Who makes $200K? - Generocity Philly

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Sep. 9, 2021 8:56 am

Who makes $200K?

Tech has made many richer. Through a Technical.ly data analysis and the start of an ongoing series, we look at what it means that at the same time, in many American cities, racial income inequality is worsening.

(Generocity graphic)

In lots of ways, Austin, Texas is in an enviable position.

The boomtown’s population nearly doubled between 1990 and 2020. For nearly 40 years between 1980 and 2020, the Austin metro area grew by more than 4% a year. Economic development executives have made it a fable: a dusty town developed a funky identity tied up in live music and a mix of low-tax conservatism with urbane progressivism. That lured enough entrepreneurs and creatives to light an economic fire. The percentage of that city’s high-income earners who work in tech nearly doubled between 2009 and 2019. Before a pandemic stumble, the city annually hosted SXSW, perhaps the world’s most plagiarized music festival-slash-business conference.

Far from innovation’s fertile crescent of Silicon Valley and the world’s elite global cities of New York, Tokyo and Shenzhen, Austin is meant to be a model that other regional cities should follow. Policymakers and local commerce officials from around the world travel there to eat queso and try to capture the magic.

It’s important then that city officials, civic-minded entrepreneurs and an influential class of tech workers consider: Just what are we attempting to replicate? Or put a different way, if tech economies are important because of their fast-paced economic growth, and if city and state officials routinely cite tech growth as a tool for making more equitable economic gains, then we should be asking: Who is our tech economy making richer?

This is the start of an ongoing Technical.ly series we’re calling “Who makes $200k? Wealth, race and economic mobility in American cities.”

Racial equity in tech has been an editorial focus of ours since our founding in 2009. In the last year, we’ve heard how Black and brown small business owners in places like tiny Wilmington, Delaware and Philadelphia have accessed the wealth creation of entrepreneurship. We’ve routinely looked at systemic, cultural and macroeconomic trends that contribute to income and, in turn, wealth inequality by race. We’ve found local trends and nuance to hard truths: Race predicts wealth to an unsettling degree, and in many ways, the Black-white wealth gap hasn’t shrunk since 1968.

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We kept returning to a straightforward question: If income is the path to wealth and if wealth begets wealth, what do Black and brown professionals have to say about the tech economy’s role in lessening — or contributing to — income inequality?

This series starts with deep dives into  Washington DC, Baltimore, Delaware, Philadelphia and Pittsburgh — each of five U.S. tech economies that Technical.ly reports daily on. We’re profiling high-income earning entrepreneurs and technologists and interviewing economists, academics and advocates. This all builds on a months-long data journalism project and a thorough review of existing research — including our own work tied to the Most Diverse Tech Hub Initiative from the City of Philadelphia.

In 2019, more than one in 10 of the people who earned at least $200,000 in Austin worked in tech, according to this Technical.ly analysis, and their numbers have swelled. The overall percentage of Austin residents who earned at least $200,000 in 2019 (3.11%) was 60% higher than a decade earlier (1.94%) — a truly staggering rate of growth unrivaled by other rising tech boomtowns like Chicago or Miami or rich cities like Boston or DC. That is a remarkable feat for a relatively low-cost city with a still nascent, if ascendent, tech economy.

The trouble is that for an industry trying to right racial disparities, the gains have been uneven.

The percentage of high-income earning Austin residents who were white spiked by more than a third. Since Austin’s white population also grew rapidly in that time, that means thousands more high-earning Austinites were buying houses, saving for retirement and perhaps even investing in private companies. At the same time, the percentage of Black high earners in the city jumped nearly 70%. The percentage of high-earning Asian residents in Austin doubled, though from a low base. Austin’s Latinx community also lagged behind both their white and Asian counterparts in terms of growth rate, though its overall numbers are higher than the Asian population of high earners.

This project works mostly in percentages both because it’s the most effective way to translate between cities of various sizes, and because the underlying Census data is a survey sample, not a true census; all figures are estimates. Another limitation is that the industry data do not track the racial backgrounds of those represented within it, so we don’t know how the percentage of high-earning tech workers breaks down by race. However, we do know that tech as a sector overall is disproportionately white. When DC topped a 2019 list of top cities for diversity in STEM, 59% of its tech workers were white — though just 45% of the city was. The stats are much worse in other major hubs.

But people stories are best told with people. So with that preface, consider the following for demonstration purposes only. In the Austin example, following the logic that 11.88% of high earners overall work in tech, let’s say that 11.88% of high earners for each racial population also work in tech. (Again, we don’t know that they do, because of the data’s limitations — and given the racial disparity in tech overall, we know that they likely don’t — but stay with us for the sake of illustration.) Between 2009 and 2019 in Austin, the number of white tech professionals earning at least $200,000 grew from almost 1,500 to nearly 3,400.

By this same logic, in 2019, how many high-income tech earners in Austin were Black? Put another way: What would be the number of highest-earning Black tech pros in one of the country’s hottest, largest and most admired tech economies? Sixty-three, up from 29 in 2009.

The number of both white and Black high-earning tech workers would have more than doubled, growth rate-wise, but in the best case scenario, in the last decade of fast-paced growth, tech would have contributed no gains in lessening this scourge. The result is that one of the country’s fastest-growing tech cities isn’t lessening racial income inequality. It is likely making it worse.

If other cities are following Austin’s example in other ways, they’re following in this way, too.

