High-tech firms urged to stem middle class flight from big cities
US tech firms have migrated from suburbs to cities to tap start-up talent in urban areas, and hollowed out middle-class neighbourhoods in the process, writes Richard Florida in the MIT Technology Review. Florida suggests the tech sector should work with cities to ensure affordable housing, public transport to outlying areas, and upgrading of low-wage service jobs so that "superstar" cities maintain access to the pool of service providers they will need to survive.
The migration of high-tech startups to cities is less of a reversal and more of a historical correction. In 2006, the venture capital icon Paul Graham said that for all its power, Silicon Valley had a great weakness. The high-tech “paradise” created during the 1950s and 1960s “is now one giant parking lot,” he said. “San Francisco and Berkeley are great, but they’re 40 miles away. Silicon Valley proper is soul-crushing suburban sprawl. It has fabulous weather, which makes it significantly better than the soul-crushing sprawl of most other American cities. But a competitor that managed to avoid sprawl would have real leverage.”

For years, economists and mayors believed that high-tech development would “lift all boats.” The reality is a new phase of winner-take-all urbanism.

And that’s what happened. Urban areas provide the diversity, creative energy, cultural richness, vibrant street life, and openness to new ideas that attract startup talent. Their industrial and warehouse buildings also provide employees with flexible and reconfigurable work spaces. Cities and startups are a natural match.

For years, economists, mayors, and urbanists believed that high-tech development was an unalloyed good thing, and that more high-tech startups and more venture capital investment would “lift all boats.” But the reality is that high-tech development has ushered in a new phase of what I call winner-take-all urbanism, where a relatively small number of metro areas, and a small number of neighborhoods within them, capture most of the benefits.

Middle-class neighborhoods have been hollowed out in the process. In 1970, roughly two-thirds of Americans lived in middle-class neighborhoods; today less than 40 percent of us do. The middle-­class share of the population shrank in a whopping 203 out of 229 U.S. metro areas between 2000 and 2014. And places where the middle class is smallest include such superstar cities and tech hubs as New York, San Francisco, Boston, Los Angeles, Houston, and Washington, D.C.

Despite all this, it wouldn’t make any sense to put the brakes on high-tech development. Doing so would only cut off a huge source of innovation and economic development. High-tech industry remains a major driver of economic progress and jobs, and it provides much-needed tax revenues that cities can use to address and mitigate the problems that come with financial success.

The tech startup boom has brought billions of dollars of venture capital into urban areas like San Francisco. It’s also driven out the middle class and caused a wave of resentment.

But if high-tech development causes problems, and stopping it doesn’t solve those problems, what comes next?

High-tech companies should—out of self-interest, if for no other reason—embrace a shift to a kind of urbanism that allows many more people, especially blue-collar and service workers, to share in the gains of urban development. The superstar cities they’ve helped create cannot survive when nurses, EMTs, teachers, police officers, and other service providers can no longer afford to live in them.

Here’s how they can do it. First, they can work with cities to help build more housing, which would reduce housing prices. They can support efforts to liberalize outdated zoning and building codes to enable more housing construction, and invest in the development of more affordable housing for service and blue-collar workers.