Tech Hubs Are Losing the Talent War to Everywhere Else

Originally published in The Wall Street Journal, December 22, 2023

As the tech industry grows up, talent and funding are spreading out. That’s bolstering smaller cities all across the country.

Silicon Valley and other tech hubs are losing the tech talent war. Metro areas that consistently attracted huge numbers of tech workers have hit a turning
point, according to fresh data from labor-market analytics firm Lightcast, crunched by D. C. think tank Brookings. The share of the nation’s tech workers who work in places such as Silicon Valley, San Francisco, Boston, New York, Los Angeles and the greater Washington, D. C. area is actually shrinking.

Driving this change are technology ecosystems cropping up throughout the U. S. that keep innovation and investment more local. In addition, non-tech companies are employing more tech workers than ever before, reducing the need for them to relocate.

On the winning side of that trade are places like Denver, Salt Lake City, Miami and Nashville. Three of the biggest winners are in Texas, with Dallas, Austin and Houston seeing some of the most significant gains between 2020 and 2022. Local boosters haven’t started calling it “Techsas” yet—but perhaps they should.

This trend has been gaining momentum for years, and was accelerated by the pandemic and the shift to remote and hybrid work. Until now, data suggested that while traditional tech “superstar cities” were adding more tech jobs, other cities far from those hubs were also adding such jobs.

What’s different now is that the latest data shows that some metros aren’t just seeing their share of the total U. S. tech labor force shrink. These areas are seeing their tech labor force shrink in absolute numbers, says Mark Muro, a senior fellow at Brookings who conducted the analysis.

Silicon Valley is one, and lost nearly 1, 400 tech workers in the two years leading up to 2023. Thanks in part to hiring freezes and rounds of layoffs at tech giants in the area, that trend is likely to have accelerated in 2023, and to continue into 2024.

Meanwhile, the booming Dallas-Fort Worth metro area gained 30, 000 tech jobs over the same two-year period.

What best explains this shift are two long-term trends, which are only now becoming evident. The first is that local tech ecosystems are taking root and establishing their own feedback loops far from traditional tech hubs. They have investors both inside and outside their communities funding new tech companies, which then grow and create clusters of talent that attract and help launch other local tech companies.

Invictus Global Management -statistics

The other trend is that the number of tech workers at every kind of company continues to grow. By now it is almost a cliché to say that every company is now a tech company, but it is worth emphasizing that the data on where tech workers are employed now bolster that supposition.

Around 60% of the tech workers in the U.S. and Canada are employed at what are traditionally deemed non-tech companies, in industries such as healthcare, education and energy, according to a 2023 report on tech talent from real-estate firm.

In the battle for tech talent, both of these trends favor fast-growing cities with a broad base of employers.

An illustrative example is the e-commerce startup, which cracked a $1 billion valuationin June of this year, after launching just 2½ years earlier. Founded in Houston, moved its headquarters to Austin in 2021, only to return to Houstonin November.

The company moved to Austin to hire software developers, says co-founder Remington Tonar. But is a logistics company as well as an e-commerce services provider, and its leaders found the company’s rapid growth required a bigger city with a larger and more diverse talent pool, including skills that go beyond just software development.

“If I’m looking for front-end software devs who can build beautiful tools to perform one task, a place like San Fran or Austin may be better,” says Tonar. “But if I need people who can integrate digital and physical systems, Houston is a lot more attractive, because people are coming out of logistics and energy.”

A lot of tech innovation still happens in places like the Bay Area—witness the highly concentrated boom of new artificial-intelligence companies there. But as the tech industry as a whole has matured, it is following the pattern of every previous industrial revolution: knowledge, capital and talent is spreading out, across America and the world.

Chris Howard is the founder and chief executive of Houston-based Softeq, an engineering contractor that helps other tech companies make software and hardware. He has been building tech companies in the Houston area for more than 40 years, and for most of that time the city had little of the support infrastructure to foster new tech startups, he says.


When Houston failed to make even the first cut of cities in the running for Amazon’s second headquarters—which eventually went to Northern Virginia—it was a wake-up call for business and civic leaders, he adds.

Houston now has approximately 30 startup development organizations, including a startup incubator founded by Howard—Softeq Ventures. One of these organizations, The Canon, is where Tonar met his co-founder.

While these Silicon Valley-style tech incubators can be instrumental in creating new companies, it is the ever-increasing reliance on tech at existing companies—and especially tech developed and maintained in-house—that is driving much of the tech job growth in many cities.

Steve Case, who founded AOL and now runs Revolution, a firm focused on investing in companies outside of the traditional tech hubs, expects these trends to continue partly because tech workers flow to where they are needed and capital often follows. Furthermore, the U.S. government is investing billions into tech in cities that aren’t the traditional hubs— through, for example, the Chips Act.

“The mindset has shifted pretty dramatically from when we first started talking about this over a decade ago,” says Case, who is co-chair of the National Advisory Council on Innovation and Entrepreneurship, a committee under the U.S. Department of Commerce. “Now, when I see people in Congress or the White House or other places, it’s on everybody’s minds. Seven years ago, it was on very few people’s minds.”

This story has been abridged and continues here on The Wall Street Journal website.

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