TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

Tech Jobs, Talents, and the

Local Economy
William Yu
Economist, UCLA Anderson Forecast
September 2019

This report provides three analyses: (1) A summary of statis-
tics of tech job growth by metro. (2) The relationship among
tech job growth and local economic growth and low-skill
job growth. (3) The association between human capital and
tech job density.
It is well known that the tech industry has been doing well
over the past several years. Google, Facebook, Apple, Ama-
zon, and Microsoft are among the most valuable companies
in the world. They inspire many startups and venture capi-
talists to pursue the same dream and hope for a successful
outcome. As a result, Silicon Valley, Silicon Beach, Silicon
Forest, and other cities have become the envy of the world
for their explosive growth. Furthermore, here we investigate
how much the tech industry impacts the rest of the local
economy in these cities, particularly for low-skilled workers.
We begin our analysis by using occupational data in which
we can obtain the median wage of each occupation. We
believe that this skill-based statistic will provide more de-
tailed insights than an industry-based one. Figure 1 shows
the median wages of 22 major occupations in the U.S. in
May 2018. The highest-paid occupation is management,
receiving a median of $104,000, followed by computer and
mathematical at $86,000, legal at $80,800, and architecture
and engineering at $80,000. The two lowest-paid occupa-
tions are personal care and service at $24,400 and food
preparation and serving related at $23,000.

Figure 1 Median Wage of 22 Major Occupations in the U.S. in May 2018

Management
Computer and Mathematical
Legal
Architecture and Engineering
Business and Financial Operations
Healthcare Practitioners and Technical
Life, Physical, and Social Science
Education, Training, and Library
Arts, Design, Entertainment, Sports, and Media
Construction and Extraction
Installation, Maintenance, and Repair
Community and Social Service
Protective Service
Office and Administrative Support
Production
Transportation and Material Moving
Healthcare Support
Sales and Related Median wage
Building and Grounds Cleaning and Maintenance for all occupations
Farming, Fishing, and Forestry ($44,800)
Personal Care and Service
(Thous $)
Food Preparation and Serving Related

$20 $30 $40 $50 $60 $70 $80 $90 $100 $110

Source: Occupational Employment Statistics

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TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

Figure 2 Employment of 22 Major Occupations in the U.S. in

May 2018

Office and Administrative Support

Sales and Related
Food Preparation and Serving Related
Transportation and Material Moving
Production
Education, Training, and Library
Healthcare Practitioners and Technical
Business and Financial Operations
Management
Construction and Extraction
Installation, Maintenance, and Repair
Personal Care and Service
Building and Grounds Cleaning and Maintenance
Computer and Mathematical
Healthcare Support
Protective Service
Architecture and Engineering
Community and Social Service
Arts, Design, Entertainment, Sports, and Media
Life, Physical, and Social Science
Legal (Millions)
Farming, Fishing, and Forestry

0 2 4 6 8 10 12 14 16 18 20 22

Source: Occupational Employment Statistics

Though it is far from perfect, to simplify the calculation, we
define the high-tech workforce as those who are in the com-
puter/mathematical and architecture/engineering categories,
which are the two highest skill and highest wage occupations
besides management and legal. Figure 2 displays the total
employment of these 22 occupations. Across the U.S., there
are about 6.9 million people in the high-tech workforce. In
contrast, there are about 18 million Americans in the two
lowest wage sectors – food preparation (e.g. restaurants)
and personal care.
Tech Jobs by Metro
Furthermore, from 2010 to 2018, San Francisco has seen the
biggest tech job increase - 73,000 new jobs, followed by New
York (66,000), San Jose (59,000), Atlanta (51,000), and Los
Angeles (50,000). It is natural to see a large metro with a
large tech workforce, so it is also useful to look at the density
Figure 3. Top 10 Metros with Most Tech Jobs in 2018
400
2010
2018
300
(Thous)

Where are those tech jobs allocated in the U.S.? How much
have they been growing over the past decade? Based on 200

the above methodology, Figure 3 lists the top ten metros

(MSA) with the largest tech workforce in 2018 along with 100
the number of jobs in 2010 as a comparison. In 2018, New
York had the largest tech workforce with 403,000 tech 0
jobs followed by Washington DC (296,000), Los Angeles
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(280,000), Dallas, Chicago, San Francisco, Boston, San Jose

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(Silicon Valley), Seattle, and Atlanta.

