Leading high-tech firms have increasingly gone from heroes to villains in the eyes of their neighbors. It’s in their own interest to help make cities more affordable and inclusive.
Dynamic entrepreneurial companies have long been the drivers of America’s economic growth, and innovators like Andrew Carnegie, Henry Ford, Thomas Edison, and Steve Jobs held up as heroes. But today, high-tech companies are increasingly cast as villains. Uber was recently thrown out of London; Airbnb has been criticized for taking housing off the market and driving up rents; and Google, Amazon, and Facebook are described by many as monopolies. In recent years, firms like these and the techies who work for them have come under fire for driving up housing prices and contributing to growing inequality—especially in the San Francisco Bay Area.
Mounting anti-big-tech sentiments are also gaining strength in Washington, D.C. “We’ve got to start having a conversation in this country: How are we going to measure the success of the tech sector?” said Senator Cory Booker, a potential 2020 presidential candidate, this past summer. “Is it by its ability to create a small handful of billionaires, or the ability for us to create pro-democracy forces—empowering individuals, improving quality of life, improving financial security, expanding opportunity—the kind of things we want largely for democracy?”
Booker’s words speak to the larger structural forces at play in the tech industry right now, but on a local level, the backlash against big tech is closely related to a major shift in the nature and location of the industry. Not too long ago, the high-tech industry was a product of the suburbs. But over the past decade or so, tech startups and tech workers have headed back to cities and urban neighborhoods.
While many large, high-tech companies like Facebook, Google, Apple, and Microsoft have their main campuses in suburban areas, cities and urban areas house the majority of venture capital–backed startups. My own research estimates that 55 percent of all venture capital investment now flows to urban neighborhoods. In the Bay Area and Boston–Cambridge, more than 60 percent of venture capital investment gravitates to these neighborhoods; in Greater New York, nearly 85 percent does.
In my latest Martin Prosperity Institute study, I show how startups reinforce the class divisions that stand at the heart of the new urban crisis. The maps below show the overlap between the locations of venture capital–backed startups and the locations of the three major classes—the advantaged knowledge and tech workers of the creative class, the low-paid contingent workers of the service class, and the declining blue-collar working class— in America’s three leading tech hubs, San Francisco, New York and Boston-Cambridge.
In San Francisco, venture capital–backed startups are clustered in creative-class neighborhoods around downtown, SoMa, and the Mission District, spreading into the historically upscale neighborhoods of Pacific Heights, the Marina, and Russian Hill. The less advantaged service class occupies the historically disadvantaged areas of the city, especially Chinatown and the Tenderloin, right next to the densest concentrations of venture capital in the world.
In New York, startups are clustered in a tight band in Manhattan that runs virtually all the way from Central Park South to the tip of the island, and there is also a major cluster in downtown Brooklyn. This overlaps with the uber-gentrified neighborhoods that line the lower half of Manhattan, from the Financial District through Tribeca, SoHo, the Village, Chelsea, and Murray Hill. For all the talk of gentrification in Brooklyn, the creative class is confined almost exclusively to the northwestern part of the borough. The less advantaged service class orbits the city’s privileged core.
In Boston and Cambridge, startups again align with advantaged creative-class neighborhoods, which are tightly clustered in and around Boston’s downtown core, from the Financial District and the Seaport to upscale Beacon Hill and Back Bay. There is an even bigger cluster of high-tech startups near MIT in Cambridge, where an astonishing two-thirds of residents are members of the creative class. Although not shown on this map, the creative class also clusters along the Route 128 high-tech corridor in towns like Waltham. The less advantaged service class is concentrated in a tight band outside downtown Boston, mainly in South and East Boston and around historically black Roxbury and near Logan Airport, as well as in the suburbs.
The way that tech companies accentuate today’s urban class divides highlights the need for these companies to step up to the plate and address the mounting new urban crisis at work in our superstar cities and leading tech hubs. This is all the more urgent given the federal government’s current retreat from—or in some cases outright attacks on—cities and urban areas.
As the five most highly valued companies in the world, Apple, Google, Microsoft, Amazon, and Facebook, as well as many of their peers, have the resources and capabilities to help address America’s deepening urban divides and move toward inclusive prosperity. But it’s also in their interest to do so.
To start, tech companies can work closely with cities to build more housing, helping to increase supply and bring down steep housing costs. In particular, they should invest alongside local governments and non-profits to provide subsidized affordable housing for local residents, as well as workforce housing for their own service workers who endure long and arduous commutes.
Next, tech companies can work with state and local governments to support additional and improved public transit. Instead of establishing private shuttle services for their own workers, which looks selfish, they can invest in better public transit for all.
Finally, and most critically, tech companies must work to upgrade service jobs. They treat their own knowledge workers and techies like gold, paying them lavishly and offering them all manner of perks from onsite restaurants and cafeterias to child-care and health-care facilities. But they pay the workers who staff these facilities poorly, and often outsource the work to contractors. High-tech companies have the resources, knowledge, expertise, and platforms to upgrade these jobs, and they can pioneer a template for other companies to do so.
How quickly America’s high-tech companies have gone from heroes to villains. It’s now in their interest to give back to cities and embrace inclusive prosperity. This not just do-goodism. It is in their own self-interest if they want to protect the value of their elite (but quickly slipping) brands, as well as the economic viability of the great cities they call home.