Jim Gibbs understands the power of network effect — and its limits.
A former Carnegie Mellon University student and Pittsburgh-based software developer for more than three decades, Gibbs has been growing his startup, Meter Feeder, since 2015, funding it through hackathons, seed and pre-seed funding. But as a Black founder, he also acknowledges that not all founders of color have access to the networks he does, as well as the generational wealth or high incomes that their white counterparts do.
“When rich people say, ‘Good ideas get funded,’ you’re essentially saying that underestimated founders don’t have good ideas,” he recently tweeted.
Gibbs’ tweet points to a tension in the local tech industry. Pittsburgh has worked for decades to transition its industrial past to a tech-focused future, and the fruits of that labor are starting to ripen. But the city is still grappling with inequities at the center of this new wealth.
According to original data compiled and analyzed by Technical.ly with the help of a local data journalist, the number of high-income earners in Pittsburgh has risen in the decade from 2009 to 2019.
Local data for analyzing income by demographics are not reported directly by the government. These figures come from U.S. Census PUMAs data to isolate a sample of U.S. cities and residents who identify as a single race or primary ethnicity — Black, Asian, Latinx or white. To identify high-earners, the figure of $200,000 was chosen because it is the threshold required to become an accredited angel investor.
Per this data, the number of people living in the city making annual salaries of $200,000 or more jumped from 3,503 in 2009 to 5,318 in 2019, which is an increase from 1.17% of the city’s population to 1.8% in that period. (Check out the methodology via GitHub.)
And overall, despite the population decreases Pittsburgh has seen since 2000 (most recently with a slight drop by 0.89%, according to the 2020 census data), the median income of city residents has continued to rise. A 2018 report from Pew Charitable Trusts showed that from 2000 to 2017, Pittsburgh’s average income per capita was $53,849 — an increase of 24% over those years.
Tech’s role in income growth
While those economic benefits can’t be completely attributed to the booming local tech industry, the influx of companies like Microsoft, Amazon and Google as well as the success of homegrown ones like Duolingo has had an undeniable impact on wage increases. Technical.ly’s data show that computer systems design — that is, tech workers — rose from being the 10th most common industry for $200,000 salary earners in 2009 to the seventh most common in 2019, while management, scientific and technical consulting services represented seventh and eighth over the decade, respectively.
Tech jobs are likely driving growth in other industries as well, particularly in leaders for banking, education and medicine in Pittsburgh.
Marie Pelloni, the director of talent, STEM and workforce innovation initiatives for the Pittsburgh Tech Council, sees both Big Tech and local growth companies looking to attract talent with higher salaries.
“I think people assume those [high-paying] roles are all at Microsoft, Amazon and Google,” she said. “But Duolingo competes right alongside them — Facebook Reality Labs, Schell Games, they compete right alongside those large companies for these roles, and people are excited to work there.”
These wage increases for talent recruitment will become a domino effect that could go on to benefit everyone working in tech. Because a lot of entrepreneur-minded employees are more attracted to the opportunity at growth companies and “being part of something at the beginning,” Pelloni said those companies will continue to have a motivation to offer competitive salaries. “So I think that there are absolutely companies outside of [Big Tech] that absolutely are paying those, and if not, will be shortly.”
Though Pelloni acknowledges that she hasn’t heard of many people being offered $200,000 or more in her work with the new Apprenti PGH apprenticeship initiative or with entry-level tech workers in general, she thinks that many of these positions are on tracks that could eventually lead to such a salary. Noting the vast number of tech job postings available in both Pittsburgh and the United States at large, she argued that if tech companies “don’t start to increase those wages, employees are just going to continue to leave to where they’re doing that already.” And as for the possibility of Apprenti graduates or other entry-level workers reaching those higher salaries, Pelloni said it’s “absolutely only a matter of time.”
Race and income
However, much of the economic success described by Pelloni and exhibited by the data is enjoyed by Pittsburgh’s white residents. The number of Black residents making $200,000 or more decreased over the 10-year period from 2009 to 2019, going down from 0.34% of the Black population to 0.31%, per Technical.ly’s analysis. Meanwhile, 2.33% of Pittsburgh’s white residents made that salary in 2019, up from 1.53% in 2009.
The Latinx population saw an increase from 0.04% to 0.09% over the same period, representing just 177 individuals in 2019, while the Asian population saw a big increase from 1.41% to 2.9%. Though the latter jump in growth rate was larger than that seen by the white population, the total number of white residents reaching that income by 2019 was 4,756, in contrast to the 514 Asian residents who had done the same by that year. The income growth across Latinx and Asian populations might be partially attributed to general increases in each of those populations here, as shown by the 2020 census data.
Here’s a look at what percentage of the population is making more than $200,000:
The data for Black residents is particularly troubling.
“I think that a lot of things that happened in Pittsburgh [with this data] are proxies for the lack of economic mobility that is available in this city,” said City of Pittsburgh Deputy Chief of Staff and Chief Equity Officer Majestic Lane. He said the disparities in high earners likely “arise from a lack of networks and relationships, lack of access to capital, to build businesses or to pursue your dreams in tech.”
