Tech is driving the New York City economy, new report finds

This article was originally published by The City.

When Kevin Ryan moved his internet startup from Atlanta to New York in 1996, it was hard for him to find a lawyer to represent the company, and landlords and banks didn’t know what to make of this new tech enterprise.

But Ryan’s company, soon to be named DoubleClick, had invented a technology that allowed websites to serve up advertisements chosen specifically for the visitor, using something known as a cookie. It moved to New York because its success depended on convincing advertising agencies to use its product — and those cookies were key to giving the internet an economic framework.

Today, tech is so entrenched in New York City that Ryan, who has founded or invested in scores of local companies, believes the city could soon equal Silicon Valley as the dominant center for the industry in the U.S.

“As long as the quality of life is maintained, New York will pass the Valley in most metrics in the coming years,” he said.

The tech sector is now the single most important source of growth in the city’s economy, argues a new report released Tuesday by the think tank Center for an Urban Future and the industry trade group Tech: NYC. It is adding the most jobs and especially well-paying positions. It is drawing billions in venture capital fueling hundreds of new firms. And it is providing jobs for New Yorkers in tech-related jobs across the city’s businesses.

“Banks now employ more software developers than bankers,” said Jonathan Bowles, executive director of CUF and the author of the report. “It is amazing how big it has become and how far it has come.”

But the role of tech companies in the city’s economy remains possibly the best kept secret in New York. The city boasts at least three news publications primarily focused on covering the real estate industry, yet there isn’t a single publication focusing on tech in New York. Local tech companies rarely attract the attention of key business publications like Bloomberg, the Wall Street Journal or the business reporters at The New York Times.

And the tech industry has received virtually no attention in this year’s mayoral race. Only Mayor Eric Adams’ Economic Development Corporation and Gov. Kathy Hochul, who has backed efforts to make New York a center for AI research, seem focused on the sector’s importance.

“If this was happening in any other city or state, we would see local government officials lining up behind it,” Bowles said. “In New York, too many are lining up to regulate the industry.”

CUF, which has issued previous reports tracking tech, began work on the latest study to see how the industry had fared both over the last three decades and especially after the pandemic shook the New York economy. It found: 

• Tech companies accounted for 41% of the 104,000 net new jobs created between 2019 and 2024, a percentage it calls “astonishing.” During those years, an average of 435 new tech-related companies were created annually during those years.

• The city has substantially narrowed the gap with Silicon Valley, with job gains during that period growing at twice the rate of Silicon Valley and 15 times the entire Bay area.

• Fears that regional tech centers like Boston or Austin would become significant competitors to New York are largely unfounded. Only Austin’s job gain has been higher than New York. The number of venture capital–funded companies in New York are more than Boston, Austin and Miami combined.

• The city is the nation’s leader in both fintech and digital health care, and has emerged as a rival to Silicon Valley in both basic research and application of artificial intelligence.

While economists track the economic impact of various parts of the economy by measuring jobs and wages of companies in that sector, tech jobs have become so vital to all companies that New Yorkers with tech skills are finding good jobs throughout the economy. The number of software developers working in the city both at tech and other companies has more than tripled since 2011 to 68,000, up from 22,000.

When Hifza Riaz was 20 years old, her family got a letter saying their personal information had been exposed in a security breach. She didn’t understand how that could happen and started googling for answers that led her to decide that she should seek a job protecting people from hackers.

After some starts and stops, she enrolled in a cyber security program at LaGuardia Community College in Queens. On her first day in class, she visited her home network and saw the many vulnerabilities and all the IP addresses that various sites were monitoring. She was appalled.

An internship at Mastercard has led to a full-time cybersecurity job that will pay her $80,000 a year while the 25-year-old works to complete her undergraduate education at Baruch College.

“I stayed with cybersecurity and I have never regretted it,” she said.

Thirty years ago, tech companies came to New York to work with the city’s advertising and media firms. As the industry recovered from the nationwide tech collapse of the early 2000s, the city became a major player in e-commerce as consumer companies began going online. The city’s allure for college graduates began providing the talent companies needed.

The financial crisis of 2008 became a turning point.

Seth Pinsky, then head of the city’s Economic Development Corporation, had convinced former Mayor Mike Bloomberg that the city needed to emphasize support for entrepreneurship in order to reduce New York’s reliance on Wall Street.

Bloomberg launched a series of initiatives that gave low-cost space and resources to entrepreneurs, training programs that taught non-entrepreneurs what it took to launch and grow new ventures, and investment vehicles to help start-ups access capital.

“Though these initiatives were all relatively modest, what struck us very quickly about them was that, in many cases, the people who participated in them were focused on starting tech businesses in New York,” Pinsky said. “This was striking because, at the time, New York was, to put it mildly, an also-ran in the tech economy.”

By 2012, Ryan could see something had changed. He was seeing strong growth at the media site he had founded called Business Insider. He was also running an e-commerce company called Gilt, which offered online flash sales.

“By then we had reached a critical mass so people could move to New York to work for a tech company, knowing if that company failed, they would be able to find a job at another tech company,” he said.

In all, the CUF report puts total employment in New York City at tech firms at 204,000, almost exactly the same as Wall Street. Full-time jobs’ median pay of $110,000 is almost double the citywide median of $58,994.

Unlike past reports that emphasized the need for more efforts to diversify the tech sector, the latest CUF report focuses on the city’s better-then-elsewhere numbers. Black and Hispanic workers make up one quarter of the sector’s workforce. The figure for Boston/Cambridge is only 10%, the Bay Area at 8% and Seattle a dismal 5%.

Despite the importance of their companies, tech leaders do not feel embraced by government officials, the report notes. For the most part, tech companies don’t seek tax breaks but CEOs feel their views are not solicited as the state and city regulate things like the use of AI in hiring or social media restrictions.

Companies that need specially built research space, like so many other businesses, complain that it takes far too long to get permits and other approvals needed for them to commit to New York.

But the biggest threat to the sector is the housing crisis. “Housing affordability is challenge Number 1, 2 and 3,” the report says. The college grads the industry needs are increasingly worried they won’t be able to afford to live in New York because of soaring rents.

The imprint of DoubleClick remains important in the city and the country. Google acquired DoubleClick for $3.1 billion in 2007 and expanded its operations here to become the city’s largest tech company with about 14,000 employees. The U.S. Justice Department antitrust lawsuit against Google seeks to force it to divest the DoubleClick technology.

Ryan notes that tech in New York City has replicated a key feature of the Valley ecosystem — employees of successful companies leave and establish their own startups. He estimates alumni of DoubleClick have founded some 20 companies in the city.

“I think some of the most eccentric and craziest ideas for new companies still go to San Francisco more so than New York, but New York is just continuing to generate great companies,” he said.