The AI Gold Rush: A Tale of 15 Cities
The tech world is buzzing with a new kind of gold rush, and it’s all about generative AI. But here’s the catch – it’s not a free-for-all. In fact, it’s a rather exclusive club. According to a recent report from the Brookings Institution, a whopping 60% of new job postings in this field are concentrated in just 15 metro areas. And guess who’s leading the pack? You got it, San Francisco.
The Winner-Takes-Most Economy
The authors of the Brookings report suggest that generative AI could lead to a “winner-takes-most” economic outcome. Unless the government steps in to encourage a more evenly distributed AI sector, we could see a widening gap between the haves and the have-nots.
The AI Elite
Let’s dive into the numbers. Nearly half of the generative AI job postings in the past year were in six cities: San Francisco, San Jose, New York, Los Angeles, Boston, and Seattle. This isn’t a new trend – it’s just an extension of the existing concentration of AI jobs and R&D.
The Forbes AI 50 list, which showcases the most promising AI companies, features 43 U.S. members. And guess what? They hail from just four states. California is the clear winner with 35 companies, followed by New York (4), Texas (2), and Massachusetts (1). One company operates fully remotely.
The AI Desert
None of the top 50 AI startups are located in a rust belt state, the Midwest, or the South. San Francisco alone houses 20 of the best-funded AI companies – that’s more than the rest of America combined.
The Need for a Broadly Distributed AI Sector
While more than 100 metro areas have the potential to be AI centers, just 14 metro areas account for more than half of AI R&D investment. Zoë Baird, senior counselor at the U.S. Department of Commerce, argues that spreading AI skills across the country is crucial for the success of the CHIPS and Science Act. Why? Because innovation happens where manufacturing takes place.
The Challenge of Skilled Labor Shortages
But there’s a problem. TSMC, the world’s largest semiconductor manufacturer, recently announced that it would delay the opening of its Arizona plant due to a shortage of skilled labor.
The Call for a More Distributed AI Sector
The authors of the Brookings report suggest a “widely distributed” expansion of public sector AI research and access to computing to spread AI benefits away from “superstar cities.” However, federal AI research spending remained stagnant at $1.7 billion in 2022.
The Silver Lining
It’s still early days for generative AI deployment, and wider deployment and adoption across the economy could spread some of the economic benefits. A National Artificial Intelligence Research Institutes program is now operating in 19 cities, helping to build up AI talent pools.
The Bigger Picture
Beyond AI, there’s a more widely distributed manufacturing boom happening in the U.S. South and West. This is reminiscent of the 1960s “space race,” which saw federal investment transform cities like Huntsville, Alabama.
