By David Merkel. Originally published at ValueWalk.
Between 2007 and 2014 the number of tech jobs in New York City grew 58%, compared to just 12% for the US overall and 36% for San Mateo – the original Silicon Valley. Inevitably this leads to the question of what whether New York will be the ‘next’ Silicon Valley, complete with funny nickname.
“When asked where tech firms in the city are located, many New Yorkers will mention Silicon Alley in Manhattan—roughly speaking, the area between the Lower and Midtown Manhattan skylines,” write NY Fed researchers Jason Bram and Matthew Ploenzke.
But they seem to be documenting the importance of IT in general more than a larger shift to New York as the center of the tech industry.
New York is growing fast – from a small base
First, the only reason New York has faster tech job growth than Silicon Valley is because it’s starting from a lower base. The highest concentration of tech jobs is in Middlesex, north of Boston, with Silicon Valley coming in a close second. New York, by contrast, has a slightly higher concentration than the nation at large, but actually had less in 2007, possibly because ambitious young people in New York mostly pursued careers in finance.
The numbers that Bram and Ploenzke are using understate the number of tech workers because self-employed people are left out of the mix. “The count also does not include the self-employed—for instance, web designers, programmers, and other consultants who work on contract and are not on any firm’s payroll,” they write.
But this is a pretty big omission when Silicon Valley is defined by tech entrepreneurs trying to turn their idea into the next billion dollar startup. It’s not just that it undercounts the raw number of jobs, it ignores a key ingredient.
Silicon Valley is defined by tech innovation, not just job counts
The assumption seems to be that a critical mass of “tech” jobs is what you need to have an innovative culture like Silicon Valley, but tech just kind of permeates business at this point. Even craftspeople whose brand depends on traditional handicraft are most easily found on Etsy. As the economic center of the country, you would expect New York to play its part in the tech industry. All we’re seeing right now is New York catching up with the rest of the country.
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