For months, news outlets have been crowing about a “tech exodus” from the Golden State, with pundits predicting that major companies would soon escape California’s high taxes and cost of living, and head for places like Texas, Arizona, and Florida. But the data just isn't showing it.
Elon Musk loudly moved Tesla’s official headquarters to Austin in 2021. Software giant Oracle did the same. And Digital Journal reported that tech employees moved out of San Francisco in such large numbers, their departure served to shift Bay Area rent prices down by as much as 35% during the pandemic.
For now, it is still true that there are more people moving out of California than there are moving in. Plus, there are more people working remotely or in a hybrid work model than pre-pandemic, meaning people could choose to live further outside the city and commute to work when necessary, and companies may choose to jump ship as well.
So far at least, it turns out the narrative of the tech exodus as a whole is not-so-true.
A new study from the Brookings Institution, spearheaded by Mark Muro, Senior Fellow and Policy Director, and Yang You, Senior Research Assistant, reported on by the Los Angeles Times, finds the exodus narrative overblown. The think tank finds there was some shuffling of tech jobs around the nation, but the same tech hubs that have existed for the past decade remain intact.
“Neither the scale of the moves seen to date nor the most frequent format of remote work seem to forecast a wholesale decentralization of tech,” the Brookings Institution researchers concluded.
The so-called "superstar" metro areas for tech — San Francisco, New York, LA, DC, Seattle, Boston, and Austin — all saw 0.3% gains in tech jobs during the pandemic.
And during the first year of the pandemic, Brookings concedes, there were new growth patterns in tech sectors nationwide, with cities like Atlanta, Dallas, Denver, San Diego, Miami, Orlando, Kansas City, St. Louis, and Salt Lake City all growing with tech jobs by a bit. Meanwhile, employment growth within STEM fields slowed in the Bay.
But, the truth is, that list of nine cities added a collective 14,000 tech jobs in total. That’s certainly noteworthy, but it is spread across the country and not an indicator of any large wave. As for the Bay’s grip on tech slipping, San Francisco and San Jose’s share of the country’s total tech startups dipped just 0.8% and 0.7% respectively.
It’s also worth noting that those declines came after the tech sector in San Francisco had massively grown for a decade straight prior to the pandemic, as the Brookings report points out.
“The current emergence of new technologies and projects in the sector — ranging from artificial intelligence and quantum computing to AR/VR, Web3, and the metaverse — may well forecast more years of concentration in the established hubs. On this front, too, further diffusion of tech employment into new places appears possible—but so does even more concentration,” the researchers speculated.
And, as UC Berkeley economist Enrico Moretti has pointed out, the high cost of living in the tech hubs of San Francisco, Boston, and Seattle has never been much of a deterrent for creative intellectuals and innovators — because the advantages of being in the hub of innovation and research in a particular industry, especially near major universities, tend to outweigh those costs. And that isn't changing anytime soon.
So, yes, once again, talk of "everyone" and "the whole tech industry" beginning a massive movement to Miami and Austin has been greatly exaggerated.
Photo: Eric Mclean