Pandemic tendencies and shifts within the geography of tech

I. Abstract

Know-how industries maintain out the potential for decentralized financial vitality. Nevertheless, for many years, tech has remained extremely concentrated in a brief listing of coastal “famous person” cities—locations akin to San Francisco, Seattle, and New York.

Extra not too long ago, although, the rise of distant work throughout the COVID-19 pandemic has spawned new hopes for the unfold of tech jobs into the U.S. heartland. Provided that risk, this report probes the newest tendencies within the geography of tech over the previous decade and thru the pandemic. Particularly, the evaluation examines detailed employment information in addition to location-specific job postings to evaluate native and nationwide hiring tendencies. Knowledge on agency begins can be examined. Among the many findings are:

  • Progress in key tech industries has been speedy and resilient within the final decade, together with by way of the pandemic. Software program publishing and different info companies have led the way in which.
  • The tech sector has till not too long ago been concentrating, not decentralizing. Previous to the pandemic, tech was including jobs throughout a lot of America, but it surely wasn’t actually “spreading out” when it comes to extra cities growing their shares of the sector’s jobs. As a substitute, coastal “superstars” just like the Bay Space and Seattle predominated.
  • With that stated, the pandemic years appear to be distributing considerably extra tech exercise right into a wider set of locations. This shift doesn’t signify an enormous reorientation of tech work into the heartland throughout the pandemic. Nevertheless, the info on this report reveals that employment progress slowed in a number of the greatest tech “superstars” and elevated in different midsized and smaller markets, together with smaller quality-of-life meccas and school cities.

II. Introduction

For many years, expertise visionaries have dreamed that an explosion of decentralized work would result in “the dying of distance”—journalist Frances Cairncross’ time period for the space-collapsing impact of the web, together with the dispersion of tech exercise into new locations, such because the U.S. heartland.

Extra not too long ago, rising considerations concerning the nation’s financial divides have sharpened the hope that the unfold of tech jobs into “flyover nation” would permit struggling Essential Road communities to take part extra totally within the economic system.

Nevertheless, comparatively little of that diffusion has occurred in latest a long time, even throughout the social media growth of the 2010s. Tech employment grew in lots of areas, however the nation’s “famous person” hubs within the San Francisco Bay Space and elsewhere grew even sooner, concentrating their dominance. As a substitute of the “rise of the remaining,” a time period coined by AOL co-founder and investor Steve Case to check with the expansion of startup ecosystems away from the coastal tech hubs, the geography of the tech sector solidified into an uneven “winner-take-most”  dynamic.

Now, although, the COVID-19 pandemic and the rise of distant work have introduced an array of intriguing new indicators.

A 2021 survey by the San Francisco enterprise fund Initialized discovered that 42% of its companies’ founders stated that in the event that they had been beginning a enterprise in the present day, their most popular “place” to launch it could be by way of distant or distributed work. Extra not too long ago, analysis by PitchBook and the Washington, D.C.-based funding agency Revolution reported that the share of early stage enterprise capital {dollars} going to non-Bay Space startups was on tempo to exceed 70% in 2021—up from 60% in 2014. In the meantime, main tech corporations akin to Palantir, Hewlett Packard Enterprise, Oracle, and Tesla have moved their headquarters from California to Denver, Houston, or Austin, Texas. Throughout the pandemic, Google and Apple introduced main satellite tv for pc and engineering places of work in North Carolina. And Intel not too long ago introduced the siting of two semiconductor vegetation within the Columbus, Ohio metro space, prompting pleasure concerning the rise of a “Silicon Heartland.”

So, is the long-awaited “rise of the remaining” truly taking place? To research that query, this report offers a brand new take a look at latest and rising geographic tendencies to evaluate the extent to which the tech sector has been spreading out or concentrating.

Particularly, the evaluation employs detailed employment information (quite than survey info) in addition to hundreds of location-specific job postings to evaluate native and nationwide hiring tendencies each earlier than and throughout the pandemic. Knowledge on agency begins can be examined. Specializing in this info yields a number of findings concerning the progress and geography of tech in recent times.  Among the many findings are:

  • Progress in key tech industries has been speedy and resilient within the final decade, together with amid the pandemic.
  • The tech sector has till not too long ago been concentrating, not decentralizing. Previous to the pandemic, tech was including jobs throughout a lot of America, but it surely wasn’t actually “spreading out” when it comes to extra cities growing their shares of the sector’s jobs.
  • With that stated, the pandemic years could also be distributing extra tech exercise right into a wider set of locations. This shift doesn’t depict an enormous reorientation of tech work into the heartland throughout the pandemic—in reality, the largest established hubs as a bunch barely elevated their share of the sector’s complete nationwide employment. And but, the info on this report reveals that employment progress slowed in a number of the greatest tech “superstars” and elevated in quite a few different midsized and smaller markets, together with smaller quality-of-life meccas and school cities.

