10 Cities Capture 50 Percent Of US Tech Jobs

Clustering and concentration of tech jobs becomes self-reinforcing.

The problem is that it creates economic imbalance and, as the COVID-19 situation reveals with regard to US dependence on China, could be even more problematic in the future (earthquakes, anyone?). JL 

Rani Molla reports in Re/code:

The 10 metro areas with the highest shares of digital service jobs accounted for nearly half of these jobs nationwide in 2018. They also captured about half of the growth in nearly a million new tech jobs added since 2010. A third of the national increase was concentrated in San Francisco, Seattle, San Jose, Los Angeles, and Austin alone. Tech jobs are consolidating in fewer areas due in part to network effects. Tech companies require big pools of tech workers, as well as other nearby tech companies, to support their operations. Over time, these cities become bastions of tech. 

US jobs in tech, arguably the dominant industry of our time, are increasingly concentrating in a handful of already prominent tech cities, according to the Brookings Institution’s new analysis of census data. This means that tech companies are sourcing employment from a more stratified portion of the country while vast swaths of America are missing out on the economic growth tied to the industry.

In an essay and a brief for the American Enterprise Institute, Brookings looked specifically at the distribution of digital service jobs in the US, such as those in software publishing; data processing and hosting; computer systems design; and web publishing and search — all jobs that we typically think of as “tech.” Since 2010, the overall number of jobs in these fields increased in numerous cities, but only a few cities increased their overall share of tech jobs. In other words, the number of tech jobs is growing nationwide, but it’s growing much faster in a few cities.

The 10 metro areas with the highest shares of digital service jobs accounted for nearly half of these jobs nationwide in 2018. They also captured about half of the growth in nearly a million new tech jobs added since 2010. About a third of the national increase was concentrated in San Francisco, Seattle, San Jose, Los Angeles, and Austin alone. The vast majority of cities, however, either lost tech jobs or saw no change in that time.

The result is that tech companies, which are increasingly shaping the way Americans live and work, are potentially missing out on crucial diversity when it comes to who is helping them come up with new ideas and make decisions.

As Mark Muro, senior fellow of the Metropolitan Policy Program at Brookings, put it, “Power and command control decisions are becoming more and more centralized.”

The rest of the country also misses out on the economic windfall created by these companies. That includes not only the high-paying jobs at those companies but also spending from those new workers, as well as the secondary benefits of industries and public works catered to them.

“Most of the country is not truly getting the economic lift that they might if this were a better-distributed industry,” Muro told Recode. “Relatively few Americans are able to plug into the most dynamic industry of our time.”

Tech jobs are consolidating in fewer areas due in part to the nature of tech, which feeds off of network effects more than many other industries. Tech companies require big pools of tech workers, as well as other nearby tech companies, to support their operations. Over time, these cities become bastions of tech companies and workers, which in turn encourage the growth of other tech infrastructure, like fast broadband internet, public transit, and a higher quality of living. Over time, despite increasingly high costs of living, the pull of these cities for new jobs and new residents has gotten stronger, not weaker.

This research expands on previous work Brookings published late last year, when the think tank looked more broadly at the innovation sector, which also included a number of hardware and aerospace industries. At the time, they found that 90 percent of growth in innovation sector jobs happened in just five metro areas: Boston, the San Francisco Bay Area, San Jose, Seattle, and San Diego.