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Source: Occupational Employment Statistics

66–California UCLA Anderson Forecast, September 2019

 TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

Figure 5 Top 10 Metros with Highest Tech Job Wages in 2018, a positive spillover impact on the local economy. However,
with Tech Jobs Over 50,000 they can also create a negative impact. For instance, high
growth pushes up home prices, which drives local residents
16% 2010
out of town or may even drive them to homelessness. But
2018 which effect is greater?
12%
Let’s take a look at the correlation between the growth of tech
8%
jobs and the local economy to begin to understand the effect.
Figure 6 shows the correlation between the changes of tech
4%
jobs and total payroll jobs among 387 metros from 2010 to
2018. The strong correlation and a steep slope suggest that
tech job growth could lead to higher total job growth in a
0%
local area despite its accompanying negative externalities.
tin

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Note that in Figure 6, some metros, such as New York, L.A.

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Ba and Dallas, have a higher ratio than the average of total job
ng

Fr
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growth to tech job growth. One possible reason could be that

W

Source: Occupational Employment Statistics
of those jobs. Figure 4 displays the top 10 metros with the
highest percentage of jobs in tech occupations, excluding
those smaller metros with less than 50,000 tech jobs. By this
measure, San Jose is the number one “tech city” with 17.2%
of jobs in tech occupations. Seattle is number two (9.6%),
followed by Washington DC (9.5%), Austin (8.6%), San
Francisco (8.3%), Detroit (8.3%), Raleigh (8.2%), Denver
(7.7%), Boston (7.2%), and Baltimore (6.9%).
these metros have other foundation jobs as local economy
drivers. For example, New York has finance jobs and L.A.
has entertainment jobs.
Figure 6 Correlation Between Changes of Tech Jobs and Total
Jobs Among 387 Metros in the U.S. from 2010 to 2018
1,200,000
New York
1,000,000
Change of Total Jobs from 2010 to 2018

L.A.
800,000
Figure 5 presents the top 10 metros with the highest median
wages in the tech occupations in 2018, which could reveal Dallas

the skills and quality of these tech jobs by metros. It is not 600,000
Chicago
surprising that San Jose is number one with the median Atlanta S.F.
wage of $120,000, followed by San Francisco’s $112,000, 400,000 Seattle
and Seattle’s $108,000.
Detroit San Jose
200,000
Tech Jobs and Local Economy
0
Since the tech industry scales and exports its high value-
added goods and services for national and international
-200,000
markets, it produces high salaries and high wages. This, in -10,000 0 10,000 30,000 50,000 70,000
turn means that tech employees often have much greater
income and purchasing power than the majority of residents Change of Tech Jobs from 2010 to 2018
in the area where their company is based. As a result, these
tech jobs could be called a “foundation” for a local economy. Source: Occupational Employment Statistics
On the one hand, they can be an economic driver and create

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TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

In theory, high-skill jobs that lead to a prosperous local Figure 8 shows the correlation between the median wages
economy will boost low-skill jobs as well. Figure 7 presents of tech jobs and low-skill jobs in 2018. We can see a strong
the correlation between the changes of tech jobs and the two positive correlation. By and large, a metro with a $10,000
lowest skill jobs (food preparation and personal care) among higher wage in tech industry could predict a $1,000 higher
387 metros from 2010 to 2018. Again, we can see a strong wage in low-skill jobs. Figure 9 displays the correlation
correlation between the high-skill and low-skill job growth. between changes of median wages of tech jobs and low-

Figure 7 Correlation Between Changes of Tech Jobs and Low- Figure 9 Correlation Between Changes of Median Wages of
Skill Jobs Among 387 Metros in the U.S. from 2010 to Tech Jobs and Low-Skill Jobs Among 387 Metros in
2018 the U.S. from 2010 to 2018
500,000 $8,000