Whether or not these tendencies forecast a sturdy shift or a brief disruption, the brand new figures help no less than for now the potential for a larger diffusion of tech exercise within the coming years.

III. Background

A couple of notes of context are wanted to situate the present second in tech geography. In spite of everything, main swings within the nature of the U.S. economic system have formed and reshaped the nation’s financial geography in latest a long time. Such swings counsel different paths for the post-pandemic future.

Postwar convergence, adopted by divergence

For a lot of the twentieth century, market forces tended to cut back job, wage, funding, and enterprise formation disparities between more- and less-developed areas. Consequently, disparities between locations tended to dissipate because the economic system grew. Even severely lagging locations usually “caught up” as enterprise concepts subtle and price differentials motivated individuals and companies to relocate to lower-cost areas; witness the rise of the South as regional pay and employment gaps narrowed within the post-World Warfare II economic system. Market forces had been bringing about “convergence” amongst communities.

But within the Nineteen Eighties and Nineteen Nineties, the convergence development began to interrupt down, particularly as digital applied sciences and innovation started to dominate. Since then, intense new calls for for expertise—all hitched to gigantic platforms and world digital networks—have elevated the ability of “agglomeration” economies, unleashing self-reinforcing dynamics which have more and more rewarded staff and firms for clustering collectively in dense, tech-heavy city areas, particularly large, coastal cities.

Amid these “winner-take-most” circumstances, the convergence of cities gave solution to their divergence within the 2000s. Quickly, the main 10% of U.S. metropolitan areas—which included tech-driven cities akin to San Francisco, Boston, and New York—begun to drag away from different areas on measures of pay and employment, with a surge within the final decade.

Figure 1

By the center of the final decade, a handful of dynamic coastal metro areas—most notably the Bay Space, Seattle, and Los Angeles—had emerged as dominant hubs of each tech and the remainder of the economic system. Against this, scores of heartland cities, small cities, and rural areas had been going sideways or falling behind on fundamental indicators of innovation, output, and earnings.

Areas’ attainable futures amid pandemic disruptions

So now what’s taking place? Given quick tech progress throughout the pandemic and the nationwide experiment with distant work, you will need to study the newest tendencies in tech geography to evaluate attainable futures because the COVID-19 disaster eases.

New analysis by Stanford College economist Nicholas Bloom suggests the potential for each a “winner-take-more” trajectory (main positive factors for only some locations) and a “rise of the remaining” situation (extra broadly dispersed alternative throughout many metro areas). On the one hand, Bloom’s examine of the rollout of 20 new applied sciences throughout the 2000s reveals that the earliest phases of tech emergence usually focus the majority of job progress near the positioning of the unique innovation. Alternatively, Bloom experiences that in later improvement phases, a larger portion of employment related to new applied sciences diffuses extra extensively, as earlier-stage innovation provides solution to extra routinized enterprise exercise.

Provided that, the continuing improvement of the U.S. tech sector holds out the potential for a number of situations for native tech ecosystems, agency siting, and improvement leaders. In view of those different situations, a data-driven take a look at latest and ongoing tendencies in tech geography is so as, as staff, companies, builders, traders, and improvement professionals start to map their subsequent strikes.

IV. Strategy

To evaluate these points, this report tracks the expansion and alter of an outlined expertise sector because it proceeds throughout a number of geographies and time durations.

Defining the expertise sector

This report defines the expertise sector as a six-industry subset of the nation’s “superior industries”—a Brookings grouping of the nation’s highest-value innovation industries:

  • Pc and peripheral tools manufacturing (together with corporations akin to Dell, Apple, and Western Digital)
  • Semiconductor and different digital element manufacturing (e.g., Intel, Nvidia)
  • Software program publishers (e.g., Microsoft, Salesforce)
  • Knowledge processing, internet hosting, and associated companies (e.g., Amazon Net Companies)
  • Different info companies (e.g., Google, Meta, Netflix)
  • Pc programs design and associated companies (e.g., IBM, Accenture, and Tata Consultancy Companies)

Table 1

Mapping the expertise sector

Given this report’s give attention to tech’s spatial patterns, our evaluation experiences main {industry} tendencies as they play out throughout the nation’s foremost geographical models: the nation as a complete and the nation’s 100 largest metropolitan statistical areas (MSAs), which account for 81% of U.S. tech sector employment as outlined right here. MSAs (or “metro areas”) are central to the evaluation as a result of they’re the nation’s core financial models.

