A decade ago, optimists predicted that the decentralization of the tech industry was inevitable. Developers can code nearly anywhere, they said, while soaring rents in cities like San Francisco would surely push people into other areas of the country.
Yet the reverse seems to have occurred. On behalf of the American Enterprise Institute, Brookings just released data showing that tech jobs have only become more concentrated in cities like San Fran and Austin over the past ten years.
The findings could have significant implications for Facebook and other tech giants, which represent the face of the industry, and have increasingly come under fire for their oversized control of the market, and lack of diversity.
The findings “might reflect the geographic effect of monopolistic ‘platforms’ in big tech, which may prevent the entry of geographical as well as corporate rivals,” according to Mark Muro, senior fellow and policy director at Brookings’ Metropolitan Policy Program.
In its defense, the tech industry continues to contribute to regional growth around the country, according to Brookings.
Specifically, digital services continued as a critical part of the national economy, accounting for 80% of the nation’s “advanced industries” growth from 2010 to 2018. During that period, sector employment grew 4.2% a year based on compound annual growth rate calculations.
Additionally, unexpected heartland metro areas far from the coastal hubs surfaced as fast-growing tech centers in the 2010s.
Among the 100 largest U.S. metro areas, Charleston, S.C., Charlotte, N.C., Lakeland-Winter Haven, Fla., Boise, Idaho, and Wichita, Kan. all posted digital services growth of over 7% per year over the past decade.
“It’s absolutely true that tens of thousands of digital services jobs … central to the current artificial intelligence-driven tech boom … are sprouting in up-and-coming heartland towns,” Muro notes in the new report.
That said, although more cities are enjoying an increase in the number of tech jobs, the sector has still been quickly concentrating over the past decade.
In fact, the top five metro areas with the highest shares of the country’s digital services industry accounted for 28% of all of these jobs nationwide, in 2018. Meanwhile, the top 10 encompassed 44.3%.
This trend might reflect the rising importance of what Muro calls “giant agglomerations of talent,” and firms in periods of tech disruption, as with the decade’s waves of social media and artificial intelligence innovation.
Additionally, “It might reflect the continued groupthink of tech industry managers and funders about siting decisions,” Muro reasoned.
Regardless, the incessant clustering of tech jobs in swanky Zip codes does not bode well for the millions of underrepresented consumers who increasingly rely on technology to live their lives.
As it stands, tech titans don’t have the best track record when it comes to representing the interests of minority communities.
Last year, for example, researchers found that even when advertisers set their targeting parameters to be “highly inclusive,” Facebook’s ad delivery system was potentially discriminatory based on users’ gender and ethnicity.
Also last year, Facebook settled a lawsuit with the ACLU, which accused the company of helping advertisers of housing, employment and credit offers target minority populations.In the words of Muro, “The nation badly needs to reconnect left-behind people and places to prosperity, [while] tech’s inherent tendency to facilitate geographic agglomeration is only sharpening the nation’s divides.”