The internet is everywhere, but internet jobs are not

The internet was supposed to render geography irrelevant. But the corporations that dominate the internet have turned out to be remarkably concentrated, geographically speaking. In internet publishing and web search portals, a somewhat ungainly but very important North American Industry Classification System category, 58 percent of all US jobs in December could be found in just five counties, and more than 70 percent in the top 10.
The location quotient is a measure of how concentrated an industry is in a particular place — a quotient of 1 means it’s right at the national average — and the location quotients in the above table make clear that this particular industry is heavily concentrated in the top five counties, especially the three bordering San Francisco Bay. In San Mateo County, home of Facebook Inc., one is about 30 times more likely to encounter an internet publishing and web search portal employee than in the country in general. Just to the south in Santa Clara County, the heart of Silicon Valley and the home of Google and its corporate parent Alphabet Inc., it’s 27 times more likely. Just to the north in San Francisco County, home of Twitter Inc. and Pinterest Inc., it’s 13 times more likely.
The Bureau of Labor Statistics actually didn’t release fourth-quarter San Mateo County data for the sector, presumably because it was so dominated by Facebook that this would amount to disclosing private information, so I backed out the numbers using metropolitan-area data and a little elbow grease. The BLS did release San Mateo County numbers for the third quarter, and the employment total and location quotient were close to those I came up with (the average weekly wage was higher, at $8,872), so I don’t think this was much of a stretch.
Employment location quotients of 30 and 27 are, it should be stressed, quite high, especially for such populous counties (San Mateo County has about 770,000 inhabitants; Santa Clara County nearly 2 million). Wayne County, Michigan, the headquarters of the US automobile industry, had a December employment location quotient for motor vehicle ma-nufacturing of 16.7; the District of Columbia’s location quotient for federal government employment was 13 and change.
Santa Clara County did have a dizzying December location quotient of almost 64 for electronic computer manufacturing (thanks mainly, one assumes, to Cupertino-based Apple Inc.) and 40
for semiconductor machin-ery manufacturing (industry leader Applied Materials Inc. is based in the city of Santa Clara), but those are at lea-
st industries that revolve around creating complex, tangible products, which it stands to reason necessitates lots of people working in the same place.
The internet is on first impression different: It’s everywhere, and it can be worked on from anywhere. Yet employment at the corporations that shape it is concentrated in a handful of places in the US and has been getting more so. In March 2014, the top five counties accounted for 48 percent of the nation’s internet publishing and web search portal jobs, and the top 10, 62 percent.
Facebook and Google have been expanding overseas, so it’s possible that this focus on US data is somewhat misleading — sadly there’s no global counterpart to the hyper-detailed Quarterly Census of Employment and Wages from which the data is taken.
Also, it’s not all about engineers at Facebook and Google: As the lower average wages outside of Silicon Valley indicate, this category also includes journalists working at online enterprises such as BuzzFeed Inc. and Vox Media Inc. in New York and elsewhere. It may also include contract workers slowly going crazy moderating Facebook pages in Phoenix; it’s often hard to know for sure how specific corporate activities are classified by the BLS, because the BLS isn’t allowed to say, but the goal is to assign the people working at a location to the industry sector that best fits what most of them are working on.
Traditional media has a tendency towards concentration, too: Los Angeles County has 27 percent of the nation’s jobs in motion picture and sound recording industries. New York County (aka Manhattan) has 18 percent of all US periodicals publishing jobs. The two counties together account for 20 percent of broadcasting employment. But the top-five and top-10 counties’ shares of jobs in these sectors are much smaller than with internet publishing and web search portals, and in motion pictures and periodicals, the very top counties have actually been losing employment share in recent years as media companies shift production to less expensive locales.
In their much-cited 2009 review of what drives economic activity and the resulting wealth to “agglomerate” in certain cities, economists Edward Glaeser and Joshua Gottlieb wrote that:
The largest body of evidence supports the view that cities succeed by spurring the transfer of information. Skilled industries are more likely to locate in urban areas and skills predict urban success. Workers have steeper age-earnings profiles in cities and city-level human capital strongly predicts income. It is possible that these effects will be reduced by ongoing improvements in information technology, but that is not certain and has not happened yet.

—Bloomberg

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time,
Fortune and American Banker.

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