Map 1

As well as, particular consideration is positioned on eight largely giant, long-established, and rising tech hubs—typically deemed tech’s “famous person” metro areas:

  • San Jose, Calif.
  • New York
  • San Francisco
  • Washington, D.C.
  • Seattle
  • Boston
  • Los Angeles
  • Austin, Texas (though smaller than the opposite established hubs, Austin is included given its longtime significance and quick progress)

Monitoring metro areas’ progress and alter

To evaluate the tempo and form of tech tendencies, our evaluation tracks tech-sector employment progress and alter throughout the most important 100 metro areas throughout a number of time durations. Broad context is supplied by reporting on tech progress throughout the 2010s decade in full, whereas the core evaluation experiences progress and alter throughout the years 2015 to 2020—reflecting pre-Covid tendencies in addition to the newest accessible information for the primary yr of the pandemic. Knowledge are segmented to permit comparability of tendencies within the pre-pandemic years (2015-2019) with tendencies within the first yr of the pandemic (2020).

For these analyses the report employs high-quality information from the labor market analysis agency Emsi Burning Glass (EmsiBG), derived from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW). This annual information permits for the highest-quality, most dependable evaluation of on-the-ground employment tendencies, however is just accessible with protection as much as 2020.

Table 2To probe newer tendencies throughout the pandemic, the report dietary supplements the EmsiBG employment information with job postings information from EmsiBG and information on new agency begins from Crunchbase. The job postings information, masking September 2016 to December 2021, offers a tough evaluation of progress tendencies, in that they measure the traits of open positions (although not essentially the character and variety of precise hires). They signify a near-real-time information supply that enables for evaluation of shifting tendencies throughout the newest part of the pandemic. The firm-start information from Crunchbase offers a further studying on the extent and geography of tech exercise.

For all of those indicators, particular consideration is paid to shifts in metro areas’ native shares of the nationwide tech sector. Such shifts are vital measures of each the situation of tech and the relative native competitiveness of explicit markets compared to different markets.

V. Findings

Evaluation of employment progress, hiring progress, and site tendencies within the expertise sector generates a number of conclusions:

  1. The U.S. tech sector has continued to quickly develop

All through the final decade, the U.S. tech sector has been rising quickly, together with throughout the COVID-19 pandemic.

Taken collectively, the sector—consisting of 4 digital companies and two slower-growing tech manufacturing industries—grew by 47% within the 2010s, because it added greater than 1.2 million jobs. That introduced the sector’s complete employment to three.9 million positions in 2019. Provided that growth, the sector grew at a compound annual progress charge (CAGR) of 4.4% within the 2010s—a charge almost triple the expansion of the economic system as a complete.

Table 3

Not even COVID-19 might stymie the sector’s progress. Though the sector’s growth slowed throughout the preliminary pandemic-related lockdowns, it has managed internet constructive progress by way of many of the disaster. Propelled by an explosion of distant work, e-commerce, and digitalization, progress turned solely shallowly adverse throughout seven months of 2020 earlier than powering ahead after fall of that yr.

Figure 2

Among the many 4 fast-growing digital companies within the sector, three of them (“Software program Publishing,” “Knowledge Processing,” and “Different Data Companies”) shed jobs within the 5 months between spring and early summer season 2020. However by final summer season, these industries noticed employment 8% to 11% above their pre-pandemic highs. Solely the slow-growing “Pc and Peripheral” and “Semiconductor Manufacturing” industries noticed employment progress languish all through 2020. The entire different industries studied far exceeded their nationwide pre-pandemic employment ranges from almost two years in the past.

In sum, 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 the 50 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. That progress and the rise of consequential tech ecosystems in quite a few new areas have licensed optimism concerning the unfold of tech into new locations, together with the U.S. heartland.

Figure 3

  1. Tech sector progress previous to the pandemic remained extremely concentrated

Regardless of the tech sector’s progress within the final decade, employment within the sector—whereas constructive in lots of markets—wasn’t actually spreading out. In truth, trying throughout the panorama, tech employment was rising extra concentrated into a brief listing of locations.

Specializing in the nation’s largest metro areas, a traditionally dominant cadre of “famous person” cities and a more recent set of “rising star” metro areas had been every persevering with to increase their ascendency within the years instantly earlier than the pandemic

On the forefront, solely eight largely coastal “famous person” metro areas—starting with San Francisco, San Jose, and Austin, and together with Boston, Seattle, Los Angeles, New York, and Washington, D.C.—accounted for almost half  of the nation’s expertise sector job creation between 2015 and 2019.

Table 4

Massive and largely fast-growing, these well-established hubs dominated the nation’s tech progress by way of the early 2010s and gained dominance within the pre-pandemic years of 2015 to 2019. For instance, the 2 Bay Space metro areas—San Francisco and San Jose—collectively generated nearly 20% of the nation’s total new tech employment throughout the pre-pandemic interval, growing their share of the sector’s complete nationwide employment by 1.2% (see Determine 4).  Likewise, Seattle added greater than 40,000 new tech jobs within the interval (roughly 7% of the nation’s complete), growing its share of the sector’s complete nationwide employment by 0.5%.

