Apple's new HQ (Photo by Justin Sullivan/Getty Images)
Tech is showing the way – perhaps, as its advocates claim, to a glorious future of communication and connectivity, but more immediately to employment in overlooked regions of the country. That assertion may seem counterintuitive. The media has consistently described tech in terms of a focus on the “super cities” of the coasts, where presumably it can find super talent in needs (in other words in the places where the media lives.) But the statistics from both the tech companies themselves and the Labor Department tell a different story. The much-dismissed (and dissed) “flyover” might have captured a lot more than the headlines suggest
The understandable tendency among most commentators is to look at tech in terms of education. It needs highly educated staff and so people naturally look at locations with a lot of college graduates. Closer examination of the nature of tech operations however shows that they do not always want the same people. It is not all coders, not by a long shot. A more detailed look at what tech firms are doing also shows that since tech costs lie predominately in salaries and bonuses, managements of these firms have a powerful incentive to locate in lower cost areas where they can pay a lower wage and still buy a good lifestyle for their employees. And because of the nature of tech operations, these firms are remarkably flexible in this regard.
Amazon and Apple are exhibits one and two. The former’s warehouses are seldom located in super cities. Rather, they are found in the exurbs where both land and labor are cheap. To be sure, Amazon made headlines with talk of locating in New York City but only after receiving huge concessions that would have protected profitability from New York’s otherwise high living costs, concessions that eventually scotched the deal. Meanwhile, Apple has gone even further from the expensive coastal cities to do much of its production. Almost all its assemblies are done in China.
Aside from these stark contrasts between tech behavior and the common narrative, location also takes account of the different sorts of employees involved in tech. The popular narrative’s focus seems to lie entirely on the coders, what are commonly called “youthful creators.” But this approach only captures part of the picture. These young people do indeed cluster in the super cities on the coasts. Their youthful energy compensates them for incomes, that though higher than national averages, do not go far in New York or San Francisco or other such expensive localities. If reporting by the tech companies themselves is any indication, these employees tend to have very short tenures, giving their firms a few highly stressful years in exciting locales to innovate and improve their resumes before moving on to jobs in less stressful, less expensive places. By contrast to these workers and their ilk, there are the many engineers and managers also in the employ of tech firms. They tend to have longer tenures, 7-8 years in contrast to 2.5 on average for the urban coder. Accordingly, they are more likely to stress lifestyle and so have preference for less expensive, less stressful locales.
These preferences are evident in just about all the available statistics. Apple, for instance, reports that it has located about at third of its staff and its entire hardware-engineering division in Austin, Texas instead of the firm’s Cupertino headquarters. Labor Department data on the predominance of engineers completes the picture. To be sure, Silicon Valley still has the greatest number of engineers per capita in the country, but Houston and Bakersfield, even Dayton far outpace what are usually considered the coastal super cities. The figures of engineers per capita for Los Angeles barely match the U.S. average, and New York is well below that average. San Francisco has seen its computer and math-related employment fall from ranking third nationally in 2010 to 25th in 2017, the most recent year for which complete data are available. It is not just tech, either. Cost of living has also driven other sorts of engineering operations, such as Bechtel and Jacob Engineering out of San Francisco, along with Occidental Petroleum and the Japanese auto manufacturers Toyota and Nissan. McKesson Pharmaceuticals has decamped for Dallas.
Contrary to common wisdom, the cities showing the fastest growth in these sorts of tech and engineering jobs include such unlikely places as Cleveland and Kansas City, Orlando, Florida, and Las Vegas as well as Atlanta. These towns show growth twice as fast as the national average and significantly faster than the self-described “tech hubs” of Washington, D.C. and Los Angeles, Boston and San Diego. According to the Labor Department, New York, which touts itself along these lines, saw, less than 1.0% growth in computer-related jobs last year and rates 40th out of 53 metro areas. The same is true of Los Angeles and San Francisco. Here, too, it is not just tech. Finance and business services are also migrating to low cost localities. Houston and Dallas have gained against the old hubs, as have Jacksonville and Orlando in Florida and Nashville in Tennessee, even Detroit and Columbus, Ohio.
None of this is to say that New York and Los Angeles or San Francisco or any of the other coastal “super cities” have entirely lost their allure. They still dominate the softer segments of the information economy, media certainly but also entertainment and advertising. Nor can parts of finance leave as readily as can an engineering operation in tech or other areas. But the story of these regions as tech hubs and creative centers exaggerates their relative position to say the least.
