2017 LEX: SEATTLE
SEATTLE'S ECONOMIC TRANSFORMATION
Researched & written by: Dan Cornpropst & Brittany Smith
Even in economics, every action has a reaction.
What U.S. city was No. 1 in GDP growth in Q4 of 2016 and is experiencing double the population growth of Silicon Valley resulting in an economic transformation? The answer is Seattle, Washington1. How has Seattle achieved this success? The better question is why and what can Hoosier leaders learn from the pattern.
Silicon Valley in California has long been known as where the “action happens” as the tech hub of America. The epicenter for venture capitalism, Silicon Valley accounts for 40% of the total venture capital invested across North America2. This investment produces strong economies but has also yielded an imbalance of jobs and housing over the years in the region. Much of the talent recruited to Silicon Valley is fresh grads accepting opportunities at Facebook, Apple, Google, etc. But, as these young tech professionals move through “life stages” and begin to have families, the “trendy 300 square foot loft” no longer meets their needs. From 2010 to 2015, 450,000 people migrated to the bay area and only 25,000 single-family housing permits were issued. In fact, the Silicon Valley Competitiveness and Innovation Project’s 2016 benchmarking study says, “Skyrocketing housing prices and increasing traffic congestion are eroding our quality of life and causing many residents to relocate to other parts of the country.”
So, how do organizations amassing billions of dollars a year in investment and revenue react to keep an engaged and productive workforce? They move. Quickly emerging as the second tech hub of the country, Seattle has been a benefactor of this reaction offering more affordable housing, less congestion and traffic, a low tax and regulation business climate rich with a large pool of “tech-talent.” Thus leading to remarkable economic performance for the city and residents of Seattle.
What can Hoosier leaders learn from this pattern? Seattle is not the only city benefiting from this growing trend of companies migrating away from dense population centers. In 2016, Salesforce a San Francisco based cloud-computing company raking in 8.4 billion in annual revenue3 opened a regional headquarters in Indianapolis. In the company announcement, a talented workforce and a low-tax, low-regulation business climate were mentioned as influential factors in the decision. Salesforce’s move to Indy has resulted in 5,000 high paying jobs, 40 million dollars in investments and a commitment of 100,000 employee volunteer hours for Indiana nonprofits each year4. Could Indy be on the verge of an economic transformation like Seattle? Are state and city leaders prepared to partner with companies making strategic moves away from dense population centers in pursuit of a talented workforce and a healthy business environment? According to a recent Georgetown University study, by 2020, 62% of jobs in our state will require a post-secondary education and only 42% of central Indiana residents have the credentials desired creating a talent gap in our region for high demand knowledge and job skills. Hoosier hospitality isn’t enough. Our leaders need to act swiftly with a targeted plan positioning Indianapolis as front-of-mind when companies react to their growing pressures. If so, Indianapolis will be the next economic transformation story.
2Martin Prosperity Institute
4Salesforce Press Release
5Georgetown University Center for Education Workforce Analysis