Altogether, the eight established hubs encompassed roughly 1.5 million tech jobs as of 2019 (38.2% of the nation’s tech employment), up from 1.2 million and 36.8% in 2015 (despite the fact that the East Coast hubs of New York, Washington, D.C., and Boston grew gradual sufficient to barely lose {industry} share). Altogether, the eight tech hubs’ share of the sector’s complete nationwide employment elevated by 1.4% between 2015 and 2019, at the same time as advocates hoped for larger dispersion.

Figure 4

On the identical time, a handful of midsized however less-established facilities grew briskly within the years earlier than the pandemic, meriting consideration as “rising stars.” Principally located within the nation’s inside, these 9 dynamic metro areas—Atlanta; Dallas; Denver; Miami; Orlando, Fla.; San Diego; Kansas Metropolis, Mo.; St. Louis; and Salt Lake Metropolis—additionally elevated their share of the sector’s complete nationwide employment by including jobs at a speedy 3% CAGR (or extra). These newer facilities—which collectively generated 87,000 new tech jobs between 2015 and 2019—grew their share of the nation’s tech economic system by an mixture 0.5% throughout these years (see Determine 4). By rising quickly and growing their share of the nationwide tech sector, these metro areas had been delivering on the promise of tech spreading out to create sizable new ecosystems within the “relaxation” of America.

Table 5

Nevertheless, for probably the most half tech, was probably not spreading out throughout the 2010s. Past the superstars and rising stars, most different giant metro areas noticed solely modest (or adverse) tech sector progress and employment share will increase within the pre-pandemic years. Determine 4 visualizes this with its lengthy “tail” of metro areas extending to the precise of the 2 dozen or so best metro areas. Altogether, 73 of the nation’s 100 largest metro areas (together with the three historic East Coast superstars of Boston, New York, and Washington, D.C.) skilled both negligible, flat, or adverse progress of their share of the nation’s expertise sector within the pre-pandemic years. Amongst these metro areas, 24 misplaced tech jobs in absolute phrases throughout that interval. About half of those slow-growing cities lie within the Northeast and Midwest.

General, the years 2015 to 2019 noticed many of the nation’s 100 largest metro areas add tech jobs, but solely 27 of them added sufficient to exhibit vital competitiveness by notably growing their share of the sector’s complete nationwide employment. In brief, the pre-pandemic years 2015 to 2019 accentuated the emergence within the final decade of a nationwide tech geography dominated by comparatively few largely coastal winners, complemented by an up-and-coming cohort of “rising star” markets within the nation’s inside. Past these two tiers lay scores of city areas within the nation’s inside that had been largely going sideways or slipping when it comes to true competitiveness positive factors, as mirrored by their flat or decreased shares of the nation’s total tech employment. The tech “wealthy” had been getting richer.

  1. The pandemic’s first yr disrupted tech sector focus

The tech sector’s “famous person” geography could also be entrenched, but it surely’s not essentially immutable. The primary yr of the pandemic confirmed that. Employment information masking 2020 confirms the extent of early pandemic disruption and the potential for new progress patterns.

To make certain, the primary yr of the pandemic imposed no wholesale apocalypse on the nation’s famous person geography. Regardless of all the pieces, the superstars’ mixture progress charge remained constructive by way of 2020, to the purpose that these established hubs additional elevated their mixture share of the sector’s complete nationwide employment by 0.3%. New York, Seattle, San Francisco, and Austin dominated on this metric, growing their shares barely. New York added jobs considerably sooner in 2020 than within the earlier 4 years, with its annual progress charge surging from 3.5% to 4.9%.

Rising stars Atlanta, Dallas, Denver, Miami, Orlando, San Diego, Kansas Metropolis, St. Louis, and Salt Lake Metropolis additionally powered by way of the primary yr of the pandemic to show in constructive progress and add a mixed 14,000 tech jobs whereas barely growing their mixture share of the nation’s tech sector. Dallas, Atlanta, Denver, and St. Louis all added tech jobs at annual progress charges in extra of three%. And St. Louis noticed its tech progress charge improve from 3.9% over the 2015-19 interval to 4.8% in 2020.

On the identical time, 29 giant metro areas didn’t register tech employment positive factors, and 62 noticed hiring gradual in 2020—an indication that not all the pieces has modified with America’s winner-take-most expertise geography.

