Slack. Dropbox. Zoom. These and countless other products from the high-tech sector over the last several years made it easier than ever to work from anywhere.
Which is why it’s particularly surprising that more than 90% of the recent growth in US high-tech jobs has been in or around five cities: San Francisco, Seattle, San Jose, San Diego, and Boston. Indeed, from 2005 to 2017, the rest of the 367 US metro areas created only about 25,000 new high-tech jobs, according to a new study coauthored by the Brookings Institution and the Information Technology and Innovation Foundation.
The trend shows how companies that once could dictate where people worked are now more willing to set up shop in areas where they feel the highest-skilled workers already are or want to live. “We’re seeing companies move and not people,” says Melissa Swift, senior client partner for digital solutions at Korn Ferry. More workers want to work where they want to live, not live where they want to work.
The study defines “high tech” liberally, grouping 13 industries, such as software, semiconductors, and pharmaceutical manufacturing, into one “innovation” sector. Based on that, fully one-third of the nation’s innovation jobs now reside in just 16 counties, and more than half are concentrated in 41 counties.
Regardless of how narrowly one defines it, fewer workers are relocating for their jobs than ever before. Indeed, the number of people who relocated for work has declined by almost half in the last decade. But the clustering runs counter to the idea that technology might allow people to work from anywhere, even in remote places.
Job clustering isn’t exclusive to high-tech jobs, of course. Construction, mining, retail, and other industries have been clustering too, according to government data. Just 31 counties made up 32% of US gross domestic product in 2018 while accounting for just 22% of the country’s population.
The clustering does have some benefits, allowing ideas to spread fast and giving a big talent pool from which companies can recruit. But the clustering also can create some problems, the study says, including sky-high housing costs and traffic congestion in places where all the jobs are, and large tracts of undeveloped areas of the country falling behind economically.
There are other issues for corporate leaders, however. Some firms are hunting for the next generation of innovation centers, Swift says, with locations in Austin, Minneapolis, and Atlanta as potential candidates. Madison, Wisconsin, and the area around Albany, New York, also are potential hot spots, the study says, based on the regions’ highly educated populations and the large research budgets of local universities.
As for the cities that already have the growth, some firms are considering how much presence they really want there, Swift says. “It’s rethinking what it means to have corporate real estate. You want to be scalable, have a bit more of a light touch, and a place for people to meet,” she says.