Law of economics slays faddish trends - jobs go to low cost centers

From The Tech Economy’s Untold Story by Joel Kotkin. You look at the numbers and there is a different story than from the headlines.

Companies that make and sell an actual physical product or service, such as Intel, tend to locate in the suburban periphery, or in more affordable metros. Apple already has more than 6,000 employees in Austin—roughly half the number projected to work at the company’s new spaceship headquarters in Cupertino—which includes its hardware-engineering division. The kind of talent that is often cited as a reason to locate in core cites varies as well. While no location competes with Silicon Valley when it comes to engineers per capita, some of the largest centers for technical professionals include Houston, Bakersfield, and Dayton, as well as Boston and San Diego. Overall, most so-called superstar cities have fewer engineers; Los Angeles is barely at the national average, and New York ranks below.

Different imperatives are at work if you’re looking for engineers as opposed to coders. Engineers tend to be long-term employees who seek to buy houses and raise families; they want to move to affordable locales. Engineering-oriented companies have thus been leaving expensive urban centers like New York, Los Angeles, and San Francisco. Amid the recent tech boom, California has seen the departures of such legacy firms as Bechtel, Jacobs Engineering, Occidental Petroleum, Toyota, and Nissan. Most recently, McKesson, a pharmaceutical distributor with the sixth-highest revenues on the Fortune 500 and a mainstay of downtown San Francisco, decamped to suburban Dallas.

These patterns are already having an effect on the tech sector, which remains more robust in Silicon Valley than in San Francisco, where computer and math-related employment growth has plummeted from third nationally, between 2010 and 2016, to 25th today. In 2017, Orlando and other rising Sun Belt upstarts, including Las Vegas and Atlanta, paced the big gainers for such jobs. Perhaps more surprising, Midwest cities like Cleveland and Kansas City are growing up to twice as fast as the national average in this critical field, and far faster than self-described “tech hubs” like Washington, Los Angeles, Boston, or San Diego. New York presents itself as a major node of the tech universe, yet its computer-related jobs growth was only 0.8 percent in 2017—40th out of 53 metros. New York’s appeal is less for manufacturing innovators than for “softer” segments of the information economy like media, entertainment, and advertising, which is why media-centric firms like Google locate there.

According to data from the EMSI consultancy, this movement away from superstar cities toward more affordable locales like Houston, Dallas, Jacksonville, Orlando, and Nashville is happening in other industries, too, such as finance and business services. Cost of living is a huge factor. Wages may be higher in superstar cities, but when you figure in the costs, not even including taxes, incomes in Nashville, Minneapolis, Detroit, Columbus, and Houston are higher than in Seattle, let alone in New York, Los Angeles, and San Francisco.

Simply put, the geography of jobs, even high-paying ones, may be shifting, but not entirely in the ways that the mainstream narrative suggests. Overall job growth in the big urban centers—outside of Seattle, Amazon’s home base— generally has slowed. New York, Los Angeles, and San Francisco last year enjoyed job growth of barely 1 percent—50 percent below Sunbelt cities like Nashville, Orlando, Dallas, and Houston.