While technology has advanced rapidly over the past 2 decades, it has resulted in a divide. This divide exists between 5 top tech hotspots in the United States and everywhere else. If this report by Brookings is anything to go by, tech concentration remains high in Austin, San Fransisco, San Jose, Seattle, and Los Angeles. Not just high, but it continues to steadily increase in these 5 tech hubs. This blog explores why.
The Brookings Institute Report
There have been numerous reports over recent years that traditional tech hubs like Silicon Valley with its rabid tech startup culture are falling in concentration, with the job growth spreading to other cities as well. However, while the tech industry contributes significantly to the American economy, it is anything but proportionate.
You may have heard about the rise of new tech hubs in Indianapolis and Pittsburgh. Yes, tech is spreading out into the heartland. But the divergence between the 5 major tech cities and the rest of the country is actually increasing. The report found that in 2018, these 5 cities had 28 percent of all tech jobs. Even more startling, these 5 cities also have 28 percent of all new tech jobs since 2010. These 5 cities have actually increased their concentration of tech jobs by 1.8 percent!
Tech Employment Growth
Over recent years, the tech sector has grown and expanded rapidly. This growth has led to an increase in tech-related job opportunities and disciplines. Of course, all major cities have experienced an increase in tech job growth in the United States. The unemployment rate is at a record-low at 3.5 percent as of February. The increase in employment rates across the country is not a problem. The problem lies in the uneven distribution of tech job opportunities. Especially when you consider that it is skewed in favor of Austin, San Fransisco, San Jose, Seattle, and Los Angeles. This is rapidly becoming a huge problem for people working in the tech industry.
The uneven distribution of jobs leads toward a whole plethora of other urban problems. Let’s take Seattle for example. The city has seen a significant growth related to the tech industry flourishing there. But it has also created many problems. For example, there has been a mass migration of residents to the city from other parts of America. This has overburdened a city infrastructure that wasn’t designed to handle such large volumes of people. Over time, this has also pushed housing costs, making them less and less affordable.
Unaffordable housing has led to an increase in the homeless population. Downtown Seattle is full of people sleeping rough, on the streets, in RVs, or even under overpasses. Of course, homelessness and squalor mean an increase in street crime, which has been the case in many cities. In places like San Francisco, a person six-figure salary qualifies as a member of the low-income segment. These people cant afford housing in the city. In fact, many employers are now opting for a “delocation” program. In such programs, employers offer incentives to employees to move to locations outside the city.
The Effect on Other Cities
Of course, this uneven distribution of jobs is most keenly felt in other cities. Many have seen a sharp drop in their share of tech jobs in the country. The disparity is not just bad for the city, but also for publicity and perception. The skewed tech job growth means a widening gap between the coastal elites and states like Ohio, Philadelphia, and Minneapolis.
Tech Employers in Trouble
Of course, it’s not just members of the tech workforce who are feeling the effects of uneven job concentration. Employers are also on the receiving end. For one thing, they have to compete with all tech companies for the same limited population of tech talent. To add to the problem, many cities don’t have sufficient infrastructure or depth in tech talent for these employers to expand. In fields that are beginning to shift to the digital landscape, such as mortgage recruiters, this means a shallow pool of talent available, to begin with. This only widens the gap between the 5 cities we listed above and everyone else.