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Expand chart
Adapted from Brookings Institute analysis of Emsi data; Table: Andrew Witherspoon/Axios

The superstar cities that already claim high shares of the U.S. digital services economy are only getting stronger, according to a new analysis by the Brookings Institution.

Why it matters: The tech industry's success along the coasts is not dispersing to other regions that have been passed over in terms of job creation, deepening America's already stark geographic divides.

The big picture: As a major contributor to regional economic growth, technology is a sector that many metro areas have tried to foster over the past decade. Some tech companies and venture capitalists have made modest efforts to expand outside of Silicon Valley. Cities such as Charlotte, N.C.; Madison, Wis.; and Boise, Idaho have added digital services jobs.

Yes, but: "They’re gaining jobs, but still losing ground," said Mark Muro, senior fellow and policy director at Brookings Metropolitan Policy Program. "The industry is still centralizing" in just a handful of tech hubs.

  • "We keep waiting for this to reverse, but we're not sure it will anytime soon because of the winner-take-most dynamics of the way the sector works," Muro said.

Why it's happening: The increased concentration may reflect the importance of large-scale clustering of talent and companies in periods of rapid tech disruption, the "groupthink" of tech industry executives and investors about location decisions, or even a geographic effect of Big Tech's dominance, "which may tend to prevent the entry of geographical as well as corporate rivals," Muro writes in the blog post.

By the numbers: The top five metros with the highest shares of digital services — San Francisco, Seattle, San Jose, Los Angeles and Austin — accounted for nearly a third of all such jobs nationwide in 2018.

  • Together, San Francisco and San Jose have added 200,000 digital services jobs in the past decade, capturing 17.7% of the nation's new tech jobs during that time.
  • Only 21 cities increased their sector share between 2010 and 2018, even though the gains were less than one-tenth of a percent. Among the cities in this group are Raleigh, N.C.; Akron, Ohio; Greenville, N.C.; Grand Rapids, Mich.; Chattanooga, Tenn.; Spokane, Wash.; Pittsburgh and Salt Lake City.
  • Of the country's top 100 larger metros, 63 saw their share decline with slow or negative growth. Providence, R.I.; Little Rock, Ark.; Virginia Beach, Va.; and Stockton, Calif. lost 5% or more of digital services jobs.

Flashback: In December, Brookings and the Information Technology and Information Foundation proposed that the federal government should provide R&D funding and regulatory benefits to 8 to 10 promising metros — or "growth centers" — to help them become more competitive to the tech hubs.

  • That December report found that 90% of the nation's tech-sector jobs had concentrated in the top five innovation cities —Boston, San Francisco, San Jose, Seattle and San Diego.
  • In the report released today, Brookings cut the data a different way to include a wider definition of tech jobs to test whether they had spread outside of tech hubs more than R&D-heavy roles.
  • Digital services includes software publishers, data processing and hosting, computer systems design and other information services.

The bottom line: "The tech economy is unleashing forces that benefit a select group of elite regions, often to the detriment of everyone else. These dynamics are circular and cumulative and can lead to harmful path dependencies, rather than dissipating," Muro writes.

Go deeper

Thousands without power as "hazardous" winter storm lashes East Coast

Winter view from Charlotte as winter storm Izzy creates dangerous conditions in Charlotte, N.C. on Jan. 16. Photo: Peter Zay/Anadolu Agency via Getty Images

A major winter storm was lashing much of the East Coast on Sunday, causing widespread power outages and disrupting travel over the holiday weekend.

The big picture: Heavy snow and ice accumulations are "likely to produce hazardous travel," downed trees and more power outages from the Mid-South to the Northeast, per the National Weather Service. Some parts of the U.S. can expect to see up to a foot of snow through Monday.

Updated 1 hour ago - Science

Volcanic eruption in Tonga caused "significant" damage

This satellite image of the eruption on Jan. 15 taken by Himawari-8, a Japanese weather satellite operated by Japan Meteorological Agency and released by National Institute of Information and Communications Technology (NICT). Photo: NICT via AP

Significant damage has been reported in Tonga following an undersea volcanic eruption on Saturday, which covered the Pacific nation in ash and cut off communication lines.

Driving the news: The eruption triggered tsunami warnings across Tonga's islands and in other regions, including the West Coast of the U.S. and New Zealand.

2 hours ago - World

North Korea launches 4th suspected missile test this month

A news broadcast in Seoul, South Korea, of an apparent North Korean missile test on Monday morning local time. Photo: Jung Yeon-je/AFP via Getty Images

North Korea's military fired "two suspected short-range ballistic missiles" eastward from Pyongyang on Monday morning local time, per South Korean and Japanese officials.

Why it matters: The fourth such launch since Jan. 5 comes days after North Korea's military warned of "stronger" action if the U.S. moved to have more sanctions imposed on the country.

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