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Indy grows share of national tech jobs

March 10, 2017

A lot of cities have been growing tech jobs over the past several years. But Indianapolis is among a small cohort that actually has increased its share of U.S. tech jobs.

In a report published this week, the Brookings Institution compared the share of tech jobs held by 100 U.S. metropolitan areas in 2010 and in 2015. Only 14 of those metros, including Indianapolis, increased their share in a "statistically meaningful way," the report's authors said.

Indianapolis was home to about 21,830 tech jobs in 2015, which is only 0.8 percent of the national total. But that share was 0.6 percent in 2010, or about 12,660 jobs. That 0.2-percentage-point upswing was the seventh-largest increase, Brookings said.

If all cities grew tech jobs at the same rate over those five years, then their respective shares of the national pool would stay the same. But metros in Silicon Valley, Austin, Texas, and Indianapolis increased their shares of the tech job pie, meaning their growth rate outpaced the overall country's rate.

Eighty-six metros saw their shares remain flat or decline. (Click here to see a graphic of the 50 metro areas with the most digital jobs, and their change in employment from 2010 to 2015.)

"To me, Indianapolis is a really interesting phenomenon of the 'rise of the rest,'" Brookings senior fellow Mark Muro said in an interview, referring to former AOL CEO Steve Case's phrase for tech jobs spreading to the nation's heartland.

"It's not universal that heartland cities are seeing significant tech growth," Muro added, "but Indianapolis is one of them."

Using Moody's Analytics data, Brookings researchers looked at cities with the largest "digital services" employment in four industries—software publishing, data processing and hosting, computer systems design, and web publishing/search. It then tallied the share each city held of such jobs in 2010 and 2015.

It found that San Francisco and San Jose, California, led all cities over that span, growing their shares of national digital services jobs by 1.5 percentage points and 0.9 percentage points, respectively. Austin, Dallas and Phoenix rounded out the top five.

While the national tech jobs pie is growing, the study suggests that growth is happening at a much brisker pace in California's Bay Area. Together, San Francisco and San Jose account for 10 percent of the nation’s digital services employment, Brookings said, up from 9 percent in 2013 and 7.7 percent in 2010.

"[W]hile tech employment is growing all over America, it really isn't 'spreading out' in terms of cities’ share shifts," the report's authors wrote. "Instead, the tech-employment 'rich'—namely San Francisco and San Jose—are getting richer."

Verge founder Matt Hunckler, who's media-and-events company aims to propel tech hubs outside Silicon Valley, said the fact that tech is growing across the country shouldn't be lost in the numbers. In fact, Brookings notes that of the 86 metros that didn't increase their share of national tech jobs between 2010 and 2015, only six saw the actual number of tech jobs decrease.

"While the percentage of the pie may be down or flat for some," he said, "the pie itself is rapidly exploding."

Hunckler added that Silicon Valley has been "at this for decades," benefiting from a virtuous cycle of capital and talent vital to tech companies. He said other cities are getting there.

"And that's what I'm seeing in a lot of these areas, or 'the rest.' And I really don't like that phrase because I think this is where a lot of innovation is happening," he said. "We're not the leftovers, but this is where the next generation, the ExactTargets, are going to come out of."

The Brookings authors said that even as tech jobs diffuse somewhat to other places, they continue to concentrate in the nation's densest tech hubs. But it doesn't have to continue to be that way, they said.

"[If] the Bay Area’s big tech firms want things to go differently, they can always make it so. Specifically, they can ‘weaponize’ their own sizable job creation, as one executive told me, by distributing some of it to some of the nation’s other aspiring cities."

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