Ro Khanna, US Representative for California’s 17th District, is not acting like your typical politician.
“I care about my district,” says the 39-year-old former Department of Commerce official. “But we also have an obligation to the nation.”
He is urging his talent to move away.
California’s 17th District includes Silicon Valley, cradle of the technology-based new economy. But rather than maintain a stranglehold on the industry, Khanna is urging tech firms to expand into the Midwest, away from his own constituency. Why? Because, as he explains, the survival of the new economy, born in Silicon Valley, depends on sharing its tech wealth with the rest of the United States. Including the entire country in the future of the economy, nurturing skills here at home and keeping jobs from moving offshore and creating new jobs in the service economy through the tech industry all factor into Khanna’s vision of the economy that lies on the near horizon.
If Khanna’s ideas of spreading the seeds of technological innovation across the Midwest gain traction, the economic landscape of the country could change dramatically. And at the core of that change would be the movement of the millennials – the largest demographic in the labor market today, and the main players in the ever-evolving, ever-growing technology sector.
Tech Sector May Already Be Diversifying Away
In a huge move, Microsoft has announced the 2018 opening of a new Technology Center in Detroit. The computer-age powerhouse has had a tech center facility in a Detroit suburb since 2010, but this new endeavor is a sign that the fortunes of the Motor City, in steady decline in recent years, may be on the rebound.
Meanwhile, on the other side of the Wolverine State, another tech-based endeavor is developing. ConstructionDive tells us that data center company Switch, whose clients include Google, eBay and Amazon, has chosen to build a new $5 billion facility in Grand Rapids, Michigan.
Great! But… do two companies, both moving to Michigan, comprise a “Midwesternization” of the tech industry? Maybe not. But they represent something that seems to be happening on a broader scale, as Business.com explains in their creatively-titled piece on the subject, “Venture COWpital? Tech Investing Hits the Midwest”.
“The Rust Belt is making a comeback!” Business.com says, reporting on the dozens of recent new startups in Ohio and Michigan and the millions and millions of dollars in venture capital that have gone into them. They further point out that the Midwest, besides playing host to some well-established tech firms like Groupon and ExactTarget, “…is also home to a number of major universities, including Ohio State, Michigan University and Indiana University, as well as numerous, high-ranking smaller colleges,” adding that,
“(T)here’s a general trend of top graduates going to work at start-ups rather than big corporations. Start-ups located in areas more familiar and closer to home, not to mention with lower costs of living than on either coast, are all attractive components.”
Imagine all those tech wizards, all those innovators migrating en masse to Silicon Valley – a place that, by the way, 40 years ago was little more than apple orchards and grassy hills. Now imagine all those young minds bringing their ideas and skills to a fresh new environment.
A year ago CBS reported on the rise of “Silicon Prairie”, likening Lincoln, Nebraska to a mini Palo Alto with its 100+ software startups and revitalized commercial areas. Meanwhile, VentureBeat offers this surprising read on the pulse of startups in Columbus, OH and all over the Midwest. Yes, California is the world’s 8th largest economy, but guess what? The Midwest is the 5th – and larger than other, more well-known, more venture-capital-attracting locales overseas, like India and Shanghai. Oh, and the Midwest graduates more computer science degrees than any other region or country on planet Earth.
Construction is underway in Michigan; Lincoln, NE is “great”; And Columbus rents for $1 per square foot. As it were, it seems plenty of techies already call the Midwest home. But is the wave of further reinforcement from the coasts to the cornfields really on its way?
To be sure, not everyone is abandoning the idea of operating along the coast. In January, the Globe and Mail explained the “race” for Boston that shoe companies are making. New Balance, Converse, Reebok and Rockport are all players in an industry seemingly bent on making Boston the center of the footwear world. And the lion’s share of tech investment dollars still goes to the northeast and the left coast. On top of this, at least one person thinks that convincing millennials on a large scale that the Midwest is the place to be is going to be a tough sell. After all, Columbus and Lincoln can hardly measure up to San Francisco in terms of culture, climate, excitement and environment. But in attracting these future homeowners, the Midwest has one major trump card: the low cost of housing. And if enough do make the move to these Midwestern cities the rest, as they say, will follow. (Except maybe the climate.)
Is Affordable Housing the Key to the Millennial Movement?
Despite the affordability and all the potential brewing, millennials are not yet sold on the Midwest. ABC Denver reports that their city only ranked 8th on Mayflower’s most recent ranking of cities most millennials moved to. The top two? San Fran and LA. The next four? Three are on one coast or another, with only Chicago breaking up the monotony. No Columbus, Ohio. No Lincoln, Nebraska. Not a single city in Michigan.
ABC also reports that millennials are by and large “vacation movers” – meaning they move to an area with no intention to remain long-term. This concept is echoed by our friends at ConstructionDive, who add the variable of home-buying into the mix as they try to figure out what is going on in the millennials’ collective heads. Their view? Millennials are planning to buy – but in the suburbs of the coastal cities that, for now, remain the darlings of these mobile millennials.
The Economist has an even less optimistic view of the millennial (anti-)movement, explaining their counterintuitive argument that millennials, for all their freedom and opportunity, simply aren’t moving much.
“More millennials lack the anchors that have previously rooted people in place: they are marrying later, having children later and buying homes at lower rates than previous generations did… Yet despite the loosening of such ties, both short- and long-distance migration have decreased among 25-to-34-year olds since 1995.”
Millennials’ ability and desire – or lack thereof – to become homeowners is one major factor that the Economist points out. The main answer to whether the millennial generation is on the move, however, remains obscured. The one thing that seems sure is that “if it continues, the decline in migration among millennials could spell trouble. Americans become less likely to move as they get older. If they’re staying put now, millennials probably won’t shift for better opportunities later on either.”
For the Midwest to realize their tech-driven reawakening, they may need their computer science graduates to stay close to home. And hope Representative Khanna can realize his own ambitions for spreading the tech wealth across the middle of America.
Otherwise it’s up to the millennials themselves to begin their move away from the coasts.
Only time, and tech firms, will tell.