As we take tentative steps out of the worst of the pandemic, some evidence is emerging about how the tech economy has fared since early 2020.
Spoiler alert: Seattle did well, but it’s when counting the metropolitan area, not merely the city that led the region’s tech boom in the 2010s.
From 2015 to 2019, Seattle-Tacoma-Bellevue turned in the second-highest share of growth in tech jobs among metro areas, much of that powered by Seattle’s rise to become one of America’s “superstar cities.” Eight of these metros accounted for half of the nation’s tech job creation then.
We were only behind San Francisco-Oakland-Berkeley but ahead of Silicon Valley in job creation. (The Washington, D.C., area, future site of Amazon’s HQ2, saw the largest decline during those years.) At the same time, most of the middle of the country was left behind by the tech boom of dense, coastal superstars.
Now, a new report from the Brookings Institution drills down into the pandemic’s effects on these advanced industry sectors and whether the rise of remote work also shifted work to the so-called left-behind metros.
The coastal superstars “persist in their dominance of tech,” according to the report authored by Mark Muro and Yang You. “These hubs range from San Francisco and Seattle to Austin and New York, and they aren’t going anywhere. In fact, these established centers expanded their share of the nation’s tech sector in the early pandemic.”
At the same time, some Sun Belt and heartland “rising stars” became potential competitors. Among them: Atlanta, Dallas, Denver, Miami and St. Louis.
The report states, “A number of smaller quality-of-life meccas and college towns also seemed to add tech jobs sharply during the initial year of the crisis.” As the pandemic continued, other cities from Philadelphia and Cincinnati to Charlotte, North Carolina, grew tech jobs.
Using job posting data from EmsiBG “suggests discernable shifts of economic activity among cities.” It showed a “distinct slippage of the superstar metro areas’ share of U.S. tech activity.” Job postings across all superstar metro areas slid from 40% in September 2016 to 31% in December 2021.
The exceptions: Los Angeles, Seattle and Austin, Texas, which saw national job postings shares grow 150% during the pandemic.
According to the federal Bureau of Labor Statistics, information jobs in metro Seattle grew from 133,000 in February 2020 to more than 147,000 this past December. (There were 87,500 in January 2010.)
Unfortunately, the data doesn’t break down differences between the city and the Eastside. Remote work complicates it further. But anecdotal evidence points to a rising tech presence in Bellevue. Amazon is adding 25,000 jobs. Tech executives laud the suburb’s low crime, lack of tents on sidewalks and “business-friendly politics.”
Meanwhile, hiring rose in Denver, Miami, Phoenix and Houston, while the other superstar cities declined.
Of course, not all tech is created equally. In Phoenix, for instance, growth is in semiconductor plants (“fabs”) and data centers, the latter especially creating few and low-end jobs. By contrast, Amazon and Microsoft account for thousands of high-end jobs here.
While minding a data center is considered good employment in a place such as Phoenix, the Seattle-area jobs are executives, coders, other software engineers and those decision-makers working at the headwaters of companies.
The report concludes: “The much hoped-for ‘rise of the rest’ in the Heartland and interior America is real, though modest in scale.”
The stakes are significant because tech jobs grew in recent decades while manufacturing declined. The post-World War II convergence in wages across the country stopped in the 1980s. “Winner-take-all” urbanism saw a small number of coastal, tech-heavy metros prosper while the Midwest languished.
No wonder some 240 localities were willing to provide big tax incentives to win Amazon HQ2, which went to the D.C. area.
To be sure, tech wasn’t the only thing to blame for the “left-behind” metros.
Financialization of the economy — big bank mergers, repeal of the Depression-era Glass-Steagall Act that separated retail and investment banking, along with the growing power of hedge funds — played a big role. So did union busting, lethal leveraged buyouts of healthy companies and lack of investment in heartland industries.
This was also the era of “Neutron Jack” Welch, who presided over thousands of layoffs at General Electric to pump up the stock price. Other CEOs followed (Welch’s acolytes led Boeing during some of its blunders, but share prices kept rising). Wall Street insisted on short-term stock performance at the expense of long-term corporate investments.
Many heartland industries also lost jobs to NAFTA and especially the “China trade shock,” as Beijing joined the World Trade Organization and employment was sent offshore.
Intel co-founder Andy Grove wrote a 2010 essay criticizing Silicon Valley for throwing away its competitive edge by sending advanced manufacturing jobs to Asia rather than scaling them up in the United States.
“Without scaling,” he wrote, “we don’t just lose jobs — we lose our hold on new technologies” and “ultimately damage our capacity to innovate.”
The Seattle area was insulated from much of this. With Microsoft and the rise of Amazon, with 50,000 well-paid jobs in South Lake Union and downtown, it became home to two of the five Big Tech giants. Offering a magnet for world-class talent and the amenities that top tech talent craves, it attracted high-end offices of a who’s who of Silicon Valley along with a vibrant startup scene.
But the big post-pandemic question is whether the city can continue its prosperity despite rising crime, the aftermath of civil unrest in 2020, a largely shuttered downtown, and hostility from a majority of the City Council.
Muro, a Brookings senior fellow and Seattle native, told me, “Remote and hybrid work may make it a bit easier for Seattle to power through, but ultimately the health of the region — anchored by its downtown vibrancy and diversity — is essential to maintaining momentum. If not this year, or next year, chaos and divides and dystopia likely will eventually harm the tech juggernaut.”
In other words, advantage Bellevue and the Eastside.