As a world city, New York can’t afford to ignore the Big Five tech firms — Apple, Microsoft, Amazon, Google and Facebook. With a combined market value of about $4.2 trillion, these five goliaths account for more than twelve percent of the dollars in the United States stock market. What they do and where they do it involves the whole society and is very important in the world economy.
As goes New York City, so goes the massive New York metropolitan area. Nobody in Ulster County’s expecting another two-million-square-foot IBM plant — that era’s long over — but for the short term at least the health of the local economy is intertwined with the money Big-Apple commuters, weekenders and seasonal visitors bring northward. This increasingly wired world also offers opportunities for tech innovation in the Hudson Valley that go beyond the local.
According to KPMG Consulting, more than half the respondents to its 2019 Global Technology Industry Innovation Survey believed the center of the tech innovation world will shift four years from now. “The belief that Silicon Valley will be displaced as the leading hub underscores the continuing decentralization of technology innovation, spurred by investment in other cities and regions globally, as well as by contributing factors in Silicon Valley,” said the report. High-profile announcements this year by tech giants helped push New York, Boston and Austin up the ranks of innovation cities.
In answer to a separate KPMG survey question, “Tech industry leaders tabbed New York to become the top tech hub in addition to Silicon Valley.”
“Innovative firms have an incentive to locate near other innovative firms,” explained Berkeley economist Enrico Moretti this February. “It is a tipping-point dynamic. Once a city attracts some innovative workers and companies, its ecosystem changes in ways that make it even more attractive.”
What are the Big Five up to in the Big Apple? Employee head counts for geographic locations are notoriously unreliable.
West Coast-oriented Microsoft has a retail store on Fifth Avenue. Its modest-sized Microsoft Research Lab serves as a research center and recruiting post. Figures on total Microsoft employment in New York City vary widely.
The tech sector in New York City is often overlooked in New York’s huge and diverse economy, tech writer Steve Lohr said in The New York Times last November. Tech work in New York has traditionally been in service of other industries, he noted. “Everything is tech-driven on the West Coast,” Lohr quoted ex-Microsoft Research executive Jeannette Wang as saying. “But the East Coast is more well-rounded. It’s about technology, but not just technology for its own sake.”
Apple is not entirely enamored of New York City’s charms. “New York City is one of five U.S. cities with more than 1000 Apple employees,” Apple recently said on its website. Of the 4300 Apple employees in the Empire State, however, many work in its 21 retail stores.
Apple last December said it would be increasing its New York City workforce “by hundreds of workers.” But it has much bigger plans for other major American cities, especially Austin, where it said it would build a 133-acre campus, at which it planned initially to add 5000 workers to the 6200-person workforce it currently employs in the Texas city.
Amazon is likely to return to the New York City spotlight in some form or another. The aftershocks of the huge kerfuffle after the acrimonious breakdown of negotiations to make New York City the on-line retailer’s second headquarters are continuing. The deal, for which Amazon was asking considerable governmental inducements, would have had a major impact on the city’s tech ecosystem. But it didn’t pan out.
Amazon, which already had about 2000 New York City employees, said then that it would keep adding to its Big Apple workforce. Real-estate people, not always the most reliable of sources, now have Amazon eyeing office space in the Manhattan West megaproject across the street from the even larger Hudson Yards. Amazon is already leasing a nearly million-square-foot warehouse on Staten Island and more space in the Bronx. In late July it was reported to be in the market for a big logistics facility in Brooklyn. Though the pay for distribution jobs in no way compares to the wages that would have been generated by headquarters work, the locations will help Amazon’s ambitions for shorter delivery times.
Real-estate reports of Facebook’s active interest in New York office space have surfaced recently. Facebook currently operates on a lease in part of a large building at 770 Broadway on the outskirts of Greenwich Village. Facebook, which prides itself particularly on its employee perquisites, has reportedly been looking first at less than a million and then a million and a half square feet at Hudson Yards in Midtown. The additional space could house thousands of additional Facebook workers.
Google has so far proven the most sympatico of the Big Five to the New York City vibe. “New York City continues to be a great source of diverse world-class talent,” wrote Google senior vice-president Ruth Porat in December. “That’s what brought Google to the city in 2000, and that’s what keeps us here.” Google had more than 7000 New York City workers last year. Informed estimates expect that number to double in the next decade.
The tech giant announced in December that it would locate its global-business organization at a billion-dollar campus called Google Hudson Square on the West Side of Manhattan between Canal and West Houston streets. Most of the rest of the Google’s rapidly growing New York City workforce is in large Google-owned or leased buildings on the West Side between the Meatpacking District and the Chelsea neighborhood — near the southern end of the High Line. Google and its parent organization Alphabet continue to be expansion-minded in New York City; it seems that not a season goes by without a substantial Gotham real-estate announcement from Google.
New York City is in a strong market position as tech innovation evolves toward software designed for specific industrial situations: e-commerce, fintech, healthtech, cloud or database apps, media, artificial intelligence, etc. Applied technology is the name of the game. “New York’s advantage is its concentration of people in other industries that require technology to solve,” writes Steve Lohr in a February New York Times article. Silicon Valley is still the place to be for pure tech, Lohr quotes Cornell Tech graduate faculty member Deborah Estrin as saying. “But when it come to everything else, New York really has a chance to be the place to be.”
In September 2017, state comptroller Tom DiNapoli’s staff compiled a report indicating that the tech sector in New York City accounted for 128,600 jobs in 2016, and that 111,500 additional workers held tech jobs in non-tech sectors. The larger tech community employed a combined total of 240,100 jobs in 2016.
Applying the job growth rate in 2014 through 2016 to a projection from 2017 through this year would produce an estimate of the combined present total of jobs in the larger tech community in New York City of 280,000 jobs.
The DiNapoli study found that most New York City tech workers were 45 years or younger, that most had at least a bachelor’s degree, that more than a third of them were immigrants, and that a quarter were women. Total wages in 2016 were $18.9 billion.
Using a completely different methodology, the Built in New York organization recently compiled a list of 70 allegedly tech companies which had at least 500 employees and a strong New York presence. The list didn’t include many companies that should have been on it and a few that probably shouldn’t have been. My edited estimate of the New York population of people in some form of tech work for these firms came to about 30,000. In the aggregate, innovative firms smaller than 500 employees undoubtedly employed many multiples of that total.
From its recent track record, the Hudson Valley’s no hotbed of tech innovation. That doesn’t mean that it can’t and won’t have its successes in the future. But it’s more likely it will succeed when its rich culture, sense of community and beautiful environment attract niche players among the urban entrepreneurs and technologists who’d benefit from plying their trade in a less exciting but calmer and less expensive place not far from Gotham.