Enrico Moretti: Where the Good Jobs Are—and Why:
It is a tipping-point.... Once a city spawns some innovative companies, its ecosystem changes in ways that make it even more attractive to others.... Salesforce, Twitter and Yelp in downtown San Francisco increases the city's appeal to other high-tech entrepreneurs.... Scientists and software engineers are not the only ones who thrive as a result... for each new innovation-job in a city, five additional jobs are created... professional occupations (lawyers, teachers, nurses) but also nonprofessional occupations (waiters, hairdressers, carpenters). For each new software designer hired at Twitter in San Francisco, there are five new job openings for baristas, personal trainers, therapists and taxi drivers. The most important effect of high-tech companies on the local economy is outside high-tech.
This matters for wages, too. In 1980, salaries for workers with a high-school diploma in Austin and Raleigh were significantly lower than the national average. Then those cities became important hubs for IT and life science, respectively. Salaries are 45% higher, and the gap keeps expanding. High-school graduates in Austin and Raleigh don't work harder or have higher IQs. The ecosystem around them is different. Most industries have a multiplier effect. But none has a bigger one than the innovation sector: about three times as large as that of extractive industries or traditional manufacturing. Clearly, the best way for a city or state to generate jobs for everyone is to attract innovative companies that hire highly educated workers.