Silicon Valley is losing its death grip as the geography of tech jobs changes

 The COVID-19 pandemic has led to a groundswell of change across all industries. And it's likely shifting the geography of the tech sector in the U.S. away from coastal strongholds, according to a new report released this week by the Brookings Institute that uses 2015-2020 data from the labor market research firm Emsi Burning Glass, the Bureau for Labor Statistics, and Crunchbase. 

Tech, per the report’s methodology, encapsulates six categories: computer manufacturing, semiconductor manufacturing, software publishers, data processing and hosting, computer systems design, and “other information services,” which include all-purpose companies like Google, Meta, and Netflix. 

As a whole, those industries experienced a compound annual growth rate of 4.4.% in the 2010s, three times that of the wider economy. Eighty-three of the 100 largest metropolitan areas in the U.S. experienced tech employment growth in the same span of time.

Most of that growth, though, has been concentrated in a select few coastal tech hubs, meaning that most of the country does not have access to the sector’s prosperity.

The concentration of the tech industry in these major hubs creates “housing affordability, traffic, and livability problems,” says Mark Muro, senior fellow and policy director at Brookings Metro and co-author of the report. “It's also a problem for the nation. We're leaving too much talent on the table.”

Of the 100 major metropolitan areas, only 27 significantly increased their share of the sector’s total employment between 2015 and 2019, according to the report. San Francisco and San Jose alone generated 20% of the nation’s tech growth pre-pandemic. Other major tech hubs are New York City, Washington, D.C., Seattle, Boston, Los Angeles, and Austin. 

Together, these eight cities made up nearly half of the nation’s tech job growth between 2015 and 2019. A number of “rising star” metros showed significant growth pre-pandemic, too: Atlanta, Dallas, Denver, Miami, Orlando, San Diego, Kansas City, St. Louis, and Salt Lake City. 

However, nearly all major tech centers, with the exception of New York City, saw their growth slow during the first year of the pandemic. While they grew at a rate of 4.9% between 2015 and 2019, that slowed to 2.9% in 2020.

Meanwhile, mid-size and smaller cities across the U.S. experienced significant growth instead, including Philadelphia, Cincinnati, Minneapolis, Charlotte, San Antonio, New Orleans, and Ithaca, among others. The report brands these cities as "Zoom towns" – places that were cost of living is lower than that of coastal tech hubs and where remote workers took up residence during the pandemic.

The report follows others that show the shift to flexible work-from-home schedules is having a real impact on tech job geography. In January, reported that cities that have large work-from-home populations — including most major tech hubs — have rebounded slowest from the pandemic’s initial drop-off in job postings especially in the hospitality industry as offices are closed and bars and restaurants in business districts struggle to find customers.

It’s still unclear whether these changes in growth rates allude to a more permanent trend. As of 2020, the eight major tech hubs accounted for 38.4% of sector employment. Though growth slowed, it didn't stop.

Muro began researching the geographical distribution of the tech sector in the U.S. around the 2016 election. “If more communities were to see tech growth, that might help tamp down some [of the country’s] economic divisions,” he says, but still he doesn't see tech decentralization as a panacea for inequality in the U.S.

“It’s simply not healthy for a nation to have a whole swath of the country not feel invested in," says Muro.

Post a Comment

Previous Post Next Post