A third of the size of Austin, Pittsburgh is another mid-sized regional U.S. city with a growing reputation for tech talent. The percentage of that city’s high-income population that worked in tech got a 10% boost between 2009 and 2019, though starting from a lower base. Around 2.3% of white Pittsburghers earned at least $200,000 in 2019, and the percentage of its small Latinx population earning that much spiked, too, as it did for its Asian population. But the city saw a decline of its high-income earning Black residents. Despite celebrated tech and economic gains for the city, there were likely fewer high-earning Black residents in Pittsburgh in 2019 than there were in 2009. For a city that has committed itself to inclusive innovation, that is a damning reality.

The percentage of high-income earners in each race and ethnicity group increased in Philadelphia, but its growth was slower than most other cities we reviewed — and still faster among white residents than people from other racial backgrounds. As many as 13,500 Philadelphia residents who earned at least $200,000 in 2019 were white, and closer to 2,000 were Black. (This, in a majority-Black city.) Philadelphia has its own unique story: as one of the lowest-cost big cities, it welcomed a wave of remote tech workers during the pandemic — but that low cost of living contributed to a lower share of its population earning more than $200,000, especially in tech, which played a smaller role in Philadelphia than other big U.S. metropolises.

In other ways, a city’s overall fate can be explored by tracking its high-income residents. Baltimore’s Black population of high-income earners outpaced people of other races — but only because the city has continued to lose population, especially among its highest-earning residents.

These findings are just the first part of Technical.ly sharing the results from a yearlong investigation of high-income earners examining who they are, what they do and where they live. This kicks off an initial phase of reporting over the next several weeks, which will lead to further review. The goal is to approach race-based income inequality in a new way. Discussions of racial income and wealth inequality focus on poverty reduction efforts for good reason, but this can prove limiting. One analyst called it an example of “deficit thinking,” looking only at Black and brown income through what some don’t have. In contrast, this series intends to focus on wealth creation, specifically high-income earners inside surging local tech economies — which many politicians and advocates pin their hopes on.

This series comes at a pivotal time. Just as Black and brown unemployment reached historic lows at the peak of the country’s longest sustained period of post-war economic growth, pandemic lockdowns shuttered the global economy. COVID-19 upended an already unsteady balance in American life, and the response has led to uneven recoveries — fortunes ballooned for some, while millions of others were thrust into chaos. Global-leading fiscal stimulus and controversial monetary policy succeeded in pumping up the American economy. But the gains managed to still benefit most those already doing well.

Generocity just published a yearlong report on how Philadelphia’s philanthropic sector responded to the economic, social and health crises of the last 18 months. It ran in contrast to the relative comfort for many remote-working professionals. Brookings called the COVID-19 recession “the most unequal in modern U.S. history.”

This series will come in three parts. First, we produced a deep dive into federal data in a way that it has never been compiled before. Next, we interviewed dozens of Black and brown professionals who are thriving inside tech economies. (This includes a series we’ve done on Black and brown small business owners in various cities.) Finally, we’ll bring this all together in a final report that includes the reporting Technical.ly is releasing this week and the feedback we get from you.

We need you to be part of this series. Consider this the start, not the end of this focus: What do you know that we don’t, or what do you think we need to come to understand about how tech economies are growing wealth in U.S. cities? Email me at chris@technical.ly or Technical.ly Managing Editor Julie Zeglen at julie@technical.ly if you have any questions, additions or thoughts.

Why are we using $200,000 as the threshold? It’s a nice round number of substance. It is rare — the median salary of a software engineer in Philadelphia is “just” $116,000, well-above median income but far from this higher threshold. Someone earning $200,000 is well within the top 10% of income earners in the country. It also has practical resonance: Someone who earns at least that can be an accredited investor by federal SEC guidelines, meaning those people can help create new wealth.  The consequences of having more high-income earning residents of various races means the opportunity for a more equitable economy.

Who backs up the data? Enhancing reporting and analysis by Technical.ly, we engaged Julie Christie, a data journalist with Resolve Philly, a journalism collaborative with whom we frequently partner. We’ve shared our methodology on Github.

What are the earliest takeaways from months of reporting and data analysis?

  • Tech economies are, in fact, increasing the number of high-income earners in cities. Economic development execs and policymakers are rational in pursuing this strategy for economic growth.
  • Cities have very different outcomes for the growth rates in high-income earners by race. Some saw declines, other surges. Percentages and numbers tell different stories. Lessons can be drawn from them all.
  • Wealth inequality will not be structurally resolved without income equality. It is crucial to review the performance of high-growth areas of our economies for gains, or losses in this pursuit.

To help these big ideas resonate in this series, Technical.ly is telling people-centric stories of Black and brown entrepreneurs and technologists who have seen their fortunes grow as part of the tech economy.

This initial series of ours starts with those within city boundaries but we hope to extend this into a county-by-county analysis. Similarly we’ve only begun our analysis of how industry roles, racial identification and region play together. This work predates the release of the 2020 Census, which told a story of continued big city importance and growth in the South and Southwest. Our framework can incorporate that newer data in the future, though we’re more interested to see how the enormously disruptive COVID-19 pandemic will play out. Demographers agree it’s far too soon to be sure about that.

In this way, the city of Austin remains a telling case study. But it’s not alone. The story of American economic disparities are told through its cities and, as this series will show, the tech economies that are contributing mightily to economic growth.

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