With that stated, the primary yr of the pandemic noticed unmistakable shifts within the nation’s superstar-dominated tech geography:

  • Tech sector employment progress slowed within the greatest, most dominant tech facilities. However New York’s 2020 progress surge, all the opposite tech superstars noticed their tech sector employment progress charges gradual—typically precipitously—within the first yr of the pandemic. General, these metro areas noticed their 4.9% pre-pandemic (2015 to 2019) annual progress charge gradual to 2.9% in 2020. Employment progress in San Jose slowed from 5.3% pre-pandemic to simply 1.9% in 2020. In Los Angeles, progress slowed from 5.6% to 0.2%. And in Boston, progress turned adverse. Given this, Boston and Los Angeles gave up sector share amid the yr’s market gyrations. These shifts signaled potential weakening of the dominant maintain of the famous person cohort on U.S. tech progress. Comparable patterns performed out among the many rising star metro areas: Progress amongst these main metro areas slowed from 5% a yr to 2.9%, as all the rising stars besides St. Louis noticed slowing progress (though in none of those vibrant areas did progress flip adverse). General, then, nearly all the nation’s main tech facilities—together with each the superstars and rising stars—noticed their progress gradual throughout the first yr of the pandemic (although only some of them additionally decreased their share of the sector’s complete nationwide employment).

Map 2

  • Almost half of the nation’s 83 different giant metro areas noticed their tech sector progress charges improve in 2020 in comparison with 2015-2019. In distinction to the main tech hubs, a major variety of cities in the remainder of America noticed notable upticks as distant work elevated and tech progress unfold out barely within the first yr of the pandemic. Altogether, 36 of those 83 metro areas exterior the famous person or rising star echelon noticed tech employment change speed up in 2020 in comparison with the pre-pandemic years. Bigger growers included northern enterprise cities akin to Philadelphia, Minneapolis, and Cincinnati; sizable heat climate cities akin to Charlotte, N.C., San Antonio, Nashville, Tenn., Birmingham, Ala., New Orleans, Greensboro, N.C., Jackson, Miss., and Stockton, Calif.; and various substantial college cities akin to Chapel Hill, C. and Madison, Wis. Additionally seeing accelerated 2020 tech progress had been quite a few life-style, Solar Belt, or trip facilities akin to Virginia Seashore, Va., Ogden, Utah, Albuquerque, N.M., Tucson, Ariz., and El Paso, Texas. In sum, almost half of the nation’s secondary giant metro areas added tech jobs at a sooner charge than they did in 2015-2019, when just one famous person and one rising star metro space did.
  • Various smaller quality-of-life meccas and school cities additionally appeared so as to add tech jobs sharply throughout the preliminary yr of the disaster. Among the many former group, high-amenity and trip cities akin to Santa Barbara, Calif.; Barnstable, Mass.; Gulfport-Biloxi, Miss.; Pensacola, Fla.; and Salisbury, Md. all noticed their tech employment surge by 6% or extra. These areas supplied proximity to bigger expertise facilities along with a beautiful high quality of life for footloose companies or staff. Likewise, enticing and handy school cities akin to Boulder, Colo.; Lincoln, Neb.; Tallahassee, Fla.; Charlottesville, Va.; and Ithaca, N.Y. all grew their tech jobs by greater than 3% throughout the first yr of the pandemic. Smaller-town job surges like these seemingly mirrored the rise of “Zoom cities”: communities bolstered (no less than for now) by the distant tech work of recent residents whose work depends on digital instruments.

Whereas not definitive, these indicators from high-quality 2020 employment information counsel no less than the non permanent emergence throughout the pandemic of a brand new sort of two-tier actuality that includes persistent famous person and rising star dominance paired with a level of tech diffusion into lower-cost or high-amenity areas.

  1. More moderen information additionally factors to continued pandemic-related decentralization

Larger-frequency, newer info on native financial exercise confirms the impression of modest tech sector decentralization throughout the pandemic. This information on job postings and agency begins extends the story past the 2020 employment information used on this report, and offers further indicators of probably larger decentralization of tech exercise.

Job postings information from EmsiBG suggests discernable shifts of financial exercise amongst cities. Whereas distinct from precise hires and employment, the ebbs and flows of job emptiness commercials permit visibility into financial exercise all through the pandemic and depict a definite slippage of the famous person metro areas’ share of U.S. tech exercise.

