Kai Ryssdal: Honest people can disagree about whether there’s a technology boom building right now. But it’s pretty clear social media’s bubbling right along. LinkedIn went public to huge fanfare a couple of months ago. Groupon’s IPO is coming soon enough. Facebook is expected to go public sometime early next year. The company may be worth $50 billion, some say double that.
So far, so good for venture capitalists and early investors. One might expect an Internet startup binge like that to lead to to a boom in jobs. Right about here’s where those expectations should be adjusted.
From the Marketplace Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman explains.
Mitchell Hartman: Prineville, Ore. Population: 10,000. It’s a small ranching town in the high desert best known for its rowdy summer rodeo.
Rodeo Announcer: Bobby Mote has drawn the horse that won the championship two weeks ago.
At the depths of the recession, unemployment here soared above 20 percent, with sawmills and construction shut down. Then, last year, Facebook came to town.
Ken Patchett: In the data center we go. I have a biometric reader here, fingerprint-accessible.
Ken Patchett is operations manager for Facebook’s first global data center. It’s 300,000 square feet of spanking-new servers where Facebook’s half-a-billion users meet for a few nanoseconds in cyberspace. Construction started last year. Facebook hired 1,400 contractors, some from out of town. Mark Zuckerberg dropped in from Palo Alto for a flashy opening ceremony in April. Senior managers came in to run the place.
Patchett: The fact that we’re this big Internet company coming into a rural area, people have difficulty mapping those two things together, right? “Oh, these big California boys coming up, going to take over the planet.”
To show it isn’t, Facebook has contracted with local carpenters and sheet-metal shops to finish the build-out. There’s an 8-foot wooden Sasquatch in the lobby and quilts by local senior citizens. But most important — Facebook’s been hiring.
Sam Viles: I lost my job last year, and then it was just kind of unemployment, and then part-time jobs here and there.
Sam Viles landed a job as a server-tech in February. He’s 25; he doesn’t have a college degree and worked for a time as a call-center technician.
Viles: This job kind of got dropped in my life and then I couldn’t believe it. I was in a job that gave me enough money to pay bills.
The average salary for Facebook workers here is $53,000 — 1.5 times the typical county wage. Under a property-tax exemption worth millions to Facebook, the company has to employ at least 35 full-time workers, says Ken Patchett.
Patchett: I’ve got, I think it might be up to 47 right now. This includes all of our security staff, facilities staff, server technician staff, and our logistics staff.
Patchett says it’s not likely to go much higher.
Hank Notthaft: These are not large job-generating companies.
Hank Notthaft is a Silicon Valley entrepreneur and author of Great Again, Revitalizing America’s Entrepreneurial Leadership.
Notthaft: So here you have a company with an $80 billion market cap, creating phenomenal wealth for a very few, and then on top of that, it’s not creating jobs.
Of course, running servers requires a lot of power, but not many people. And social media sites like Facebook don’t need many employees posting content. We users do that — all those messages and photos and likes and pokes — for free. So add in all the fancy programmers and marketing types in Palo Alto and around the world — Facebook still only has 2,500 employees, total. Apple has 20 times that. Sony employs 170,000. And those jobs generate more jobs.
Notthaft: Hi-tech manufacturing will actually create up to 15 additional jobs. Companies like a Facebook, a Zynga, a Twitter, for every job they create, even though they’re very high-paying positions, they create only about two-and-a-half jobs.
Jeff Anderson: Well, I think every little bit helps.
I met Jeff Anderson at his Tastee Treat burger joint on the main drag through town. Some bikers had just rolled in on their way to a rally in Hell’s Canyon. They ordered, whipped out cell phones — and updated their Facebook pages. Anderson says Facebook’s “friending” a lot of folks in town.
Anderson: So if you get 30, 40, 50 jobs, that’s possibly 50 families that show up here, and they have to grocery shop, they go out to eat, ice cream, sports, all that — so it will make a difference.
Realtors say the local housing market is picking up. And the dry climate, available workforce, and local tax breaks have enticed several other tech firms to consider building data centers here now that Facebook’s put Prineville on the map.
I’m Mitchell Hartman for Marketplace.
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