11/15/2019

The Tech Economy’s Untold Story

The decisions by Amazon and Google to expand into the New York area have led some pundits to claim that the nation’s high-tech economic future will be shaped in dense urban areas. “Big cities won Amazon and everything else,” proclaimed Neil Irwin of the New York Times. “We’re living in a world where a small number of superstar companies choose to locate in a handful of superstar cities where they have the best chance of recruiting superstar employees.” Yet the trends in job creation, particularly in technology, are not nearly as favorable to the “superstars” as some urbanists imagine. If one looks at data, not press releases, a more nuanced picture emerges, with much of the fastest growth—including in tech—shifting dramatically not to the elite, dense urban centers but to more sprawling regions and the suburban periphery.

As Ali Modarres, Director of Urban Studies at the University of Washington at Tacoma suggests, not all tech jobs are created equal. “Second wave” tech firms like Amazon tend to be short-term employers, where young workers earn their spurs before heading elsewhere. Of course, Amazon also has its warehouses, mostly in the exurbs, where workers labor in often Dickensian conditions, while Apple builds virtually everything in grim Chinese factories plagued by on-the-job suicides. Such practices contrast with those of more traditional tech firms—those involved with semiconductors, computers, network equipment, and aerospace—which rely on long-term employees. These firms, Modarres suggests, thus have different priorities when it comes to siting and corporate planning.

Second-wave workers, particularly coders and those involved in media-centric work, for example at Google, may prefer an urban location. “The new economy, epitomized by Amazon, neither requires nor offers loyalty to its employees,” Modarres notes. “They need the largely youthful ‘creative class’ to give a few stressful years of their lives to innovate, pad their CVs and leave for the next job, hopefully in less expensive places. They work hard, live fast, and burn out in a few years, ending up often in more suburban and other less-costly areas.” These urban habitués are usually short-timers. Demographer Wendell Cox, looking at the nation’s 53 largest metros, found that residents in their urban cores remained there, on average, for just 2.4 years, while suburban and exurban residents stay seven to eight years. The second-wave model is ideal for the young and restless but not for those entering middle age.

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