By Matt DeVeau, Project Associate.
“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.
