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Thanksgiving weekend is the biggest US migration of the year, with nearly 30 million Americans expected to travel by plane alone.
Many of those travellers are millennials leaving the coasts, to where they have migrated, and heading back to their hometowns. Many of those hometowns, particularly in the Midwest, wish they would stay, particularly if they work in the growing tech sector. Cities such as Indianapolis, Detroit, Cleveland, Kansas City and St Louis are the cities that AOL founder and tech investor Steve Case means when he encourages the “rise of the rest”. As Ron Klain, an Indiana native who is now an experienced Washington political hand and vice-president for Revolution LLC, Mr Case’s investment firm, predicts: “Over time, young talent will move to those places where exciting new jobs — not to mention more reasonable real estate prices and more modest overhead — exist.”
The data, however, paint a gloomier picture. Berkeley economist Enrico Moretti, author of The New Geography of Jobs, argues that the US economic map shows what he calls “the Great Divergence”. He documents a growth gap between “cities with the ‘right’ industries and a solid base of human capital”, which feeds a virtuous cycle of growth and success, and “cities with the ‘wrong’ industries and a limited human capital base”, which are then ”stuck with dead end jobs and low average wages”.
Mark Muro of the Brookings Institution builds on Mr Moretti’s arguments by showing that even as the digital services sector — software publishing, data processing and hosting, computer system design, and a handful of additional services — is spreading to more cities across the US, its growth is still exacerbating inequalities between cities. San Francisco, San Jose, Dallas, Austin, Seattle, and a handful of other cities keep increasing their lead over cities with much smaller tech sectors, even as tech keeps growing.
And yet Indianapolis; Charlotte and Raleigh, North Carolina; Madison, Wisconsin; Provo, Utah; Nashville, Tennessee; Louisville, Kentucky; and Jacksonville, Florida, are among the cities that have seen their share of the national digital services market increase from 2010 to 2015, even if only by a fraction of a percentage point. The two US states showing the largest percentage increase in software jobs from 2014 to 2016 were Kansas and Indiana (although those states started with a low base compared with California or New York).
Some Midwest cities are also starting to recruit aggressively for tech talent. In Indianapolis, for instance, the industry association Techpoint has launched an “Xternship” programme encouraging students from around the country to take summer jobs with local tech companies, ensuring that they improve their view of Indy as a desirable place to live after graduation.
Moreover, focusing on the geography of jobs typically omits the demography of families. Millennials are the largest generation in the United States; older millennials (born in the 1980s) are now in their early to mid-30s, prime time for buying a house and having a family. Hot tech hubs such as Silicon Valley, Austin, Seattle and the New York area have equally hot real estate markets. Various lists of where millennials are most actively buying houses all show a willingness to move off the coasts into more affordable heartland communities. According to the mortgage data firm Ellie Mae, the top city for millennial homebuyers is Athens, Ohio.
Millennials with children also have a renewed appreciation for their own parents — as grandparents willing to pitch in with childcare. And as Baby Boomers age, X-generation children will be feeling the tug to care for their parents. Anecdotal evidence from techies who move back to the Midwest bears out these family reasons, although it is hard to document trends. Still, “family reasons” comprise one-third of the stated reasons that Americans move overall — it is hard to imagine that engineers from top schools such as Purdue, the University of Michigan, the University of Illinois and the University of Wisconsin will escape these pressures.
Finally, the next phase of the digital revolution is the internet of things. The Midwest is the traditional home of makers — of cars, tractors, machines and household appliances. Companies such as Deere & Co, Carrier or Ford may have shifted manufacturing abroad, but the design, engineering and innovation is still concentrated back home. Those jobs may be less sexy than billion-dollar start-ups, but they will be stable and well paid. On Thanksgivings to come, Midwest cities seeking to grow their tech sectors should have more and more to be thankful for.
The writer is president of New America and an FT contributing editor