Chase for Talent Pushes Tech Giants Far Beyond West Coast

The search for talent outside Silicon Valley and Seattle has also been prompted by issues in the companies’ hometowns, which have not built enough housing to keep up with their growing work forces. San Francisco, San Jose, Oakland and Seattle are the four most expensive major cities in the country based on home values, according to data from Zillow. The median home in San Francisco is valued at almost $1.4 million and more than $733,000 in Seattle. Questions also abound over the quality and funding of the areas’ public school systems.

“Every day as a C.E.O., you have employees coming to you saying, ‘I don’t make enough to buy a house for my family,’ and you already feel like you are paying through the nose,” said Glenn Kelman, chief executive of Redfin, the real estate site based in Seattle. “Almost everyone is looking at other affordable places where you can open an office.”

Some economists said the Trump administration’s tougher immigration policies could also restrict the tech giants from importing skilled workers from abroad to their West Coast headquarters. The Trump administration has increased the red tape in applying for H-1B visas for highly skilled workers and has denied petitions more often. Over a five-day window this April, employers submitted petitions for more than 190,000 specialized work visas, but only 85,000 can be granted annually.

That has helped push some tech companies into building major outposts in Canada, particularly in Toronto and Vancouver. Edward Glaeser, a Harvard economics professor, said that even if H-1B workers were to come through in abundance, it would still make sense to put them in cheaper cities, like Austin. He said, “$100,000 goes a lot further in Austin than in Silicon Valley.”

Yet even as the tech companies move beyond the West Coast, their choices to converge on cities or towns that are already highly educated, wealthy and well employed do not spread the wealth.

More than 44 percent of all digital-service jobs in the United States were located in just 10 metro areas last year, including Seattle, San Francisco and San Jose, as well as New York, Washington, Los Angeles and Boston, according to research by Mark Muro, a senior fellow at the Brookings Institution. From 2015 to 2017, only nine metro areas increased their share of the nation’s tech work force, including the West Coast tech hubs, as well as Austin and Denver.

“The tech industry concentrates in very few markets,” said Amy Liu, director of the Metropolitan Policy Program at the Brookings Institution. “Our biggest concern is how do we make sure more cities, particularly midsized cities in the middle of the country, can be players in the tech economy?”

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