In the coming months, Amazon will start hiring its way toward 50,000 jobs between newly announced dual second headquarters in New York City and Northern Virginia. Right on their heels, Google will begin its billion-dollar expansion and addition of 7,000 more jobs in Manhattan. Two moves alone don’t make a region, but they mark a powerful vote of confidence that adds energy and momentum.
The residents living between Greater New York and Washington, DC might feel they lost a battle for jobs from big tech companies, but if all of those cities leverage their assets wisely, places like Newark and Philadelphia (both on the list of HQ2 finalists) as well as New Brunswick, Wilmington, Baltimore and others have a shot at becoming America’s next great innovation corridor.
Amazon and Google’s spillover effects will start in the greater New York and Washington, DC areas, but their vendors, partners, advisors, employees and alumni will span the cities in between. It’s not hard to imagine a hyper-connected Mid-Atlantic corridor of cities, networked with high-speed transit and powered by knowledge-intensive sectors like life sciences and technology.
McKinsey’s global research has identified a set of factors that need to come together for innovation hubs to flourish: a highly educated workforce, a critical mass of leading universities, the presence of large anchor companies; strong physical infrastructure, affordability and quality of life, and access to capital.
Starting with talent, the Mid-Atlantic corridor is currently home to more than 4.5 million bachelors degree holders and nearly 3.2 million graduate and professional degree holders—more than any other 300-mile long corridor in the nation
To establish a reliable and recognized tech talent base, businesses within the corridor must double down on producing, employing, and retaining science, technology, engineering and mathematics (STEM) talent. That means scaling STEM education, from elementary school through higher education institutions (that still confer less than 20 percent of their degrees in STEM), matching talent with employers, and further boosting diversity and inclusion in STEM.
The geography of the Mid-Atlantic corridor also brings together four of the country’s top 10 universities and the largest concentration of federal research dollars in science, technology, and medicine.
To match the explosive growth that has come from Stanford and Berkeley in the San Francisco Bay Area or from Harvard and MIT in the Boston area, the Mid-Atlantic corridor will need to keep growing its universities’ research funding and the rate at which that research converts into start-ups.
With nearly a quarter of the Fortune 500 headquartered in New York, New Jersey, Pennsylvania, Delaware, Maryland and Virginia alone, the corridor offers innovative companies a vast testing ground for new ideas. These companies can further boost the innovation economy by setting up more transit-accessible operations near universities and downtowns and investing even more in local research and development.
Cities in the Mid-Atlantic Corridor are easily commutable, within 20 minutes to three hours of one another by train, and their convenience and lower cost of living are attractive for young workers and families. Overall, the region’s housing costs between 20 to 60 percent below the Bay Area’s. Still, creating a true innovation corridor will require significant new investment in things like transportation infrastructure and improved reliability. Cities also need to invest in public resources like parks, cultural institutions and, of course, schools.
While the corridor possesses many of the elements necessary to become one long innovation hub, it lacks sufficient venture capital. All of the corridor’s metro areas combined received less than half of the venture capital dollars that went to the San Francisco Bay Area over the past five years. The institutions of the Mid-Atlantic corridor need to raise more of their own funds and better connect entrepreneurs to capital.
Fueled by West Coast tech companies moving East and endowed with the right mix of assets, the Mid-Atlantic corridor faces an historic opportunity. To seize the moment, the states and cities along the Corridor will need to invest in, scale, connect, and market their innovation economies in the months and years to come. Working hard and working together, they can make the Mid-Atlantic Innovation Corridor a reality.
Steve Van Kuiken is a Senior Partner in McKinsey’s New Jersey Office and leads the firm’s Technology Practice. Mike Kerlin is a Partner in McKinsey’s Philadelphia Office and leads the firm’s North American Economic Development Practice.