December 11, 2018 / 9:36 PM / 7 months ago

Breakingviews - Big Tech has a mission in U.S. flyover country

Microsoft Chief Executive Officer Satya Narayana Nadella speaks at a live Microsoft event in the Manhattan borough of New York City, U.S. on October 26, 2016. REUTERS/Lucas Jackson

WASHINGTON (Reuters Breakingviews) - If the big U.S. tech firms want more friends in Washington, they could try looking in flyover country. Facebook, Google and others have built businesses that mostly aid the richer, coastal parts of America. It’s in the interior that they can do particular good, by creating more jobs. That would be a slow but long-lasting way to build support.

Tech bosses say they want to create opportunities for Americans. Alphabet’s Sundar Pichai, who is scheduled to testify before Congress on Tuesday, attended a White House meeting last week on the jobs of the future. Silicon Valley companies also care deeply about what politicians in D.C. think. Alphabet spent $18.4 million on lobbying in 2017, about 2.5 times more than its 2010 budget.

Facebook and Google’s services are used everywhere, but the public and most lawmakers have little direct contact with tech companies themselves. Most have headquarters on the West Coast, and expansion has centered on the east. Tech job openings have been concentrated in the same eight metro areas, including San Francisco and Seattle, from 2013 to 2017, according to an Indeed study.

Beneath the 50-year low unemployment rate of 3.7 percent is an uneven jobs market. Policymakers and businesses have been grappling with a skills gap that has partly contributed to 7 million jobs left unfilled. The jobless rate in the Cleveland area of Ohio is at 5.1 percent. Only a handful of counties in the eastern Appalachian area were rated as economically competitive, according to a regional commission.

Silicon Valley is in a good position to help. On Saturday, representatives from Microsoft and other groups joined Congressman Ro Khanna, who represents Silicon Valley, promoting scholarships and worker training in Jefferson, Iowa. It will result in jobs that pay $65,000 a year. Two-thirds of Iowa’s counties lost population from 2010 to 2017, according to the U.S. Census Bureau.

Such programs often get classed as philanthropy rather than corporate strategy. Amazon has created thousands of jobs in places like Georgia, Tennessee and Texas in recent years, yet it chose rich New York and the outskirts of D.C. for its new headquarters. Meanwhile, about 85 percent of Michigan residents who have benefited from Facebook-funded digital job training found new or better paying positions. This might be a good time to trade the Valley for the plains.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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