Particularly, the famous person metro areas’ share of distinctive tech sector job postings—which had begun to say no within the pre-pandemic interval—has slipped additional within the final two years as postings declined from roughly 40% in September 2016 to about 31% in December 2021. To make certain, three of the nation’s superstars—Los Angeles, Seattle, and Austin—noticed their nationwide job postings shares surge as tech job advertisements there elevated by greater than 150% throughout the interval. Adverts in Austin, particularly, surged massively throughout the pandemic. Nevertheless, the share of postings within the 5 different superstars—San Francisco, San Jose, Boston, New York, and Washington, D.C.—slumped, with hiring exercise as measured by job postings sagging by noticeable margins.

figure 5-1

figure 5-2

For his or her half, job postings within the rising star cities have elevated as a share of U.S. tech postings—from 14.5% in September 2016 to 16% on the finish of 2021—hinting at new exercise in non-superstar metro areas. Rising star cities with significantly vibrant progress in hiring advertisements throughout the pandemic embrace Denver and Miami. What’s extra, different metro space tech ecosystems past the superstars and rising stars—together with more and more dynamic facilities akin to Phoenix and Houston—have seen will increase of their shares of the nation’s tech sector job openings. Such shifts—whereas just one indicator, albeit a number one one—might nicely forecast potential changes within the geography of hiring and maybe of the tech sector participating with distant work and shifting location tendencies.

Knowledge on new tech agency begins—accessible from Crunchbase—corresponds with the job postings development. After a number of years of regular will increase of tech startup share progress, the eight famous person metro areas’ share of recent tech agency begins declined by 2% between 2020 and 2021. Concurrently, the share notched by the rising stars rose 0.4%. Contributing to those shifts had been notable startup declines in San Francisco and San Jose, which noticed their shares of the nation’s tech startups slip 0.8% and 0.7%, respectively. On the identical time, rising star metro space positive factors on the a part of San Diego and Miami pointed to elevated vibrancy in these locations, as startup share positive factors ticked up from 1.7% and three.3%, respectively, to 1.9% and three.7%.

Figure 6

Additionally notable was vital progress in Philadelphia’s and Tampa’s shares of the nation’s tech startups, which rose by 1.7% and 0.2%, respectively.

In sum, higher-frequency information extending the evaluation past 2020 and into 2021 utilizing job postings and startup info reinforces the impression that the pandemic disruption has considerably—although not massively—reallocated tech exercise throughout cities.

VI. Dialogue

The evaluation introduced right here offers a contemporary take a look at tech sector geography at a second of attainable inflection.

A number of the information suggests tech could possibly be on the point of spreading out, prompted by the COVID-19 pandemic and distant work. Particularly, the continued progress of the rising star metro areas—in addition to accelerated job progress in dozens of different metro areas throughout the pandemic—suggests the potential for a real adjustment of the nation’s extremely concentrated tech geography within the coming years. Comparable vibrancy exterior probably the most entrenched famous person hubs on measures of hiring exercise and new agency begins in tech reinforces this impression.

Nevertheless, what’s equally placing is the persistence of the sector’s famous person geography. Since 2010, the geography of tech has remained extremely skewed, with exercise and progress concentrated into a brief listing of huge, largely fast-growing hubs on the West Coast and the Boston-Washington, D.C. hall. On this regard, what’s exceptional isn’t just that 38.4% of all U.S. tech jobs clustered in simply eight of the nation’s metro areas in 2020. Much more noteworthy is the truth that that these metro areas elevated their share of the nation’s tech sector employment from 35.2% to 38.2% between 2010 and 2019, after which barely extra amidst the pandemic’s disruptions in 2020.

In brief, as not too long ago as 2020, the tech {industry} remained rather more a “winner-take-most” affair than one by which the “relaxation” of the nation’s tech ecosystems had been actually rising, as outlined by growing their shares of the sector’s complete nationwide employment.

The query now’s whether or not tech’s barely extra dispersed progress forecasts a shift to larger diffusion, or whether it is as a substitute a brief disruption.

Coming tendencies that may shift the equation

A number of tendencies mentioned right here communicate to the problem of whether or not ongoing developments—such because the unfold of distant work or the maturation of tech product cycles—are actually starting to decentralize U.S. tech exercise. The solutions are ambiguous.

Distant work is garnering probably the most consideration. Such discussions speculate that the pandemic and its aftermath are decentralizing the U.S. tech sector by sending key agency models and the {industry}’s hottest expertise hustling towards the exits of the massive, crowded, costly famous person hubs. And positively, there are many anecdotes and media tales suggesting that such strikes might considerably shift the nation’s tech geography within the coming years, particularly towards smaller tech ecosystems and high-amenity cities.

Nevertheless, neither the dimensions of the strikes seen thus far nor probably the most frequent format of distant work appear to forecast a wholesale decentralization of tech. First, the numbers don’t actually add up, given the nonetheless modest flows of individuals transferring out of high-cost metro areas and into “flyover nation” (other than sizable flows out of the Bay Space and New York). Past that, latest analyses forecast that, for many data staff, work patterns might be “hybrid” for the foreseeable future, with staff commuting to places of work two or three days per week. This stage of commuting might restrict full exits from established hubs to new areas, although it would nicely help tech employee shifts to close by high-amenity satellite tv for pc cities. With that stated, wider-spread acceptance of distant work within the tech sector might, with time, permit larger dispersion of staff and tech exercise.

