New Critical City Infrastructure: A Tech Workforce

Recently I was in Austin for the SXSW conference, and I was floored by the infusion of ideas, energy, creativity and innovation across the days and days of sessions, the music, and other content. This event is a trademark for the city, bringing close to 280,000 people there from around the world.

Austin also is very proud of being interesting and diverse – its slogan is “Keep Austin Weird.” While it has this distinct, unique and abstract culture, it’s also adding tech jobs at an unsustainable rate. Austin just welcomed in Tesla, which is adding 20,000 jobs to the city, along with Oracle, adding another 5,000-plus jobs.

While the jobs are rushing in, demand for housing is escalating and Austin cannot keep up. Right now, according to another SXSW session discussion, the Austin market only has enough housing inventory to last 10 days. So, while bringing in these tech companies may be an economic boost to the city, there are most definitely compromises.

“Cities need to invest in housing and infrastructure,” said Patrick McKenna, executive chairman at Facet Wealth, and founder at One America Works, who participated in the session. “Cities become too expensive for missing middle and creatives, who are the people who make the city cool, but then they can no longer afford to live there. Demand comes in and pushes from the top down, squeezing out the people who make it interesting, diverse.”

So, while Austin is attracting these large technology companies that are bringing jobs and economic growth, this expansion could be threatening the heart and soul of the city.

Double-Edged Sword

Leaders from Tulsa and Miami were in the session as well and both have strong initiatives to attract technology to their cities, yet also deal with providing the right balance between aggressive growth and creating healthy communities.

Nicholas Lalla is the co-founder and managing director of Tulsa Innovation Labs, and he recognized the opportunity for Tulsa to attract residents to a higher quality of life and a lower cost of living just as the legacy technology hubs were losing luster. He launched a program with a systematic approach that linked investment with education, which due to its success has become a prime example for other cities nationwide.

“As Tulsa Innovation Labs works to establish a thriving and inclusive tech industry in Tulsa, we’re cognizant of how important that sense of community is to the city,” Lalla said. “It’s not only important from an economic development perspective, but it’s also a critical value of our city, and we have to be intentional in nurturing it going forward.”

As Tulsa’s technology economy grows, the city will need to continue to build affordable housing and be mindful of the unintended consequences of tech-focused growth that has happened in other places like San Francisco. Lalla knows that Tulsa cannot blindly replicate these other places—it needs to focus on inclusive growth, and housing is a critical asset to sustaining that positive trajectory over time.

Currently, the Tulsa region is an affordable place to own a home with median rent sitting around $1,300 per month, and the median list price for a single family home at about $200,000.

New housing solutions are being developed to fill the need to build community as programs like this bring in tech workers to new innovation centers across the country. One such project is Casata, a neighborhood that recently opened in Austin.

“We view ourselves as a new category of housing that fits just in between multifamily and single family, taking the benefits of both to a community,” said Zain Mahmood who serves as the co-founder and COO at Casata. “Casata started in 2020 because during the pandemic there was a big issue with loneliness. Suicide rates went up, especially with millennials. We wanted to build something that gives people their own space, but also some sort of connection.”

The first Casata community is in Austin and has 66 units on 6 acres, 20 miles from the new Tesla plant. The rent for the micro-homes is in line with the apartment rents in the area, priced between $1,400 to $1,865 per month.

The property has a full-time campus alchemist who focuses on art, philanthropy, and physical activity. Technology also helps connect residents so that they can communicate with each other and so that they can book services such as dog walking, cleaning, laundry, and renting furniture.

The Casata project also offers community-building amenities such as a pool and gym, vegetable garden, coworking space, food trucks, entertainment space, dog parks, and walking trails. Plus, 10% of the property is reserved for short-term rental so that friends and families can rent a place to stay when they come to visit.

Chicago’s Bronzeville Lakefront project also aims to deliver a balance between attracting technology workers and creating community.

“Chicago Mayor Lori Lightfoot has been committed to inclusive growth and growing our tech ecosystem since the beginning of her administration,” said Morgan Malone, the managing director of strategic initiatives and operations at Farpoint Development, part of the project’s joint venture team. “With catalytic investments such as Invest SouthWest and her support of Bronzeville Lakefront and workforce opportunities for underserved Chicagoans, the city is turning every lever to support talent development in the tech industry.”

The Bronzeville project team also focused on cultural preservation through a unique development process that actually engaged the community with the intention of building a stronger sense of belonging.

The Remote Pandemic Endemic

Attracting and keeping technology companies in a city is a huge priority for many cities, especially now as the world is shifting because of the pandemic. Plus, technology jobs can be more valuable than other sectors because, according to McKenna, each technology job has four to five downstream jobs associated with it.

“More cities need to be exporters of services, not people,” he said. “These are the new working-class jobs. You need diverse work types to have a diverse community. You don’t want all software developers; it has to be jobs that last a while.”

Cities not only have to attract companies that offer entry level jobs in technology, but also need to create programs to identify opportunities for people to get upskilled locally. Lalla says that Tulsa’s program is focused on building global capacity in inclusive ways.

“Tulsa Innovation Labs doesn’t spend time chasing company headquarters,” he said. “We want to connect entrepreneurs to venture capital. We also dedicate money to universities to position them as centers of innovation, so that we can create high quality and diverse tech talent.”

Eric Gavin is the executive director for Venture Miami, an initiative to bring together academics and other leaders in order to grow tech innovation. One of the group’s key initiatives is working with universities to educate and to create better access points for people within the community to technology jobs, and at the same time, to strengthen technology programs.

“There is a lot of experimentation,” Gavin said. “We don’t dictate someone’s path in tech, but we help them at whatever level they are at.”

However, it isn’t as simple as that. While cities are creating programs to effectively recruit technology companies and their associates, there is now the incalculable risk factor of remote work. McKenna says that before the pandemic, only 7% of the working force was remote, during the pandemic it went up to 50%, and is eventually settling into the high 30s.

“Companies now have to offer a remote option,” he said. “If you are a company and trying to hire and requiring people to move, it’s going to result in 40% fewer applicants.”

Gavin says that Miami considers remote work a steppingstone to get people into the community.

All of the panelists agreed that interest from venture capital is a leading indicator of a city’s technology success. If a city can continue to attract venture capital, it will still be able to attract technology companies.

While there are many factors that need to be considered when attracting a tech workforce, including housing, McKenna believes that the formula for success is investing in a technology workforce like an asset.