent. They generally don't recruit companies from outside the state, and when one happens to move in, the red carpet remains in storage. Nevertheless, FORTUNE rates the Twin Cities No. 2. When it comes to labor availability, the spots that shine do so for different reasons. Austin, Texas, and Columbus, Ohio, have a lot of young talent because they're homes to state universities. Atlanta and Minneapolis/ St. Paul are magnets for ambitious young people from farms and small towns because they are the only large cities in their regions. In contrast, Sacramento will have one of the fastest-growing populations in the U.S. in the Nineties because at least for now it is a small town. Angelinos and San Franciscans are flooding in, fed up with big-city traffic, big-city costs, big-city life. And with their moderately priced housing and good recreation, Jacksonville and Phoenix are hot spots for young people; financial service companies have been moving in to hire them as clerical employees. Yet none of these business centers can beat Salt Lake City on demographics. ''This is the place,'' said Brigham Young when he stood on a mountaintop and selected the site of Salt Lake City as his home base for Mormonism, but never did he fathom that 143 years later big-time executives would say the same. This is an unusual place, resisting national trends and, though conservative and boring on the surface, wonderfully surprising. For one thing, the baby boom never stopped here. That's because Mormons, who make up half the metro area's population of 1.1 million, keep on producing America's largest families. As a result, Utah's high school graduates will increase in number through the year 2000, when they should peak at 37,000, vs. 23,000 last year. ''While the rest of the country is becoming labor poor, we'll be in a labor- rich situation for years to come,'' says Mayor Palmer DePaulis, an anomaly himself. DePaulis is a Michigan-bred Democrat in probably America's most Republican state. He is a Roman Catholic ex-seminarian, ex-high school English teacher who is 46 and looks thirtysomething. Mayor since 1985, DePaulis has aggressively courted new business, diversified Salt Lake City's economy away from basic manufacturing and mining, and, in the opinions of many, become a promising choice for governor in 1992. Along with Austin, Oklahoma City, and Sacramento, Salt Lake City has many underemployed workers. They're working below their skill levels and would switch in a minute for a good offer. Sears' Discover executives saw that for themselves when 1,500 job seekers came knocking before the company ran a single ad (though loads of local press coverage had made everyone in town aware of Discover's hiring plans). McDonnell Douglas managers were similarly surprised when they built a fuselage assembly plant in 1987. Says Kim Napper, human resources manager: ''We had been planning a low-labor operation with 300 to 350 people, but once we realized the great availability of workers, we completely changed our plans.'' While McDonnell Douglas is reducing worldwide head count by 17,000, it is designating Salt Lake City for labor-intensive work and intends to expand to about 900 people there by next June. Though pegged as cowfolk, Utahans have America's highest literacy rate, and Salt Lake City residents are probably more educated in foreign languages than people in any other city. Reason: their missions. Before beginning their careers, most Mormon men -- and an increasing number of women -- travel, usually abroad, as missionaries. For American Express, this makes Salt Lake City the perfect place to locate a traveler's check operation that serves customers worldwide by toll-free telephone. A businessman from Oslo or a vacationer from Seoul has lost his checks? The polyglots are there to help. IF YOU'RE LOOKING to locate in California, you won't find loads of management depth in Sacramento, a farmbelt town (''Sacra-tomato,'' locals call it) and state capital that is attracting major corporations. But entry-level and mid-level workers there tend to be more efficient and loyal than in Los Angeles, San Francisco, or San Diego. NEC has chosen the Sacramento area to build a $500 million semiconductor fabrication plant, the largest Japanese manufacturing investment in the U.S. outside the auto industry. NEC already operates a facility near Sacramento that ranks among its most productive worldwide. A coming attraction: With Washington budget cutters halting work at several military bases in Sacramento, thousands of highly trained civilians may soon hit the streets. Though Minneapolis/St. Paul has above-average labor costs, you get what you pay for. Says TCF Bank Chairman and CEO William A. Cooper, a Michigan native and ex-Ohio resident who moved to Minneapolis five years ago: ''The work force in Columbus was 20% more efficient and hardworking than Detroit's, and the people here are 20% better than in Columbus.'' Skip Marsden, founder and president of Marsden Building Maintenance, one of the Twin Cities' leading minority employers, says that managers of janitorial companies in other cities tell him about problems with absenteeism, drugs, and thefts by employees. Says Marsden: ''We don't have any of those problems here.'' The Twin Cities are apathetic about inviting out-of-state companies to employ these outstanding workers partly because Minneapolis/St. Paul has a remarkable record of developing its own employers. The 14th-largest metro area in the U.S., it is a major center of FORTUNE 500 and Service 500 companies, including General Mills and 3M. But besides not needing an inflow of employers, the area seems unsure that it wants them. After Minneapolis lost bids for General Motors' Saturn plant and the headquarters for US West, many people said, in effect, ''If they don't want me, I don't want them.'' And unlike Dallas and Fort Worth, which have learned to work together, Minneapolis and St. Paul compete with each other too much to tout their benefits jointly. If Minneapolis/St. Paul is the Garbo of cities (it wants to be alone), Dallas/Fort Worth, Salt Lake City, and Atlanta are social butterflies. They go all out to show you that their work forces meet your needs. Dallas recently persuaded such companies as MCI Communications, GTE, and Fujitsu to move major operations there by offering not only inexpensive office space -- which the area still has much of -- but also the assurance that plenty of engineers and computer types inhabit its educational pipeline. Utah runs an unusually ambitious program called Custom Fit, in which community-college faculty or out-of-town experts provide free, specially designed training for newcomers' employees. NO CITY is more hospitable -- or better at selling itself -- than Atlanta, as it recently demonstrated to the site-selection committee for the 1996 Summer Olympics. Its negatives as a labor market are many: poor primary and secondary schools (Georgia has the third-worst high school graduation rate in the U.S.), high crime, and residents with a work ethic that is average at best. But its Chamber of Commerce is probably the most energetic in the U.S., and the state-run training program Quick Start can't be beat. If you call the Greater Atlanta Chamber and say you're interested in setting up a business in the area, you'll shortly hear from the Quick Start people, who develop training materials, provide instructors, and pay for them. When General Mills built a cereal plant near Atlanta, Quick Start's software designers wrote computer programs simulating production lines, and 88 General Mills employees received 30 weeks of instruction in such disciplines as ^ statistical process control, the economics of the cereal business, and team building. ''We were very surprised at the high quality,'' says plant manager Patrick McNulty. ''If we had gone out and hired someone to do this training, it would have cost us over $1 million.'' Largely because of Quick Start, Georgia has been one of the states most successful at attracting Japanese companies. One newcomer, the Japanese office equipment company Ricoh, is using the program to train some 2,000 workers over the next five years. Koichi Endo, who is just finishing a term as president of Ricoh Electronics in the U.S., says that the manuals and videos that the Quick Start staff created for trainees are so sophisticated that he ordered his managers not to let them out of the plant for fear competitors might get hold of them. Which city will provide a company with the optimal work force? Naturally that depends on many factors. But remember that the best cities aren't just those with the best people, but also places like Atlanta that try hard and make the most of what they have. Keep an open mind -- and remember that a company that puts worker quality among its top criteria when locating operations won't go far wrong.

BOX: THE TEN TOP CITIES

1. Salt Lake City 2. The Twin Cities 3. Atlanta 4. Sacramento 5. Austin 6. Columbus 7. Dallas/Fort Worth 8. Phoenix 9. Jacksonville 10. Oklahoma City