America’s lopsided economy: Tech job edition

Congressional Democrats say they’re attacking “monopolies and the concentration of economic” power with their “Better Deal” policy agenda. But perhaps the more relevant issue is the increasing geographic concentration of both economic power and employment. A new Indeed.com analysis finds that technology  jobs offering salaries in excess of $100,000 a year are becoming increasingly concentrated in just eight metro areas. Nearly 40% of those positions are in Seattle, San Francisco, San Jose, Austin, Raleigh, Washington, Baltimore, and Boston. Check out this map from the Indeed study: So even taking a more expansive view of what constitutes a “tech hub,” there’ s a whole lot of territory and population nowhere near any of them. It’s a map that immediately reminded me of a similar one from the Economic Innovation Group showing the lopsided nature of the current economic recovery in terms of business creation: Back to tech: Another way of breaking it down is to look at the geographic distribution of billion-dollar tech startups, or "unicorns." The Wall Street Journal startup tracker finds there are currently 100 US-based unicorns. And of that group, 61 are in California, almost all in Silicon Valley. The next closest is New York with 12, and then Massachusetts with 6. One interesting observation is made by Wall Street Journal reporter Josh Zumbrun, who notes that high housing prices have not yet led to a dispersion of tech jobs to other places. Silicon Valley still dominates even though home prices have risen faster there than those other cities during the past decades. Some economists and policymakers worry that high housing costs in high productivity cities are hurting migration there and thus crimping US growth and worker incomes. So they have been arguing for zone and land-use regulatory reform. On the other side of the trade, some analysts hope that those high housing costs will in effect spread the wealth by spreading tech talent and tech jobs to more affordable places. Markets will adjust. That doesn't seem to happening yet. Zumbrun:

While high costs and the possibility of telework might lead some employers to locate staff outside the hubs, other employers might be attracted to the hubs for their deep talent pools, for their proximity to venture capital, or simply because even in high-tech fields there’s huge value in face-to-face interactions. Whatever the reason, the forces of centralization are winning out.

The rise in regional inequality has become a political issue, as the 2016 election showed. And it's why people are suggesting ideas such as relocating federal agencies to the Midwest, or turning unemployment insurance into relocation vouchers so people can move to where the jobs are. Or perhaps cities that aren't tech hubs should lure top talent to settle there. But as economist Enrico Moretti has noted: “If you look at the history of America’s great innovation hubs, they haven’t found one that was directly, explicitly engineered by an explicit policy on the part of the government. It’s really hard.”   This post originally appeared in AEIdeas.

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