That Big Tech Exodus Out of California? It Didn't Happen

"Wannabe innovation hubs from coast to coast have been slavering over the prospect that the work-from-home revolution triggered by the COVID pandemic would finally break the stranglehold that California and Silicon Valley have had on high-tech jobs," writes a business columnist for the Los Angeles Times. "Here's the latest picture on this expectation: Not happening." That's the conclusion of some new studies, most recently by Mark Muro and Yang You of the Brookings Institution. They found that although the pandemic brought about some changes in the trend toward the concentration of tech jobs in a handful of metropolitan areas, the largest established hubs as a group "slightly increased their share" of national high-tech employment from 2019 through 2020. (Emphasis theirs....) "[T]he big tech superstar cities aren't going anywhere," Muro told me. "There's a suggestion that we're on the brink of an entirely different geography. I don't think recent history or the nature of the technologies point in that direction.... " "The California metropolises really do retain their irreplaceable depth and strength," Muro says. "That's not to say there won't be some movement. Early in the period we saw some exiting, especially from the Bay Area, but it turned out that much of it was within California, rather than to Kansas." This shouldn't be too surprising. The value of concentrated ecosystems in nurturing innovation has been documented for decades.... The pandemic-driven shift to remote work does seem to have opened entrepreneurs' eyes at least to the potential for doing away with centralized workforces. In a recent survey of tech startup founders, the share of respondents saying they would prefer to start a firm with an entirely remote workforce from Day One rose to 42.1% in 2021 from only 6% in 2020. Among physical locations where the founders said prefer to launch their businesses, however, San Francisco still dominated, at 28.4%, with New York a distant second.... Unlike service industries such as leisure and tourism, most tech industries experienced barely a hiccup in their long-term growth trends during the pandemic. The column also questions when, "if ever," work-from-home jobs will become a significant share of the workforce. "Full-scale work-from-home only applies to about 6% of workers, UC Berkeley economist Enrico Moretti says. That's triple the 2% level of the pre-pandemic era, but still an exception to the rule."

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