By Shayndi Raice and Janet Adamy
Decisions by Amazon.com Inc. and Alphabet Inc.'s Google to add
tens of thousands of jobs to New York and the Washington area
reflect a growing divide in the U.S.
A few big cities, particularly on the coasts, are soaking up
high-tech talent and are also becoming wealthier, more liberal and
more ethnically diverse -- shifting the economic, political and
cultural landscape of the nation.
Smaller cities are also pulling in educated workers, but are
having trouble competing for the nation's most prized jobs and
biggest projects, while rural areas are falling behind.
In the past 10 years, employment in U.S. cities has grown 7% and
the number of businesses in these places has grown 11%, while
employment has contracted in nonmetro areas and the number of
businesses there has barely changed, according to Labor Department
data.
Big shifts in how people work and live over the past generation
are behind the change. As global competition dried up manufacturing
jobs in small towns, the U.S. became more dependent on the growth
of knowledge and service jobs that tend to proliferate in dense
places.
Five cities -- New York, Chicago, Dallas, Houston, San Francisco
-- accounted for a third of all Fortune 500 headquarters and half
of Fortune 500 firms' profits last year, according to research by
Richard Florida, a professor at the University of Toronto, and his
colleagues. The Washington area, which had just four corporate
headquarters in 1975, was home to 17 headquarters last year. New
York had 70, more than any other U.S. city.
"For those that were watching [the Amazon competition] and using
it as some sort of bellwether for how the coasts and the heartland
are doing, they are coming away saying we're still in an era where
the rich are getting richer both in terms of people, companies and
now cities," said Joseph Parilla, a fellow at the Brookings
Institution.
When startups began locating in cities in the 1990s, many
experts predicted that because the internet allowed people to work
from anywhere, tech workers would scatter across the country as
firms sought cheap office space.
Instead, places like Silicon Valley and Seattle proved that
clusters of highly skilled workers fueled innovation at a faster
pace. That supercharged places that were already doing well,
drawing in more educated workers who wanted to live in walkable
neighborhoods with nice restaurants and hip entertainment.
"Every giant of the long-distance internet economy that chooses
a traditional city location only reinforces the view that new
technologies work well in dense settings," said Edward Glaeser, an
economics professor at Harvard University.
When Amazon announced it had winnowed its finalist cities to 20
places earlier this year, small cities like Columbus, Ohio;
Indianapolis and Pittsburgh saw a chance to spread out the
country's economic growth. Their dearth of technology workers put
them at an insurmountable disadvantage.
In Dallas, former Amazon executive Matt Rutledge said he wanted
his city to land HQ2 but worried about the dearth of tech talent.
He said Dallas has many developers in the energy and financial
sectors, but few of them are looking for work. "I've had trouble
finding a big talent pool of developers that are available in the
workforce," he said.
Diversity was also high on Amazon's lists of priorities for its
new home, according to its initial request for proposals and people
familiar with its thinking. The company wanted a location with lots
of women in the workforce and many ethnicities.
Among all of Amazon's U.S. finalist cities, the New York and
Washington metro areas rank third and fourth, respectively, for
having the most diverse populations, according to a Wall Street
Journal analysis of census figures. They are behind Los Angeles and
Miami. The Indianapolis, Nashville and Pittsburgh metro areas took
the bottom three places on the diversity list.
The new concentration of work could influence America's
political map. College-educated workers are increasingly moving to
the Democratic Party. The influx of skilled jobs in New York and
Washington is likely to make those areas even more heavily
Democratic, said Karlyn Bowman, senior fellow at the conservative
American Enterprise Institute.
"It could exacerbate the urban-rural divide; there's no
question," she said.
Shifting political preferences have shown up in Arlington, where
Amazon plans to put its Virginia office, and the 17 cities and
counties in Northern Virginia that are part of metro Washington. In
the 2000 presidential election, Republican George W. Bush got 49%
of the vote, beating Democrat Al Gore by 2 percentage points. By
2016, the area had flipped to become heavily Democratic, with
Hillary Clinton taking 60% of the vote to Donald Trump's 34%.
Johnna Reeder, former president of the group that prepared
Cincinnati's Amazon bid, said the city had sought to impress the
company with its efforts to turn itself into a tech hub. It wasn't
enough. "We just didn't have the volume, the scale that was
necessary," she said.
Still, it's not exactly a winner-take-all economy for the
biggest metro areas. Prof. Glaeser said small and midsize cities
with educated populations are still benefiting from their
combination of skilled labor and lower costs, just on a smaller
scale.
In Pittsburgh, for example, officials say the city's high
quality of life is key to nurturing the former steel town's tech
sector. Allegheny County Executive Rich Fitzgerald pointed to the
area's parks, cultural amenities, professional sports teams and
major universities as playing a role in attracting major companies
such as Uber Technologies Inc., Facebook Inc., Google, Microsoft
Corp. and Amazon.
Kenny McDonald, head of the economic development group that ran
Columbus's Amazon bid, said city officials focused on making it a
better place to live with the hope of drawing a talent base that
would then lure employers. That was a switch from older economic
models that revolved around getting the jobs first.
The unemployment rate in Columbus hit 3.6% in September -- lower
than the New York City area's rate of 3.9%.
--Scott Calvert, Paul Overberg, Dante Chinni and Valerie
Bauerlein contributed to this article.
Write to Shayndi Raice at shayndi.raice@wsj.com and Janet Adamy
at janet.adamy@wsj.com
(END) Dow Jones Newswires
November 14, 2018 19:03 ET (00:03 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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