Change of Median Wage of Low Skill Jobs '10 to '18

Change of Two Lowest Skills Jobs from 2010 to 2018

$7,000
400,000 L.A.
$6,000

300,000
$5,000
New York

200,000 $4,000

S.F. $3,000
100,000

$2,000
San Jose
0
$1,000

(Thous $ )
-100,000 $0
-10,000 0 10,000 30,000 50,000 70,000 $-20 $-10 $0 $10 $20 $30 $40 $50
Change of Tech Jobs from 2010 to 2018 Change of Median Wage of Tech Jobs '10 to '18
Source: Occupational Employment Statistics Source: Occupational Employment Statistics

Figure 8 Correlation Between Median Wages of Tech Jobs and Figure 9A Correlation Between Changes of Real Median Wages
Low-Skill Jobs Among 387 Metros in the U.S. in 2018 of Tech Jobs and Low-Skill Jobs Among 387 Metros in
the U.S. from 2010 to 2018
$-2,200
Change of Real Median Wage of Low Skill Jobs '10 to '18

$30
Seattle
(Thous$)
Boston S.F.
$28 $-2,400
New York
Median Wage of Low-Skill Jobs in 2018

San Jose

$26 DC L.A.
$-2,600
L.A.

$24
$-2,800
DC
$22 New York
S.F.
$-3,000
Houston
Seattle
$20
(Thous $)
(Thous$) $-3,200
$18 $-20 $-10 $0 $10 $20 $30 $40
$40 $50 $60 $70 $80 $90 $100 $120
Median Wage of Tech Jobs in 2018 Change of Real Median Wage of Tech Jobs '10 to '18

Source: Occupational Employment Statistics Source: Occupational Employment Statistics

68–California UCLA Anderson Forecast, September 2019

 TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

skill jobs from 2010 to 2018. Here, we cannot see a clear Figure 10 Correlation Between City Human Capital Index in 2015
correlation between wage growth of these two jobs over the and Tech Job Fraction in 2018
past decade. This implies that the wage linkage between 20%
high-skill and low-skill jobs is less straightforward than
the employment linkage. This might also explain the rising
anxiety about income inequality, in particular at bi-coastal 16%
San Jose

Tech Jobs Fraction in 2018

cities facing higher cost of living. Figure 9A shows the real Huntsville, AL
median wage change by adjusting the cost of living increase
(using a national consumer price index) from 2010 to 2018. 12%
Boulder
It suggests that only half of tech jobs have seen the real wage
growth from 2010 to 2018; even worse, the real wage of low- S.F.
DC

skill jobs declined by $2,000 to $3,000 during this period. 8%

Human Capital and Tech Jobs

4%

Tech jobs, with high productivity and income, seem to propel

local economies and boost low-skill jobs as well. So, how 0%
can a municipality create and attract more tech jobs? That is 110 120 130 140 150 160 170 180
the question the whole world is asking with admiration and
ambition to become the next Silicon Valley. Among several City Human Capital Index in 2015
possible ways, we here focus on one: human capital. In
theory, the tech industry requires highly skilled laborers (a Source: Occupational Employment Statistics
high human capital workforce) to foster a creative and pro- Note: The chart excludes one outlier observation: California-Lexington,
ductive place. Plus, a high-human capital metro will attract MD, which has 26% of tech jobs due to a military base employing many
a more educated workforce to a town and therefore reinforce aerospace engineers.
its talent pool. This is a trend explained by economist Enrico
Moretti in his book: “The New Geography of Jobs.”
that the relationship is more from human capital to tech jobs
Figure 10 displays a clear positive correlation between the than the other way around. Note that there seem to be two
City Human Capital Index (CHCI)1 of a metro in 2015 and outliers in Figure 10: San Jose and Huntsville, AL. The for-
its fraction of tech jobs (tech jobs over total payroll jobs) in mer is the high-tech capital of the world. The latter is home
2018. The reason we use CHCI in 2015 is to demonstrate of an air-defense military base with many rocket engineers

1. An index calculated based on the weighted average educational attainment of local adult resident (age above 25).
For details, see https://www.anderson.ucla.edu/centers/ucla-anderson-forecast/projects-and-partnerships/city-human-capital-index

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TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

