Coastal cities have dominated tech work. A new analysis of pandemic trends suggests new possibilities.

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Technology industries have the potential to diffuse economic vitality into all corners of America.  But for decades, tech has instead remained highly concentrated in a short list of coastal “superstar” cities such as San Francisco, Seattle, and New York. Not even the booming 2010s tech scene saw these industries spread out in terms of cities’ shares of the sector’s overall employment.

More recently, however, the rise of remote work during the COVID-19 pandemic has spawned new hopes for the decentralization of tech. Story after story has reported on footloose big-city techies heading for the hills. What’s more, major tech companies such as Palantir, Hewlett Packard Enterprise, Oracle, and Tesla have moved their headquarters from California to Denver, Houston, or Austin, Texas. Most recently, Intel announced the siting of two semiconductor plants in the Columbus, Ohio area, prompting excitement about the rise of a “Silicon Heartland.”

So, is the long-awaited spread of tech into the “rest” of America happening at last?

To answer that question, Brookings Metro has published a new installment in its series of data-driven reports tracking fixity and change in the geography of the U.S. tech sector.

Building on our last look at tech location trends from March 2020, the new analysis probes recent trends across six key high-tech industries and charts the geography of tech sector growth in the U.S. over the last decade and through the pandemic. Specifically, the analysis examines data on employment, job postings, and new firm starts in tech to assess local and national hiring trends for the sector across the nation’s 100 largest metropolitan areas and communities containing at least 1,000 tech workers. Focusing on this information yields several key findings:

The U.S. tech sector has continued to rapidly grow, including through the pandemic

Between 2010 and 2019, the tech sector grew by 47% and added more than 1.2 million jobs—nearly triple the growth of the economy as a whole. Not even COVID-19 could stymie this growth; although the sector’s expansion slowed during the initial pandemic-related lockdowns, it managed net positive growth through almost all of the crisis.

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Most U.S. regions and states and more than half of metro areas have benefitted from tech sector growth throughout the last decade. Between 2010 and 2019, all four major census regions; 48 out of 50 states as well as Washington, D.C.; and 289 out of the nation’s 384 metro areas have seen positive employment growth in the sector. Among the 100 largest metro areas, 83 have seen tech sector growth.

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However, tech sector growth prior to the pandemic remained highly concentrated

While positive in many markets, tech sector employment growth wasn’t really spreading out in geographical terms. In fact, tech employment was growing more concentrated into a short list of places. Just eight “superstar” metro areas—San Francisco; San Jose, Calif.; Austin, Texas; Boston; Seattle; Los Angeles; New York; and Washington, D.C.—accounted for nearly half of the nation’s technology sector job creation between 2015 and 2019.

At the same time, a handful of midsized but less established centers also grew briskly in the years before the pandemic, meriting attention as “rising stars.” Mostly situated in the nation’s Sun Belt and interior, these nine dynamic metro areas—Atlanta; Dallas; Denver; Miami; Orlando, Fla.; San Diego; Kansas City, Mo.; St. Louis; and Salt Lake City—increased their share of the sector’s total nationwide jobs by adding tech jobs at 3% a year (or more).

Yet while the superstars and rising stars surged, most metro areas went sideways. Seventy-three of the nation’s 100 largest metro areas experienced either negligible, flat, or negative growth in their shares of the nation’s tech sector employment between 2015 and 2019. Among those metro areas, 24 lost tech jobs in absolute terms during that period.

The pandemic’s first year disrupted tech sector growth patterns and slowed concentration

The tech sector’s “superstar” geography may be entrenched, but it’s not necessarily immutable. Data covering 2020 confirms the extent of early-pandemic disruption and the possibility for new growth patterns.

To be sure, the first year of the pandemic imposed no wholesale destruction of the nation’s superstar geography. The superstar and rising star metro areas continued to excel, with their aggregate growth rates remaining positive through 2020 to the point that they further increased their aggregate share of the sector’s total nationwide jobs by 0.3%. At the same time, nearly one-third of the nation’s metro areas failed to grow and nearly two-thirds saw hiring slow—a sign that America’s winner-take-most tech geography remained in place.

With that said, the first year of the pandemic saw unmistakable shifts in the nation’s superstar-dominated tech geography, including:

  • In most superstar and rising star metro areas, tech sector employment growth in 2020 slowed compared to the previous five years.
  • In nearly half of the nation’s other large metro areas, tech growth rates increased in 2020. These included northern business cities such as Philadelphia, Minneapolis, and Cincinnati; sizable warm-weather cities such as Charlotte, C., San Antonio, Nashville, Tenn., Birmingham, Ala., New Orleans, Greensboro, N.C., Jackson, Miss., and Stockton, Calif.; and a number of substantial university cities such as Chapel Hill, N.C. and Madison, Wis. Also seeing accelerated 2020 tech growth were numerous lifestyle, Sun Belt, or vacation centers such as Virginia Beach, Va., Ogden, Utah, Albuquerque, N.M., Tucson, Ariz., and El Paso, Texas.
  • Numerous smaller quality-of-life meccas and college towns also seemed to add tech jobs sharply during the initial year of the pandemic. Among the former, high-amenity or vacation towns such as Santa Barbara, Calif., Barnstable, Mass., Gulfport-Biloxi, Miss., Pensacola, Fla., and Salisbury, Md. all saw their tech employment surge by 6% or more. Likewise, attractive and convenient college towns such as Boulder, Colo., Lincoln, Neb., Tallahassee, Fla., Charlottesville, Va., and Ithaca, N.Y. all grew their tech jobs by more than 3% during the first year of the pandemic.

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While not definitive, these signals suggest at least the temporary emergence during the pandemic of a two-tier reality that incorporates persistent “star”-city dominance paired with a modest degree of tech diffusion to lower-cost or high-amenity locations.

More recent data points to potentially continued decentralization

Higher-frequency, more recent information on local economic activity confirms modest tech sector decentralization during the pandemic. To begin with, superstar metro areas’ share of unique tech job postings—which had begun to decline in the pre-pandemic period—has slipped further in the last two years, from roughly 40% in September 2016 to about 31% in December 2021.

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Crunchbase data on new tech firm starts corresponds with the job postings trend. After several years of steady increases, the eight superstar metro areas’ share of new tech firm starts declined by 2% between 2020 and 2021; only Austin, Texas grew. At the same time, increased tech firm starts in rising star metro area gains such as San Diego and Miami pointed to vibrancy in those places.

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It’s too early to tell if tech diffusion is temporary or a long-term trend

Overall, the trends depicted here reinforce the impression that the pandemic disruption has somewhat—though not massively—reallocated tech activity among cities. Some of the data suggests tech could be on the brink of spreading out, prompted by remote work. Specifically, the continued growth of the rising star metro areas—as well as the accelerated job growth of dozens of other metro areas during the pandemic—suggests the possibility in the coming years of a genuine adjustment of tech’s highly concentrated geography.

However, what is equally striking is the persistence of the sector’s superstar geography. Since 2010, the geography of the sector has remained highly skewed, with its activity and growth concentrated into a short list of large, mostly fast-growing hubs on the West Coast and the Boston-Washington, D.C. corridor. Even amid 2020’s pandemic disruptions, these eight superstar metro areas still slightly increased their share of the nation’s tech sector employment, and housed 38.4% of all U.S. tech jobs.

In short, the tech industry still remains more a “winner-take-most” affair than one in which the “rest” of the nation’s tech ecosystems are truly rising—although intriguing signals point to possible decentralization. The question now is whether the recent dispersed tech growth forecasts a major shift, or is instead a temporary disruption.