Coastal cities have dominated tech work. A brand new evaluation of pandemic developments suggests new prospects.
Expertise industries have the potential to diffuse financial vitality into all corners of America. However for many years, tech has as a substitute remained extremely concentrated in a brief record of coastal “celebrity” cities similar to San Francisco, Seattle, and New York. Not even the booming 2010s tech scene noticed these industries unfold out when it comes to cities’ shares of the sector’s general employment.
Extra lately, nonetheless, the rise of distant work through the COVID-19 pandemic has spawned new hopes for the decentralization of tech. Story after story has reported on footloose big-city techies heading for the hills. What’s extra, main tech firms similar to Palantir, Hewlett Packard Enterprise, Oracle, and Tesla have moved their headquarters from California to Denver, Houston, or Austin, Texas. Most lately, Intel introduced the siting of two semiconductor crops within the Columbus, Ohio space, prompting pleasure concerning the rise of a “Silicon Heartland.”
So, is the long-awaited unfold of tech into the “relaxation” of America occurring eventually?
To reply that query, Brookings Metro has printed a brand new installment in its sequence of data-driven experiences monitoring fixity and alter within the geography of the U.S. tech sector.
Constructing on our final take a look at tech location developments from March 2020, the brand new evaluation probes current developments throughout six key high-tech industries and charts the geography of tech sector progress within the U.S. over the past decade and thru the pandemic. Particularly, the evaluation examines information on employment, job postings, and new agency begins in tech to evaluate native and nationwide hiring developments for the sector throughout the nation’s 100 largest metropolitan areas and communities containing at the very least 1,000 tech employees. Specializing in this info yields a number of key findings:
The U.S. tech sector has continued to quickly develop, together with via the pandemic
Between 2010 and 2019, the tech sector grew by 47% and added greater than 1.2 million jobs—practically triple the expansion of the economic system as a complete. Not even COVID-19 may stymie this progress; though the sector’s growth slowed through the preliminary pandemic-related lockdowns, it managed internet constructive progress via nearly the entire disaster.
Most U.S. areas and states and greater than half of metro areas have benefitted from tech sector progress all through the final decade. Between 2010 and 2019, all 4 main census areas; 48 out of fifty states in addition to Washington, D.C.; and 289 out of the nation’s 384 metro areas have seen constructive employment progress within the sector. Among the many 100 largest metro areas, 83 have seen tech sector progress.
Nevertheless, tech sector progress previous to the pandemic remained extremely concentrated
Whereas constructive in lots of markets, tech sector employment progress wasn’t actually spreading out in geographical phrases. Actually, tech employment was rising extra concentrated into a brief record of locations. Simply eight “celebrity” metro areas—San Francisco; San Jose, Calif.; Austin, Texas; Boston; Seattle; Los Angeles; New York; and Washington, D.C.—accounted for practically half of the nation’s expertise sector job creation between 2015 and 2019.
On the identical time, a handful of midsized however much less established facilities additionally grew briskly within the years earlier than the pandemic, meriting consideration as “rising stars.” Largely located within the nation’s Solar Belt and inside, these 9 dynamic metro areas—Atlanta; Dallas; Denver; Miami; Orlando, Fla.; San Diego; Kansas Metropolis, Mo.; St. Louis; and Salt Lake Metropolis—elevated their share of the sector’s complete nationwide jobs by including tech jobs at 3% a 12 months (or extra).
But whereas the superstars and rising stars surged, most metro areas went sideways. Seventy-three of the nation’s 100 largest metro areas skilled both negligible, flat, or adverse progress of their shares of the nation’s tech sector employment between 2015 and 2019. Amongst these metro areas, 24 misplaced tech jobs in absolute phrases throughout that interval.
The pandemic’s first 12 months disrupted tech sector progress patterns and slowed focus
The tech sector’s “celebrity” geography could also be entrenched, nevertheless it’s not essentially immutable. Knowledge overlaying 2020 confirms the extent of early-pandemic disruption and the chance for brand new progress patterns.
