Effects of the COVID-19 Pandemic on the Geography of Technology Analysis

Recently Brookings produced a piece that outlined the effects of the COVID-19 pandemic on the geography of technology.  It provides some evidence-based analysis that there has been movement from the traditional tech hubs.  In the article, Brookings describes the traditional hubs as: Austin, Boston, Los Angeles, New York City, San Francisco, San Jose, Seattle, and Washington DC.

At one point in the last decade, this group of 8 MSAs had more than 53% of the total technology industry workforce.  There is an important distinction though.  The technology industry is not the same thing as technologists, and thus, the analysis should be seen at least in part with skepticism regarding technology workers.  Not every great engineer works for FAANG, some work for ConAgra, Mutual of Omaha, or other businesses that are technology enabled.

The industry is defined to include only six NAICs sectors (see below).  This is important for two different reasons.  First, Lincoln and Omaha do pretty well in certain industries that were measured but not every category.  This illustrates some of the relative weakness in a smaller population geography. But, it also illustrates the depth of employment in some of the key technology industries. For example, Omaha has 2.03 LQ (twice as dense) and ranks as the 12th most dense MSA for NAICS 5112.  It has roughly 3650 employees in this industry.  Lincoln has employment of over 1300 in NAICS 5112, Software Publishers, and an LQ of 1.94.  This is unusually high against all metro areas placing Omaha and Lincoln near the top of the 273 MSAs measured.  

Second, in looking at BLS occupational data from 2020, the key point is that these cities make up a huge percentage of total employment – almost 20%.  They make up about 30% of technologist employment, but that number is dramatically less than the technology industry employment of 50-53%.  This suggests that technologists are more widespread.  For example, against the 8 highest performing communities, Omaha and Lincoln finish ahead of Los Angeles and New York on a percentage basis.  And, Omaha and Lincoln are both higher than the national average by a significant margin.

 All JobsSoftware Jobs (15-0000)Technologist Employment in MSATotal of All Employment
Los Angeles58225101747103.001%4.19%
New York88343703054303.457%6.35%
San Francisco23308001587306.810%1.68%
San Jose110297014401013.057%0.79%
Washington D.C.30222002423508.019%2.17%

There are many reasons that the technology industry is centered in large cities, not the least of which, is that they are large cities that have more stuff generally.  But, it is closer to the point to measure them based on density where Omaha and Lincoln are competitive, and other Midwest communities, such as Madison, excel than strictly based on industrial clusters.  This is not to say that the industrial clusters as measured by employment by NAICs is incorrect, just incomplete. 

The analysis attempts to provide other data that illustrate the point of technology employment without using BLS data (the gold standard).  For example, the EMSIBM data lists of job postings are described in the article (which can be found at https://economicmodeling.com/job-posting-dashboard/.  According to the EMSI dashboard, there are more than 1.070 million “Professional, Scientific, and Technical Professional” job postings on the web.  Nebraska has 7.952 thousand of those postings.  Thus, Nebraska’s technical jobs in demand make up about about 7.5% of total job postings in this space.  Many of these include remote work and other ways that this is a misnomer, but it is still a signal that Nebraska – and in particular, Omaha and Lincoln have a disproportionate number of technologist jobs – including many in the technology industries.

Clarifying this data is one of the goals of the Nebraska Tech Collaborative (“NTC”), a workforce initiative of the Aksarben Foundation, in 2022.  For this reason, NTC has hired an economic consulting organization to do an analysis of the Nebraska technology workforce and industry.  The data shows that it is important, but it is also often forgotten by national organizations when they are doing their analysis.  Being a small population state means that Nebraska often must prove its place at the table, rather than receiving default consideration based on one type of data analysis.

In conclusion, the Brookings report is an interesting read and has many good policy and analytical points, but it is weakened by cherry-picking certain data and not fully fleshing out the analysis’ weaknesses.  To an experienced analyst, the whole in the industry versus workforce data is glaring, but it does not naturally stick out to many that may read this analysis without that additional insight.