Inside-sector expertise cycles additionally benefit consideration as attainable sources of decentralization.  Nicholas Bloom’s analysis on the diffusion of disruptive applied sciences, for instance, builds on financial literature exhibiting that as new applied sciences mature, a portion of their employment step by step spreads out geographically. Such findings bode nicely for the unfold of extra tech employment into new locations as parts of the sector mature.

And but, Bloom’s analysis (and that of others) underscores that disruptive applied sciences have a tendency not solely to emerge in only a few city areas—such because the famous person metro areas named right here— but additionally to be commercialized there. Such “pioneer” areas, report Bloom and others, then appear to take care of a persistent benefit in early-stage improvement and ancillary progress.  This, in flip, confers long-lasting native advantages on the early hubs. Provided that, the present emergence of recent applied sciences and initiatives within the sector—starting from synthetic intelligence and quantum computing to AR/VR, Web3, and the metaverse—might nicely forecast extra years of focus within the established hubs. On this entrance, too, additional diffusion of tech employment into new locations seems attainable—however so does much more focus.

Actions that would promote decentralization

What wouldn’t it take for the U.S. to steer tech into extra locations and convey larger alternative to new individuals and areas? There are a number of solutions.

Some observers will say nothing wants doing. These voices will say the nation’s excessive diploma of geographical imbalance is ok, because it displays the optimum, market-ordained geography for maximizing innovation in a sector closely formed by clusters and agglomeration. Alternatively, such observers might say nothing wants doing given the pure diffusion of maturing expertise mapped by Bloom and his colleagues. The present unfold of distant work has added to this view.

However such confidence in business-as-usual tech tendencies stays tentative at greatest, whether or not amongst {industry} veterans, inland entrepreneurs, or heartland financial builders.

Housing and life-style crises within the large coastal hubs proceed to represent sizable drags on {industry} effectivity. On the identical time, too many different communities really feel that they continue to be excluded from digital prosperity, as they wrestle with underutilization, “mind drain,” and solely modest tech progress. What’s extra, the self-reinforcing nature of tech sector improvement underscores the seemingly rigidity of the present {industry} construction. Because the College of California, Berkeley economist Enrico Moretti has defined, the geography of expertise progress is a vexing problem as a result of “preliminary benefits matter, and the long run relies upon closely on the previous.”

Which is why the pandemic second is seeing a surge of native and nationwide ferment targeted on disrupting—and higher balancing—the nation’s deterministic, superstar-dominated tech geography.

There’s little doubt, on the native stage, that the distant work experiment throughout the pandemic has proven that cloud-based instruments for staff, companies, and entrepreneurs can open up hopeful prospects for tech exercise wherever. In that vein, city theorist Richard Florida and economist Adam Ozimek are proper that native communities, particularly smaller or extra distant ones, have a possibility to “develop their economies based mostly on distant staff in order to attempt to compete with the big-city enterprise facilities and West Coast high-tech meccas which have lengthy dominated the employment panorama.”

So it’s not shocking that quite a few communities are taking direct motion to draw newcomers with particular perks and advantages—some aimed particularly at high-tech staff. Most notable are the money incentives supplied by applications akin to Tulsa Distant and Distant Tucson to draw distant staff with money, perks, or relocation advantages. Savannah, Ga. supplied to reimburse relocating expertise staff for as much as $2,000 of their transferring bills. For its half, the Northwest Arkansas Council affords relocating tech staff $10,000 in money or bitcoin and a motorcycle.

But it stays uncertain that such incentives—supplied in restricted numbers to the comparatively few actually footloose tech staff—will by themselves do a lot to reverse the winner-take-most nature of America’s financial geography. Such methods might assist some amenity-rich smaller cities generate buzz, however that won’t be the case for many communities.

A probable higher native technique for selling connection might be to give attention to the essential block-and-tackling of constructing out homegrown tech ecosystems which are compelling to companies, entrepreneurs, and staff. This consists of the laborious work of:

  • Constructing genuine, differentiated tech clusters
  • Growing a talented, plentiful, and various digital workforce
  • Offering wonderful broadband connectivity
  • Cultivating a vibrant tech neighborhood with plentiful networking alternatives and acceleration applications
  • Crafting a wonderful high quality of place, full with top-notch colleges; parks and greenspace; bike lanes; and coworking areas

Additionally vital for communities is considering tips on how to handle the expansion that may observe the arrival of a whole bunch of relocating tech staff who hail from areas that beforehand struggled with growth-related quality-of-life points.

