Okay, so the headline overstates things: The problem is not that the booming tech sector fails to produce any jobs; the problem is that one of the most robust parts of our economy isn't producing enough jobs to make a dint in this nation's unemployment crisis.
Technology companies deliver amazing products and services, and Facebook is a prime example of how breakthroughs in the tech sector can change how we live. But don't look to the tech sector to create the middle class jobs of tomorrow. Facebook illustrates this reality. Even as the company has become spectacularly successful, and vastly enriched individuals associated with it, it has generated relatively few jobs.
Facebook added just over 1,000 jobs in 2011, bringing its total work force to 3,200 employees. Indirectly, through the apps and other subsidiary components supported by Facebook, the company is estimated to have created between 53,000 and 129,000 jobs in the United States.
Even if Facebook doubles or triples its labor force with the new investment capital it raises from the IPO, it will employ vastly fewer people than any other U.S. corporation of a similar value in the range of $100 billion. For example, PepsiCo has 285,000 employees with a market value of $103 billion, according to Fortune. Abbott Laboratories employs 91,000 people with a market value of $95.6 billion. Walt Disney has 156,000 employees with a market value of $77 billion. Bank of America, with a market value of $102 billion has 284,000 employees. GM, with a third the market cap of Facebook, has 209,000 employees.
Facebook also has many fewer employees than older technology and Internet companies, showing how a new generation of tech firms may be able to generate greater wealth without large labor forces. Amazon has 56,200 employees and market value of $93.1 billion. Cisco has 71,000 employees and a market cap of $113 billion. Intel has 101,000 employees with a market cap of $114.6 billion.
Facebook is not the only new generation tech company with relatively few employees. Twitter, which is said to have a value of around $10 billion, has only 400 employees. Pandora has 530 employees with a market cap over $1 billion. Instagram, which Facebook recently bought for $1 billion, has just 17 employees -- or a market cap per employee of $83 million. Spotify, recently recently valued at $4 billion, has only a few hundred employees. Zynga, the much touted game making firm, has 2,846 employees. Linkedin, with a value just over $10 billion, has 2,116 employees. The picture is somewhat brighter when it comes to Groupon, which has over 11,000 employees, but that company seems more like an outlier among the latest tech successes.
Given these facts, it's no wonder that the unemployment rate in Santa Clara County, which encompasses Silicon Valley, is 8.2 percent -- a bit higher than the national average. The unemployment rate in San Jose, the biggest city in California and the third biggest city in California, is over 9 percent.
Facebook’s high valuation on the NASDAQ also speaks to a larger disconnect between corporate profits, stock prices, and the labor market during the post-recession recovery. According to a recent analysis from Northeastern University, in the first two years of the recovery, the Dow Jones Industrial average increased 49 percent, the Standard and Poor 500 index had increased 46 percent, yet real mean hourly earnings of all private sector workers had decreased 1 percent.
Put a different way, recent years have been fantastic for owners of capital – who are largely part of the top 20 percent of households, as noted – and terrible for workers. Facebook's IPO reflects this larger trend.