“What the hell happened in San Mateo?!!”
That’s what a colleague in the economic development world asked me last month while sharing a link to the latest quarterly jobs report over GChat. I glanced at the report and replied with an equally incredulous remark. How else can one respond when a county’s average weekly wage more than doubles in 12 months?
Our conversation was in reference to the County Employment and Wages release for the fourth quarter of 2012 from the Bureau of Labor Statistics. Table B within the release showed that San Mateo County, California – aka Silicon Valley – had an average weekly wage of $3,240 in the fourth quarter of 2012, $1,677 higher than the same quarter in 2011. That’s an increase of 107.3 percent. But it couldn’t be real, right? 107.3 should be the frequency of a radio station playing the hits of the 80s, 90s, and today, not a realistic percentage wage gain for a county of more than 700,000 people. We briefly wondered if the BLS had made a rare mistake – and a big one at that. But it turns out we were the ones who were mistaken. As usual, I blame Mark Zuckerberg.
OK, well maybe not Zuckerberg himself. But as Scott Thurm of the Wall Street Journal noted, “several clues” point to Facebook, Zuckerberg’s company, as the source of the increase. Facebook is based Menlo Park, a city in San Mateo County. First, the Bureau of Labor Statistics defines wages as including more than just salaries but also bonuses, stock options, and so forth. And while the BLS can’t comment on specifics, Thurm interviewed a supervisory economist at the U.S. Department of Labor who noted that quarterly wage totals can fluctuate due to the payout of bonuses or the impacts of a corporate merger or acquisition.
Companies often issue stock in a company to employees as compensation, and these “restricted stock units” come with stipulations about when they can be sold. For the restricted stock units that Facebook offered prior to 2011, this date was six months after the company’s initial public offering (IPO). The highly publicized Facebook IPO took place in May 2012, and its six-month anniversary fell in November – comfortably within the fourth quarter of that year. According to securities filings, Facebook employees (Zuckerberg not among them) “cashed out” approximately 51 million stock options in the fourth quarter, which Thrum estimates could have added $1 billion to San Mateo County’s wage total. San Mateo County’s wage gain, it seems, is real, albeit temporarily.
Alas, there might not be anything too instructive for local communities here. San Mateo County’s secret formula for success is simply “being home to the company that has the largest IPO in the history of the Internet.” Not exactly a replicable feat. But there is a lesson for the economic development profession here, and that is that anomalies in government data we use the most, such as a rogue peak in wage data, probably have a good explanation that can be discovered with a bit of additional inquiry, as Thurm has demonstrated here. This is also what we do here at Market Street – sort through complicated data to present an up-to-date, accurate picture of a local economy. So if you notice an unusual datapoint in your community and just can’t make sense of it, give us a call. Or just shoot me a GChat if we’re friends.