There’s a narrative that the tech industry’s future lies in Texas and Florida. That tech workers and executives — sick of California’s oppressive policies and sky-high real estate costs — are moving en masse to Miami and Austin this year. That these cities are building dominant talent foundations that will persist for years due to the pandemic. That narrative is wrong.
The story crumbles when placed next to new LinkedIn data showing where tech workers are actually moving in 2020. The key beneficiaries of this year’s tech migration are less buzzy cities like Madison, Wisconsin; Richmond, Virginia; and Sacramento, California. These places don’t get much play in the news, but they’re attracting tech talent at significantly higher rates than they were last year. Austin, conversely, is gaining tech workers more slowly.
The new LinkedIn data, which Big Technology is first publishing here, examines several hundred thousand tech workers in the U.S. It breaks down the ratio at which they’re moving into a city vs. moving out, something LinkedIn calls the inflow/outflow ratio. The data ranges from April to October, comparing 2020 with 2019. It encompasses the core months people left their cities due to the pandemic.
The country’s biggest tech migration increase took place in Madison. The city was gaining 1.02 tech workers for each one that left last year, and it’s now gaining 1.77, a 74% jump. Sacramento and Richmond, meanwhile, were losing tech workers before the pandemic and have turned it around. Sacramento was adding a fraction of a tech worker — 0.87 — for each one that left last year, and now it’s adding 1.02. Richmond was adding 0.95 last year, and it’s adding 1.06 this year. Other Midwest cities, including Minneapolis, Minnesota, and Cleveland, Ohio, have significantly reduced the rate at which tech workers were leaving their cities.
These tech talent shifts could invigorate tech and startup activity in the communities experiencing the gains, leading to lasting economic benefit, LinkedIn chief economist Karin Kimbrough told Big Technology. “I could totally envision that people who have that skill, if they decide to remain in what might call the second cities or nontraditional tech hubs, they eventually could spin off into something where they build their own thing,” she said.
Austin, for its part, is not experiencing a pandemic-induced tech worker surge. Last year, Austin was gaining 2.06 tech workers for every one that left; now it’s down to 1.84, a drop of 10.78%. Though Austin is still gaining tech workers this year, the notion that 2020 was a watershed year for tech workers moving there is a myth.
Miami is another buzzy city among people trying to anoint the next Silicon Valley. “If you’re an entrepreneur, it is probably easier to raise a VC round in Miami right now than CA,” said venture capitalist Keith Rabois last week. But that might be because the supply of VCs outweighs the demand from tech talent. Miami is gaining tech workers faster this year than last but not dramatically, an increase of 3%, according to LinkedIn.
Now on to the ugly stuff. The only two cities in the country losing tech workers that previously were gaining them are New York City and San Francisco. New York’s change in inflow/outflow ratio is -20%. San Francisco’s is -35%. To put that in context, San Francisco was previously gaining 148 workers for every 100 that left; now it’s gaining only 96. These steep drops may only be temporary, however, as these cities will likely bounce back post-pandemic.
“There are some people who have moved and are going to stay in their new place and some who might be willing to come back in a couple of years to San Francisco or New York,” Kimbrough said. “I’m not calling time on these cities. They will definitely come back.”
Seattle, meanwhile, has kept up its surge of incoming tech workers during the pandemic. The city was adding 2.52 tech workers for each one it was losing before the pandemic, and it’s kept the ratio well above 2. I wondered if this meant Seattle was on its way to becoming the new tech capital of the U.S., thinking Amazon and Microsoft’s ascents might have something to do with it. But Kimbrough looked at LinkedIn’s data along with other housing data and poured cold water on the idea. “We believe a lot of these moves are likely short-term,” she said. “We expect to see tech talent returning to legacy tech hubs like the Bay Area when offices reopen.” In other words, beware the narrative.
by Alex Kantrowitz (Big Technology)