America’s tech economy needs to expand beyond Seattle, says report

Originally posted in kuow.org, DEC 11, 2019

Seattle is among the handful of metro areas that have seen almost all the nation’s tech job growth in the past 15 years – and the wealth that comes with it.

That’s according to a new report by the Brookings Institution.

But the authors claim there are some big downsides, even for cities like Seattle that are booming.

KUOW’s tech and politics reporter David Hyde spoke with the report’s coauthor, Rob Atkinson.

Atkinson: The pluses are that tech jobs pay really, really well. They on average pay about 75 percent more than average jobs in the U.S. economy. They’re very sustainable.

And you’re better off being Seattle than you are Flint, Michigan. People in Seattle should understand that you really don’t want to be a declining industrial place where jobs are leaving and workers are out of work. So in that sense, it’s a plus.

Seattle has built itself around the industries and firms of the future.

Now, the downside is obviously it’s congested, it’s crowded and it costs more money. It’s hard for an average worker maybe to afford to buy a house or afford housing. So you have the benefits that come from growth, but also the costs.

Hyde: Given that, why would tech companies continue to want to cluster here when there are plenty of other cities with cheaper rents and a lot less traffic?

Tech companies are not like furniture companies where they are saying we’re worried about lowering the cost of production. That’s not their dominant thing they have to do.

The dominant thing technology companies have to do is keep innovating. Because the day they fail to innovate is the day they go out of business.

And the innovation ecosystem in a place like Seattle is so strong. You have the University of Washington. You have one of the best computer science departments in the world. You’ve got all these great small firms, you’ve got venture capitalists, you’ve got big firms, you’ve got a great place that’s attractive for workers. So it kind of builds on itself.

And the one thing companies do, though, in Seattle and other places is when they kind of feel like, well, we’ve got to go to a place with lower costs, they generally go to a low cost technology hub overseas.

Why do you think this split in the concentration of jobs and wealth is such a big problem at this point for American society and politics?

Well, two reasons. One is politics. One is economics.

And we saw that in the 2016 election where it was a lot of dissatisfaction. We see it in our politics today and people are unhappy. They feel like the American dream has slipped away.

There are whole parts of the country that feel left behind and, frankly, are left behind.

And so I think it’s pretty urgent to say, look, let’s try to get the most vibrant and dynamic parts of our economy. Let’s get it more spread out in the country to more places.

But the second is a little bit more prospective. And that is, I don’t know, frankly, that we’re going to be able to keep doing what we’re doing when you have vibrant tech hubs in other countries like India or Taiwan or Korea, China that are very, very vibrant and a lot lower cost than Seattle or Silicon Valley.

We’ve got to create our own domestic alternatives that can be competitive with those places or else we might start losing tech jobs to overseas.

What needs to be done, according to Brookings, to try and fix this?

Look, the reality is we can’t NOT do anything. We’ll just have continued bifurcation of the economy, more Seattle doing well, Silicon Valley doing well, and then a lot of other places not.

We’ve got to do something. But it can’t be what you might call “peanut butter policy,” where the federal government tries to help 100 places that just don’t get critical mass. You don’t get escape velocity.

So we’re proposing a 10-year program. It sunsets after 10 years, where the federal government would do a competition and metropolitan areas around the country could compete to be an emerging next tech hub, if you will.

And those that win would have to commit their own resources and reforms locally, but they would then be backed up by federal support, things like significant increases in university, funding for science and research, better workforce training efforts, some tax and regulatory benefits.

So we think that if the federal government were to do this, in 10 years the geography of the tech economy could look quite different and frankly, better.