To make sure, the primary 12 months of the pandemic imposed no wholesale destruction of the nation’s celebrity geography. The celebrity and rising star metro areas continued to excel, with their combination progress charges remaining constructive via 2020 to the purpose that they additional elevated their combination share of the sector’s complete nationwide jobs by 0.3%. On the identical time, practically one-third of the nation’s metro areas didn’t develop and practically two-thirds noticed hiring gradual—an indication that America’s winner-take-most tech geography remained in place.
With that stated, the primary 12 months of the pandemic noticed unmistakable shifts within the nation’s superstar-dominated tech geography, together with:
- In most celebrity and rising star metro areas, tech sector employment progress in 2020 slowed in comparison with the earlier 5 years.
- In practically half of the nation’s different massive metro areas, tech progress charges elevated in 2020. These included northern enterprise cities similar to Philadelphia, Minneapolis, and Cincinnati; sizable warm-weather cities similar to Charlotte, C., San Antonio, Nashville, Tenn., Birmingham, Ala., New Orleans, Greensboro, N.C., Jackson, Miss., and Stockton, Calif.; and quite a lot of substantial college cities similar to Chapel Hill, N.C. and Madison, Wis. Additionally seeing accelerated 2020 tech progress have been quite a few way of life, Solar Belt, or trip facilities similar to Virginia Seashore, Va., Ogden, Utah, Albuquerque, N.M., Tucson, Ariz., and El Paso, Texas.
- Quite a few smaller quality-of-life meccas and faculty cities additionally appeared so as to add tech jobs sharply through the preliminary 12 months of the pandemic. Among the many former, high-amenity or trip cities similar to Santa Barbara, Calif., Barnstable, Mass., Gulfport-Biloxi, Miss., Pensacola, Fla., and Salisbury, Md. all noticed their tech employment surge by 6% or extra. Likewise, enticing and handy faculty cities similar to Boulder, Colo., Lincoln, Neb., Tallahassee, Fla., Charlottesville, Va., and Ithaca, N.Y. all grew their tech jobs by greater than 3% through the first 12 months of the pandemic.
Whereas not definitive, these indicators counsel at the very least the momentary emergence through the pandemic of a two-tier actuality that comes with persistent “star”-city dominance paired with a modest diploma of tech diffusion to lower-cost or high-amenity areas.
More moderen information factors to probably continued decentralization
Greater-frequency, newer info on native financial exercise confirms modest tech sector decentralization through the pandemic. To start with, celebrity metro areas’ share of distinctive tech job postings—which had begun to say no within the pre-pandemic interval—has slipped additional within the final two years, from roughly 40% in September 2016 to about 31% in December 2021.
Crunchbase information on new tech agency begins corresponds with the job postings pattern. After a number of years of regular will increase, the eight celebrity metro areas’ share of recent tech agency begins declined by 2% between 2020 and 2021; solely Austin, Texas grew. On the identical time, elevated tech agency begins in rising star metro space good points similar to San Diego and Miami pointed to vibrancy in these locations.
It’s too early to inform if tech diffusion is momentary or a long-term pattern
General, the developments depicted right here reinforce the impression that the pandemic disruption has considerably—although not massively—reallocated tech exercise amongst cities. Among the information suggests tech may very well be getting ready to spreading out, prompted by distant work. Particularly, the continued progress of the rising star metro areas—in addition to the accelerated job progress of dozens of different metro areas through the pandemic—suggests the chance within the coming years of a real adjustment of tech’s extremely concentrated geography.
Nevertheless, what’s equally placing is the persistence of the sector’s celebrity geography. Since 2010, the geography of the sector has remained extremely skewed, with its exercise and progress concentrated into a brief record of enormous, principally fast-growing hubs on the West Coast and the Boston-Washington, D.C. hall. Even amid 2020’s pandemic disruptions, these eight celebrity metro areas nonetheless barely elevated their share of the nation’s tech sector employment, and housed 38.4% of all U.S. tech jobs.
In brief, the tech business nonetheless stays extra a “winner-take-most” affair than one during which the “relaxation” of the nation’s tech ecosystems are actually rising—though intriguing indicators level to attainable decentralization. The query now could be whether or not the current dispersed tech progress forecasts a serious shift, or is as a substitute a brief disruption.