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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

Swing voters oppose Texas abortion law

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All 10 swing voters in Axios’ latest focus groups — including those who described themselves as "pro-life" — said they oppose Texas' new anti-abortion law.

Why it matters: If their responses reflect larger patterns in U.S. society, this could hurt Republicans with women and independents in next year's midterm elections. The swing voters cited overreach, invasion of privacy and concerns about frivolous lawsuits jamming up the courts.

47 mins ago - Politics & Policy

Scoop: Biden bombs with Manchin

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President Biden failed to persuade Sen. Joe Manchin (D-W.Va.) to agree to spending $3.5 trillion on the Democrats' budget reconciliation package during their Oval Office meeting on Wednesday, people familiar with the matter tell Axios.

Why it matters: Defying a president from his own party — face-to-face — is the strongest indication yet Manchin is serious about cutting specific programs and limiting the price tag of any potential bill to $1.5 trillion. His insistence could blow up the deal for progressives and others.

Biden blindsides Europe with new AUKUS alliance on China

Photo illustration: Sarah Grillo/Axios. Photo: Melina Mara/The Washington Post via Getty Images

President Biden is constructing and deepening new alliances to strengthen the U.S. position in its showdown with China, but he risks alienating longstanding allies in the process.

Why it matters: Biden heralded a new agreement to help Australia acquire nuclear submarines as part of a trilateral security pact with the U.K. and the U.S. as an "historic step" to update U.S. alliances to face new challenges. The message from French foreign minister, Jean-Yves Le Drian, was quite different.

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