Updated 9:10 am ET, Tuesday, September 20
In a move that would surely make any parent, teacher, boss or basically any other authority raise their eyebrows in disbelief, the University of Maryland School of Business published a study Monday asserting that Facebook has added at least 182,000 full-time jobs and $12.19 billion in wages and benefits to the American economy as of this year.
To put that in a bit of context, the U.S. economy created no new jobs in August, 117,000 jobs in July and has added about 872,000 jobs since the beginning of the year, according to the Bureau of Labor Statistics. Meanwhile, unemployment has hovered close to 9 percent since January and is likely to remain that way into the 2012 election, according to the White House’s Office of Management and Budget.
So it would be tremendous if Facebook actually added as many jobs as the Maryland School of Business purports, enough to account for over 22 percent of the total job creation in the U.S. this year.
But a close reading of the study reveals that it makes some strong assumptions: Namely that every Facebook application job added creates at least “2.42 additional jobs in other sectors,” and benefits are equal to 1.43 times an employee’s salary.
Still, the study’s authors say that these projections are actually a conservative estimate: Facebook might have added up to 235,644 jobs and $15.71 million to the economy.
“Our findings confirm that social media platforms have created a thriving new industry,” said the study’s lead author, II-Horn Hann. associate professor of information systems at the University of Maryland, in a release. “As Facebook and other platforms grow, we will continue to see job growth and the ripple effects of these advances in the U.S. economy.
And yet, as eagerly as us Facebookers and the media have circulated the news, there are a couple of reasons why the findings should be taken with a few grains of salt.
Firstly, the study doesn’t include or subtract the amount of money that Facebook has cost the economy in lost productivity, as Fast Company’s Kit Eaton points out. Eaton reminds readers of a 2007 study showing Facebook cost the U.K. $264 million in lost revenue daily. As Eaton writes:
Let’s assume that U.S. use was ten times greater, since the U.S. is roughly ten times bigger, and that means the U.S. was losing $12 billion in revenue from Facebook every 4.5 days, back in 2007. The site has grown now, and has more users who use it more often–and while we know many workplaces now ban it, it’s safe to say that lost man hours probably eat up more value from the U.S. economy faster now than they did four years ago.
Of course, that only addresses half of the incredible claim from the University of Maryland. Arguably the more interesting part of their report is the jobs claim, that the growing Facebook ecosystem has created a thriving, growing employment sector all to itself. Indeed, there’s reason to believe that this figure is more accurate, given how many applications developers there are for mobile platforms Apple and Google’s Android, over 53,000, according to a recent study from AppStoreHQ.
A more difficult measure to determine is just how many jobs have been lost because of Facebook. And we’re not just referring here to those employees who have been fired due to Facebook indiscretions (after all, Facebook is just one of many tools for expression and idle time, and who’s to say that they wouldn’t have been fired for some other reason?)
No, instead consider how Facebook has suffocated its competitors. MySpace itself, for one, once employed 1,600 workers at its peak in 2009. That number was reduced to 1,000 in June 2009, to 400 in January , and 250 in June.
Facebook has also been aggressive about protecting its brand name, suing smaller startups including Teachbook, Lamebook, FriendFinder, Faceporn and others for trademark infringement. (Facebook in late 2010 secured the rights over “Face” as a prefix to a company name.) While those lawsuits undoubtedly created temporary work for lawyers, it’s difficult to estimate just how many potential jobs they might have cost.
Finally, even the Facebook developers themselves have been suffering at the hands of the big blue giant recently. As Ad Age’s Irina Slutsky reported in a thorough article in May:
Some in the Facebook app industry go so far as to declare Facebook a closed system for new companies and their products. “For the most part, the window of opportunity for games on Facebook has closed,” said Chris Cunningham, CEO of Appssavvy, a firm that pairs marketers with app developers and one that has worked extensively with Facebook. “There was a three-year window for companies entering Facebook, but since Facebook opened their platform in 2007, each year has brought stricter restrictions and requirements that have changed the Facebook app marketplace forever.”
And as the article notes, Facebook recently shifted its ecosystem over to a 70-30 model, where 30 percent of the proceeds from in-app transactions go directly to Facebook. Ad costs have also risen, making it harder for developers to market their apps on the platform at the same time that Facebook has disabled the auto-updating News Feed for apps (a change that from a user perspective at least, is refreshing).
Sure, Facebook doesn’t have a legendarily contentious relationship with its developers as some other large platforms (namely Apple and Twitter), at least not yet.
And with the company expected to unveil a suite of new content sharing agreements with major media publications at its f8 conference Thursday, the image of Facebook as a job creator is only likely to become clearer. But even then, it’s worth noting that it isn’t quite as clear cut as the flashy numbers would indicate.
Late update: Facebook has responded to the study. In an email to TPM, a Facebook spokesman said simply “We think the research speaks for itself.”
