The gap between the SaaS and the SaaS-nots is growing

The innovation gap between cities with many and few tech jobs is increasing.


December 11, 2019

The innovation gap between cities with many tech jobs and those with few is increasing, according to a recent report from the Brookings Institution

A small handful of cities have cornered the “innovation sector” (which Brookings defines as jobs in 13 industries ranging from software publishing to chemical manufacturing) widening the gap between coastal tech hubs and other cities.

In fact, 90% of growth in innovation-sector jobs occurred in just 5 cities.

So, who were the winners and losers?

San Francisco, Seattle, San Jose, Boston, and San Diego came out on top in what Brookings described as a “winner-takes-most” race to capture tech talent. 

But while those 5 cities and a few others expanded their slices of the innovation pie, 343 cities saw their slices shrink, including Los Angeles, Chicago, Dallas, Philadelphia, and DC.

In this game, it’s not always great to be a ‘winner,’ either

As the richest cities get richer, they must also contend with a number of growing pains that range from soaring home prices to worsening traffic.

Take the San Francisco Bay Area: Cities throughout the region have struggled to adjust to soaring costs of living and widespread homelessness that have accompanied the influx of wealth and investment.

So, where does all that leave us?

The authors of the study suggest that the federal government should select 8-10 non-coastal cities and pump them with as much as $700m apiece over the next decade to spur research and development. 

But not everyone agrees with this top-down approach, and some states are taking matters into their own hands. 

Take the Buckeye State: Venture capital investment in Ohio has almost tripled since 2013 thanks to state-level initiatives to facilitate growth in the tech sector.

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