Tech is (still) concentrating in the Bay Area: An update on America’s winner-take-most economic phenomenon
Mark Muro and Jacob WhitonMonday, December 17, 2018
The hope persists among tech and urban optimists for what Revolution LLC funder Steve Case calls “the rise of the rest“—the spread of tech companies into the Heartland.
In fact, recent announcements from Amazon, Google, and Apple—which are adding high-level jobs away from Seattle and the Bay Area—encourage such hope, with their hints that the tech giants are increasingly outgrowing their West Coast roots. Maybe Big Tech really is going to take its incessant talent hunt—and economic contributions—into new places and seed wider-spread economic vitality at a time of economic divides.
So what’s the reality when we look closer? Unfortunately, the story isn’t great, despite the recent news. Building on our last look at tech locational trends from March 2017, this new analysis of job-creation in four key digital services industries—software publishing, data processing and hosting, computer systems design, and web-publishing/search—finds again that while employment in tech is growing all over America, it really isn’t “spreading out” in terms of more cities gained increased shares of the tech pie. To the contrary: By our measure tech has continued to concentrate in a short list of metros during the last few years. The upshot: “Winner-take-most” in tech seems more the rule than the hoped-for “rise of the rest.”
The top five metros with the highest share of digital services account for 28 percent of all of these jobs nationwide, and the top 10 metros with the highest share of digital services now encompass 44.3 percent of all of these jobs across the nation (based on their national shares of such sectors in 2017). The same top 10 metros captured almost half (49.1 percent) of the new tech jobs created from 2015 to 2017, with eight of these metros—including San Francisco, Seattle, San Jose, Los Angeles, and Austin—all increasing their share of the nation’s tech work. Those five metros alone captured 34 percent of all new digital services job growth and increased their share of the nation’s core tech employment by 1.2 percentage points.
Consider further that the super-rich tech folks—epitomized by San Francisco and San Jose—got even richer in the last two years.
San Francisco alone added over a tenth of the entire nation’s new digital services jobs (over 25,000), and San Jose increased its share of the nation’s sector by nearly 18,000 jobs. Together, the two Bay Area hubs now encompass 10.7 percent of the nation’s digital services employment, up from 10.1 percent in 2015, 8.9 percent in 2013, and 7.5 percent in 2010. Note too that virtually all of Amazon’s and Apple’s newly announced workforce locations will take place in the biggest 10 of America’s “superstar” metros...
