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  • - [Narrator] This is Hudson Yards.

  • Late in 2019, Facebook completed a lease

  • for over 1.5 million square feet of space

  • across three buildings in the area.

  • Amazon also has an office down the street.

  • And if you go further down the Hudson River,

  • you'll find a cluster of buildings

  • leased or owned by Google.

  • It seems like everyone in tech wants

  • a piece of New York City's West Side.

  • - There's a reason that most of the major

  • big tech brand platforms are based in a few places.

  • They wanna be near each other

  • and they wanna be near some of the same resources.

  • - [Narrator] Mark Muro is a fellow

  • at the Brookings Institution,

  • a Washington DC think tank.

  • He and other economists call

  • this clustering agglomeration.

  • - Agglomeration is the tendency of economic activity

  • to gather, or cluster, or clump together.

  • It happens because there are often benefits

  • to businesses, workers, and institutions

  • being close to each other.

  • - [Narrator] That clustering can build up an economy,

  • but there's a catch.

  • - Even the winners don't feel like winners.

  • If you're in traffic choked, expensive San Francisco

  • you don't feel like the current clustering

  • is working for you,

  • and neither does anybody else in the United States

  • and in the Heartland.

  • - [Narrator] To understand how an agglomeration gets going,

  • consider New York City.

  • Tech clusters typically rely

  • on a robust pool of workers

  • and the labor pool in New York

  • is more educated than the national average.

  • Analysts say that it's become difficult

  • to find qualified workers

  • in hotspots like Silicon Valley,

  • which makes New York attractive for expansion.

  • Experts say that labor is key.

  • - Obviously, we've seen these clusters develop,

  • you know, all over the world.

  • The reason they occur is because,

  • when you draw people together

  • they learn from each other.

  • - [Narrator] Capacity for growth on the far West Side

  • grew in the 2000s during Michael Bloomberg's

  • run as city mayor.

  • Doctoroff was his deputy.

  • - We did 140 separate rezonings of the city.

  • Often of old, under utilized, industrial land

  • that opened up the capacity to develop

  • all sorts of new areas.

  • So, we embarked on a massive expansion

  • of capacity for space.

  • - [Narrator] The city also extended the subway

  • for the first time in 25 years.

  • - [Dan] One of the big problems

  • on the West Side of Manhattan

  • was there was no great way to get over here.

  • $3 billion was invested in the extension of the subway

  • into the area as well as other infrastructure.

  • - [Narrator] Also the city provided land

  • and millions of dollars for a new Cornell Tech campus.

  • - Cornell Tech plays a crucial role

  • in the New York tech ecosystem.

  • Often times, the research really shows is that

  • universities catalyze that kind of collaboration

  • better than almost any other institution.

  • - [Narrator] All this new development

  • laid the groundwork for tech companies

  • to open offices on the West Side,

  • forming a cluster of highly skilled workers.

  • - A big agglomeration of say high-tech economic activity

  • is simply going to be more productive

  • and more competitive than others

  • because think of what it has close proximity,

  • highly specialized workers,

  • highly specialized providers of business services.

  • - [Narrator] Research from Mr. Muro and others

  • suggest that workers who live in these clusters

  • tend to be more productive than those who don't.

  • Here's a chart that measures

  • output per worker by industry group.

  • Workers in industries like manufacturing or retail

  • tend to be more productive

  • if they're in a top cluster.

  • That advantage stretches further

  • if you're a worker in an innovation industry.

  • The effects are so potent

  • that some of the cities who've generated clusters

  • are pulling away from the rest of the country.

  • But that poses challenges for Americans

  • both in and outside the clusters.

  • - You only have to look at the complaints

  • of people who live in Seattle or the Bay Area

  • to see that very serious negative implications

  • of excessive or poorly managed agglomeration.

  • - [Narrator] Like the tech hubs

  • in Seattle and San Francisco,

  • New York has issue with affordability.

  • Late in 2019, the median home in New York City

  • sold for $563,000 which was much higher

  • than the national median.

  • A similar story unfolds in the commuting data.

  • Most states in the New York metropolitan region,

  • have commute times well above national averages.

  • And in the city proper,

  • commute times are on the rise.

  • In some cases,

  • tech workers earn enough to make the pain worthwhile

  • and that's encouraging educated people

  • to leave smaller cities.

  • In the big coastal cities,

  • wage and employment levels are outpacing

  • other parts of the country.

  • - We have Google, Facebook, Amazon combined

  • over 20,000 jobs in the near future.

  • We have 9,000 startups in New York City.

  • It's increasingly true that

  • every company is a tech company.

  • Whether you're in finance,

  • whether you're in real estate,

  • whether you're in fashion, media.

  • You name it,

  • all of these sectors are already headquartered here,

  • and they need people who understand

  • and know how to build technology.

  • - [Narrator] In regions further from the top,

  • incomes and employment levels aren't keeping pace,

  • which sends a message.

  • - For the foreseeable future,

  • to really have a great career in tech in America,

  • you probably do need to head out to

  • the Bay Area, or New York, or Seattle

  • and work for one of the big tech titans.

  • I think that's an unfortunate reality in the United States.

  • (upbeat music)

- [Narrator] This is Hudson Yards.

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