Often referred to as one of the most livable cities in America, reports in recent years have shown that Pittsburgh is actually one of the most unlivable for Black residents. The inequities outlined by those reports are having a real effect on the population, with Pittsburgh’s total Black population decreasing by 13.4% or about 10,500 residents from 2010 to 2020.
“We know that because of a myriad of studies and so many things, that there’s this idea that Pittsburgh is not a welcoming place for Black people,” Lane said. “And on top of that we have studies that show that tech is not a welcoming place for Black people.”
However, Lane sees a limitation in Technical.ly’s data in that it only reflects income statistics for the city, as opposed to all of Allegheny County, where the Black population increased by 12,500 according to the 2020 census data: “When you understand that there’s an outflow of wealth into the county, I think that’s how those [city] numbers start to become what they are,” he said. Keeping wealth within the city limits is important, he added, because, on a basic level, it increases the amount of tax income to the city, which can then be put toward school district improvements or city-sponsored innovation initiatives.
But Lane thinks the primary goal right now should be to increase family-sustaining wages for Black residents. While he recognizes the importance of achieving salaries of $200,000 or more to create new angel investors or limited venture capital partners in the community, he sees a more pressing issue in entry-level and career growth pathways for Black residents in the city.
“The ability for the community to be stabilized, the ability for people to create opportunities and jobs — these things all connect to this kind of conversation about economic mobility, which I think is going to be the conversation for our region,” Lane said. “And going forward, we need to think about how we’re creating these on-ramps for economic mobility and opportunity.”
Possible solutions: new entry points, and support for employees
While coding bootcamps aren’t a perfect solution to that problem, they do offer a pathway into tech, typically without requiring college or other higher education. John Lange, the director and cofounder of web developer bootcamp Academy Pittsburgh, said reaching a $200,000 salary in tech right out of a coding bootcamp is basically impossible. But since founding the bootcamp in 2016, he’s seen graduates go on to have salary increases that are getting increasingly closer to that amount.
“We are seeing people on that trajectory,” Lange said. “Generally you’re looking at seven to 10 years of experience, depending on where you are and what you’re doing.” Based on self-reported data from Academy Pittsburgh alumni, Lange has seen some graduates on the brink of reaching a $200,000 annual salary.
Lange noted that many of the more successful graduates of the program had earlier experience in adjacent industries like finance, or college education in a subject outside of tech. That doesn’t mean that students without those backgrounds can’t land a position on a track to higher salaries, but that it might take more time to get there.
“But if you are to look at just the person and their pay rate over time, I don’t think you’d be able to tell who is and who is not a person that had a degree before they started the bootcamp,” he said.
But for all of Academy Pittsburgh’s accomplishments in helping to create wealth-building opportunities for its graduates, Lange emphasized that simply having more non-white technologists reach a salary of $200,000 doesn’t fully address the systemic issues at play.
“A person of color making $200K is different than a white person making $200K,” he said, adding that disproportionate amounts of loan debt, family support needs and inherited savings can affect the amount of money in that salary that’s actually available for potential investment back into the startup community.
Gibbs, the Meter Feeder founder who tweeted about the network effect, agrees with Lange’s sentiments on generational wealth gap challenges and also attributes part of the racial pay gap across high earners to a lack of support and awareness among employees of color of what an appropriate salary should be for certain positions.
“I don’t see that support there, and I think that’s really what’s missing,” Gibbs said. “And it goes right back to not understanding the possibilities of like, what should you be asking for? What should you be getting paid?”
Though some of those problems are being addressed by communities like Black Tech Nation, Gibbs hopes to see more action from companies themselves in creating safer environments and communities for employees of all backgrounds.
“It just seems the motivation isn’t quite there, and I don’t know why the motivation isn’t there because literally everyone would win,” he said.
As a prominent member of Pittsburgh’s tech founder community, Gibbs has also witnessed local founder salaries inching closer to $200,000. Wealth building among founders is particularly important, because many of them have the entrepreneurial risk-taking mindset that could lead them to become angel investors in future tech startups.
But while Gibbs thinks both the data and anecdotal evidence indicate a growth of high-earning founders and non-Big Tech executives, he worries that this progress won’t benefit Black Pittsburghers without more effort toward equity.
“It’s a difficult hurdle to get over, in order for us to start that flywheel and get that process of wealthy Black Americans in Pittsburgh, who understand the startup ecosystem, in order to invest in the next generation of startups,” he said. “It’s going to take a bit. And, you know, I feel like we’re just going to continue to bleed Black talent, and people are just going to continue to move away until we figure it out.”
This is the first in a series on how tech economies are growing wealth in U.S. cities, and we need you to be part of it. What do you know that we don’t, or what do you think we need to come to understand about the topic? Email Technical.ly CEO Chris Wink at firstname.lastname@example.org or Technical.ly Managing Editor Julie Zeglen at email@example.com if you have any questions, additions or thoughts.
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.