The Unlikely Cities That Will Power the U.S. Economy
By Christopher CannonChristopher Cannon, Patrick ClarkPatrick Clark, Jeremy Scott DiamondJeremy Scott Diamond, and Laurie Meisler
September 3, 2015

A decade ago, Richard Myers was the director of the Department of Genetics at the Stanford University School of Medicine, where he enjoyed the fruits of a rich endowment and his pick of faculty members and graduate students. So he left behind some befuddled scientists when, in 2008, he left Palo Alto, Calif., for Huntsville, Ala., to launch an independent research lab, the HudsonAlpha Institute.

“‘My God, you’re leaving Stanford for Alabama?’” Myers recalls colleagues asking. “‘What’s wrong with you?’”

Huntsville may not seem like an obvious place to base a center for genomics, a branch of biology concerned with DNA sequences that requires expensive hardware and even greater investment in human capital. Alabama ranks in the bottom 10 U.S. states for educational attainment and median income.

Yet Huntsville, nestled in a hilly region in the northern part of the state, turns out to be a great place to recruit high-tech workers. As of May 2014, 16.7 percent of workers in the metropolitan area held a job in science, technology, engineering, or mathematics—STEM, for short—making it the third most technical workforce in the country after San Jose, Calif., and Framingham, Mass., a Bloomberg analysis of Labor Department statistics shows.

Huntsville is one of a growing number of smaller U.S. cities, far from Silicon Valley, that are seeking to replace dwindling factory jobs by reinventing themselves as tech centers. Across the Midwest, Northeast, and South, mayors and governors are competing to attract tech companies and workers.

Top 100 metro areas for STEM jobs

  • STEM employment:
  • 10K
  • 100K
  • 300K
  • Percentage of total workforce:
  • 0–6.9%
  • 7–9.9%
  • 10%+

Like many high-tech locales, Huntsville owes its 21st century economy to an initial burst of funding for government research. It was a town of 16,000 residents working in cotton mills and on watercress farms when, in 1950, the U.S. Army relocated a team of rocket scientists to Redstone Arsenal, a local installation that produced chemical munitions during World War II. In the decades that followed, NASA designed, assembled, and tested the rockets that put the first men on the moon. Boeing, Lockheed Martin, and dozens of lesser-known aerospace and defense companies have swarmed to Huntsville.

Those companies pay good salaries that end up supporting public schools, restaurants, and a symphony orchestra—amenities that in turn make the city an appealing place to people like Myers and the high-skilled workers he employs.

But building a tech economy is easier said than done. The South is littered with cities that haven’t regained the jobs lost when the apparel mills closed; the same is true for the rust belt and heavy manufacturing.

Still, many have embarked on transformations similar to Huntsville’s since the number of U.S. manufacturing jobs peaked at 19.6 million in 1979. Plenty of cities have tried.

In San Diego, 9.3 percent of workers hold STEM jobs. The city kickstarted its tech economy by investing in local universities beginning in the 1960s. Durham, N.C., has a STEM labor force that's 13.9 percent of all workers. Its biotech economy started with a sprawling research park that began to grow around the same time that Huntsville’s high-tech transformation was getting started. Cities like Omaha, Neb., and Chattanooga, Tenn., have courted Web startups by investing in high-speed Internet.

Top STEM occupations by metro area

highest paying

most popular

highest concentration*

  • STEM employment:
  • 10K
  • 100K
  • 300K
  • Occupation type:
  • Science
  • Tech
  • Engineering
  • Math

*Occupation with the highest number of employees compared to the national average.

Workers have sniffed the opportunity. About 146,000 students received undergraduate degrees in computer science and engineering in 2012, the last year for which the U.S. Department of Education has data, up 25 percent from 2001. Another 16,000 students will graduate from coding boot camps this year, many to supplement their college degrees, according to the website Course Report. That makes sense, since approximately 53 percent of the 7.9 million STEM jobs tracked by the Labor Department were in computer-related fields.

Tech jobs have also proliferated in energy hubs, like Oklahoma City, Okla. and Denver, Colo. and around research institutions like the University of Wisconsin at Madison and Princeton University, in New Jersey. The top 20 metropolitan areas by STEM employment account for half the STEM jobs in Bloomberg’s analysis, leaving cities like Ann Arbor, Mich. and Boulder, Colo. to fight for the other half of America’s geologists, medical researchers, and computer programmers.

Wages in “advanced industries”—the name that the Brookings Institution uses for fields with lots of STEM-degree workers and heavy investment in research and development—have grown five times faster than U.S. wages since 1975. Companies that employ STEM workers also tend to create good-paying jobs for workers who don’t have bachelor’s degrees, and can breed innovations that fuel new companies.

“These are highly virtuous economies,” says Mark Muro, a senior fellow at Brookings’ Metropolitan Policy Program. “They’re actually more inclusive than people think.”

STEM pay v. non-STEM pay in the top 100 metro areas

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See all top 100 metro areas
  • Non-STEM pay
  • STEM pay
  • Rank
  • Top 5
  • Bottom 5

Competition for STEM workers has led Huntsville’s business community to the gospel of tactical urbanism, with its food trucks and craft beer. Downtown developers have been turning old cotton mills into artist colonies and loft apartments, and sponsoring events like a human foosball tournament and a thousand foot-long water slide. “Who would have ever thought that for your millennials you have to have a kickball league on Wednesday night?” says Mayor Tommy Battle from his 8th floor office in the Huntsville Municipal Complex.

Huntsville’s high quality of living and low housing costs helped convince Curse, a video-gaming startup, to choose the city over Las Vegas and Boulder, when the company was relocating from San Francisco in 2013. “If I pay someone $125,000 a year in Huntsville, they can buy a house and a car and have a very comfortable lifestyle,” said Donovan Duncan, vice president of marketing at Curse. “Pay someone $125,000 in San Francisco, and they wind up living in a house with four roommates and are constantly asking for a raise or scheming on how to get a job at Facebook or Google.”

STEM pay vs. cost-of-living in the top 100 metro areas by STEM employment

BetterPay for STEM workers outranks the cost-of-living WorseCost-of-living outpaces the pay for STEM workers EvenParity between STEM pay and the cost-of-living

Drilling down into Huntsville’s STEM worker base reveals another component of its tech success: The city’s history as a hub for rocket science has made it a magnet for the smartest kids in the region.

There’s an old joke about how to tell the difference between an extroverted and an introverted engineer: The extrovert looks at your feet when he’s talking. Reputation for social awkwardness aside, engineers are also known for a penchant for tinkering that gives the city a science-camp feel that’s hard to build from scratch.

“You can be in a restaurant and hear someone at the next table talking about thrust oscillation or adaptive control for rockets,” says Tracie Prater, 31, a materials engineer at NASA in Huntsville. “I was in Target one day and I saw Owen Garriott, who once held the record for the longest time in space. I was just trying not to geek out while I was shopping for groceries.”