Why hasn't the tech boom triggered more hiring?
Apple headquarters at 1 Infinite Loop in Cupertino, Calif.
Jeremy Hobson: There is one big bright spot in the U.S. economy and it's about 360 miles up the California coast from where I sit right now. Silicon Valley is home to companies like Facebook, Google and Apple -- companies that have expanded during the recession and are now
worth billions of dollars. But for some reason, they're not making a dent in our unemployment rate. Marketplace's Steve Henn is with us now
from Silicon Valley to explain. Hi Steve.
Steve Henn: Hey.
Hobson: Well the tech industry has really been booming recently. Where are the jobs?
Henn: That's an excellent question. You know, one of the problems is some of the biggest and most successful companies up here -- especially the Internet companies -- are built by design to not have to hire a lot of people. Facebook might be worth $100 billion, but do you have any idea how many people actually work there?
Hobson: Oh, I know it's something really small. It's something like a couple thousand right?
Henn: Yeah, it's 2,500. So for the size of that company, it's a really, really small number. The problem is that venture capitalists and entrepreneurs look at what Facebook has done and they want to imitate it. One of the hotter start-ups in this area right now is this company called Airbnb.
Hobson: Airbnb, I've never heard of that, Steve.
Henn: OK, so it's a website that lets you rent your own apartment to someone else while you go on vacation. You can go to it and you can look for apartments in Paris or really pretty much anywhere in the world to find a place to stay that might be a little bit nicer or cheaper than a hotel. The real brilliance of this is they don't own much of anything. They operate a website. If I'm renting my place, I do the work. And if I'm buying a place, I do the work.
Hobson: So therefore they don't really need to hire anybody?
Henn: That's right. If they have 100,000 people using their site or a million people or a hundred million people, their costs are more or less the same. And that's what investors are aiming for.
Hobson: So that's what investors are aiming for. But what about the big behemoth out there in Silicon Valley, I'm talking about Apple, which just recently became -- for a brief period -- the biggest company in the world by market value. Aren't they hiring anybody?
Henn: Apple is hiring. It hired 12,000 people in the last year, which sounds like a a big number. But when you compare it to the scale of the entire economy and all the jobs that the U.S. economy needs to get back on track, it's tiny. Apple employs just 46,000 people right now. And the reason it can do what it does with so few people is while it sells lots of devices, it doesn't actually make them. Over the last decade, it has outsourced almost all of its production to subcontractors. Most of those firms are in Asia.
Hobson: So Apple is bringing down the employment rate in Asia, but not right here in the United States.
Henn: Not a lot.
Hobson: Marketplace's Steve Henn in Silicon Valley. Steve, thanks.
Henn: Sure thing.