In sum, one of the best ways for many cities to advertise their very own participation within the nation’s tech sector might be to construct up the perfect tech ecosystems and high quality of life they’ll—now and going ahead. In that sense, Florida and Ozimek are proper that the distant work alternative might change the main target of smaller cities and cities from luring corporations with particular offers to luring expertise with companies and facilities.

Nonetheless, given the huge scale of the nation’s tech divides, not even the perfect of methods will by themselves be prone to enhance native ecosystems sufficient to democratize the sector’s geography. For that motive, an increasing number of tech leaders, economists, and policymakers are more and more targeted on deliberate efforts to catalyze progress in a restricted variety of promising new areas with the intention to disrupt the established order.

In lots of components of the nation, renewed state investments in public increased schooling (after a interval of disinvestment) might be obligatory in build up new tech hubs. In different areas, the way in which ahead will seemingly contain complementing current increased schooling strengths with coordinated state-level financial improvement methods.

But not even statewide methods will seemingly be ample. Federal intervention can be now on the desk in a critical means. Particularly, the previous few years have seen intensive speak and motion in Congress targeted on efforts to “seed digital jobs everywhere in the nation, even whereas [ensuring] locations like Silicon Valley proceed to draw expertise and prosper,” as Rep. Ro Khanna (D-Calif.) not too long ago wrote.

Already, 60 finalist areas have been introduced within the Construct Again Higher Regional Problem, a $1 billion U.S. Financial Growth Administration competitors that may award 20 to 30 regional coalitions between $25 million and $100 million every to implement initiatives to drive tech and associated cluster improvement. As well as, pending bipartisan laws would create a set of large-scale expertise hubs to catalyze innovation sector takeoff in a handful of promising inland areas. The Senate’s U.S. Innovation and Competitors Act (USICA) and its Home companion invoice—quickly prone to be harmonized in a congressional convention committee—would additionally enhance progress in new areas by way of new and higher place-based and place-conscious investments in expertise schooling in addition to the nation’s traditionally Black faculties and universities (HBCUs) and minority-serving establishments (MSIs). Different initiatives embrace investments from the Nationwide Science Basis’s synthetic intelligence program to catalyze exercise in rising applied sciences in areas past the same old ones. Such applications might ship a serious new place-based innovation surge of the sort that when created Silicon Valley and Boston’s tech ecosystem.

In sum, the pandemic years have raised the promise of tech decentralization by way of distant work and new siting selections. Nevertheless, the continued dominance of tech’s long-standing hubs ensures that the “rise of the remaining” gained’t occur simply, or by itself. The nation, states, and areas themselves might want to assist it alongside.




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Case, Steve. 2016. The Third Wave: An Entrepreneur’s Imaginative and prescient of the Future.” New York: Simon & Schuster.

Florida, Richard, Andres Rodriguez-Pose, and Michael Storper. 2021. “Cities in a post-COVID world.” City Research. 1-23.

Florida, Richard, and Adam Ozimek. 2021. “How distant work Is reshaping America’s city geography.” Wall Road Journal. March 5.

Gruber, Jonathan, and Simon Johnson. 2019. Jumpstarting America: How breakthrough science can revive financial progress and the American Dream.

Mims, Chris. 2021. “How working from house can change the place innovation occurs.” The Wall Road Journal. October 21, 2021

Muro, Mark. 2021. “The geography of AI: What cities will drive the factitious intelligence revolution.” September.

——. 2017. “Tech Is (nonetheless) concentrating within the Bay Space: An replace on America’s “winner-take-most” financial phenomenon. The Avenue. December 17.

——. 2017. “Tech is divergent.” TechCrunch. March 7.

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O’Mara, Margaret. 2019. The code: Silicon Valley and the remaking of America. Penguin.

Arjun, Ramani, and Nicholas Bloom. 2021. “The donut impact of COVID-19 on cities.” Working paper. Nationwide Bureau of Financial Analysis.

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Brookings Metro want to thank the next for his or her beneficiant help of this evaluation: Dell Applied sciences, Microsoft, Hillman Household Foundations, Antoine van Agtmael, and Derek Kaufman. The staff can be grateful to the Metro Council, a community of enterprise, civic, and philanthropic leaders that gives monetary and mental help for this system.

The report’s authors want to thank Alan Berube, Richard Florida, and Margaret O’Mara for offering priceless feedback on early variations of the evaluation. Jenny Chiang, Emily Laderman, Miguel Liscano, and Carly Tatum supplied different types of help. The authors would additionally prefer to thank the next Brookings colleagues for invaluable help in producing the report and contributing to outreach efforts: Dalia Beshir, Michael Gaynor, Annelies Goger, David Lanham, Rob Maxim, and Erin Raftery.

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