Tech Jobs and Migration Silicon Beach

Despite having high human capital, however, a metro might
not find a sufficient supply of tech laborers to meet high
growth demand. What should be done? The answer is that the
city will hire people outside its region with a bit higher re-
cruitment and relocation costs. The migration data is scarce.
Here we use perhaps the best and most accurate migration
data related to migrants’ income from the IRS. The latest
data for county-to-county migration data is from 2015-2016.
Figure 11 shows the average adjusted gross income (AGI per
federal tax return) in 2016 of those who lived outside that
county in 2015, or in other words, the AGI of migrants. In
the vertical axis, we show the percentage of total migration
inflow population over non-migrants for these selected coun-
ties. It is clear that there is a positive correlation between
average income of migrants and the tendency of migration.
That said, high-skill talents are mobile and the tech cities
need them.
Figure 11 Migration Inflow’s Average AGI and the Fraction of
Migration Population, 2015 to 2016
10%
9% Ne w Yo rk County
S.F.
8%
Fraction of Migration Inflow
As shown in Figure 3, Los Angeles is one of the largest
clusters for tech jobs. Although it doesn’t have the highest
nominal wages, its vibrancy and growth are still among the
most competitive. Its nomenclature, Silicon Beach, refer-
ences the proximity of the many startups that are located
near Santa Monica and Venice Beaches. Figure 12 presents
the number of tech jobs by zip code in Los Angeles County.
Due to data availability, we define a tech job as one in the
information sector or the professional, scientific, and techni-
cal services sector here.
The dark red color represents a high number of tech jobs in
a zip code. The dark blue color represents a low number of
tech jobs. Figure 13 displays a different measurement: the
ratio of tech jobs over the total payroll jobs by zip code, or
the tech job density. We get a similar picture. Tech jobs are
concentrated along the Pacific Ocean, from South Bay to
West L.A., Culver City, Beverly Hills, West Hollywood,
Hollywood, North Hollywood, and Burbank.
In contrast, a vast area in South L.A. is covered with a deep
blue color, meaning it has a low density of tech jobs. Why?
Similar to the positive association between human capital
and tech job share by metro as shown in Figure 10, we can
see a positive correlation between human capital and tech
job share even within a county. An area/zipcode with high

Alameda human capital will create and attract more high-paid tech
7% King County, WA San Mateo jobs than other part of a metro. Figure 14 exhibits the City
Contra Costa Human Capital Index in 20132 by zip code, in which a red-
6% San Diego colored area represents a high-human capital region while
a blue area represents a low-human capital one.
5% Santa Clara
Orange County The similarity of the maps implies the idea that the key to
4%
building a vibrant city with shared prosperity for all in the
21st century hinges on increasing human capital, both by
3% L.A.
investing in local education and by attracting talents from
2%
all over the country.  
$40 $60 $80 $100 $120 $140 $160 $180 $200
Average Adjusted Gross Income of Migrant, Thous$

Source: IRS

2. Again, we use CHCI data in 2013 by zip code to enforce the correlation is more from human capital to tech job density in 2018 than the other way
around.

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 TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

Figure 12 Number of Tech Jobs by Zip Code in Los Angeles County in 2018

Source: California Employment Development Department

Figure 13 Density of Tech Jobs by Zip Code in Los Angeles County in 2018

Source: California Employment Development Department

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TECH JOBS, TALENTS, AND THE LOCAL ECONOMY

Figure 14 City Human Capital Index in Los Angeles County in 2013

Source: American Community Survey

• High human capital metros and regions are more likely

Conclusions
The takeaways of the report are as follows:
• The tech industry and its jobs are a driver of the local
economy: its high wages will propel overall job growth
as well as low-skill job growth. But the high-skill job
growth does not guarantee wage growth of low-skill
jobs.
to become tech clusters. A region with high human
capital and tech jobs tends to attract and recruit talents
from outside the region. That said, to build a city with
shared prosperity full of high-paid jobs in the 21st
century, it should invest in its local education well and
meanwhile create an environment, e.g. high quality of
living, to appeal and attract the talents to town from the
rest of the country and the world.

72–California UCLA Anderson Forecast, September 2019