Who Benefits in a Tech Hub?

Many mayors, economic developers, and economists believe that high-tech industry is a key factor in the growth and development of cities. Enrico Moretti of the University of California, Berkeley famously found that five additional jobs are created for every high-tech job. Still, local residents in high-tech hubs have voiced growing concerns about rising housing costs, escalating gentrification, and the widening economic gap between rich techies and just about everybody else. My own work has shown that the nation’s leading tech hubs number among its most unequal places.

A new study from Neil Lee and Andrés Rodríguez-Pose at the London School of Economics, published in the Annals of the American Association of Geographers, takes a closer look at who benefits and who suffers from high-tech development. To get at this, it examines data on the effects of the tech industry (mainly information technology and biotech) on wages and poverty levels for some 300 U.S metros between 2005 and 2011. It measures poverty as the share of families in a metro that are below the federally defined poverty line. While the average poverty rate in these metros rose from 13.7 percent in 2005 to 16.5 percent in 2011, the share of technology employment declined slightly, from 4.5 percent in 2005 compared to just 4.3 percent of total U.S employment in 2011.