Internet is everywhere, but U.S. jobs that support it aren’t

The internet was supposed to render geography irrelevant. But the corporations that dominate the internet have turned out to be remarkably concentrated, geographically speaking. In internet publishing and web search portals, a somewhat ungainly but very important North American Industry Classification System category, 58% of all U.S. jobs in December could be found in just five counties, and more than 70% in the top 10.

In San Mateo County, Calif., home of Facebook Inc., one is about 30 times more likely to encounter an internet publishing and web search portal employee than in the country in general. Just to the south in Santa Clara County, the heart of Silicon Valley and the home of Google LLC and its corporate parent Alphabet Inc., it’s 27 times more likely. Just to the north in San Francisco County, home of Twitter Inc. and Pinterest Inc., it’s 13 times more likely. King County, Wash., [fourth-highest location quotient] and New York County, N.Y. [fifth-highest location quotient], round out the top five.

The location quotient is a measure of how concentrated an industry is in a particular place – a quotient of 1 means it’s right at the national average. Employment location quotients of 30 and 27 are, it should be stressed, quite high, especially for such populous counties [San Mateo County has about 770,000 inhabitants; Santa Clara County nearly 2 million].

Wayne County, Mich., the headquarters of the U.S. automobile industry, had a December employment location quotient for motor vehicle manufacturing of 16.7; the District of Columbia’s location quotient for federal government employment was 13 and change.

- Advertisement -

Santa Clara County did have a dizzying December location quotient of almost 64 for electronic computer manufacturing [thanks mainly, one assumes, to Cupertino-based Apple Inc.] and 40 for semiconductor machinery manufacturing [industry leader Applied Materials Inc. is based in the city of Santa Clara], but those are at least industries that revolve around creating complex, tangible products, which it stands to reason necessitates lots of people working in the same place.

The internet is on first impression different: It’s everywhere, and it can be worked on from anywhere. Yet employment at corporations that shape it is concentrated in a handful of places in the U.S. and has been getting more so. In March 2014, the top five counties accounted for 48% of the nation’s internet publishing and web search portal jobs, and the top 10 accounted for 62%.

Fifty-eight percent of all U.S. jobs in December [were in] five counties.

Facebook and Google have been expanding overseas, so it’s possible that this focus on U.S. data is somewhat misleading – sadly there’s no global counterpart to the hyper-detailed Quarterly Census of Employment and Wages from which the data in this column is taken. Also, it’s not all about engineers at Facebook and Google: As the lower average wages outside of Silicon Valley indicate, this category also includes journalists working at online enterprises such as BuzzFeed Inc. and Vox Media Inc. in New York and elsewhere. It may also include contract workers slowly going crazy moderating Facebook pages in Phoenix; it’s often hard to know for sure how specific corporate activities are classified by U.S. Bureau of Labor Statistics, because it isn’t allowed to say, but the goal is to assign the people working at a location to the industry sector that best fits what most of them are working on.

Traditional media has a tendency toward concentration, too: Los Angeles County has 27% of the nation’s jobs in motion picture and sound recording industries. New York County has 18% of all U.S. periodicals publishing jobs. The two counties together account for 20% of broadcasting employment. But the top-five and top-10 counties’ shares of jobs in these sectors are much smaller than with internet publishing and web search portals, and in motion pictures and periodicals, the very top counties have actually been losing employment share in recent years as media companies shift production to less-expensive locales.

It’s presumably the value of transfer of information among skilled workers that has driven internet companies to concentrate in a few places. High costs in those places and those “ongoing improvements in information technology” might drive dispersion, although there’s no sign of that yet in this data. Politics might, too: As Facebook in particular has been discovering lately, having your employees concentrated in a few places can mean having few friends in Washington. But for now, the work of internet publishing and web search portals remains tightly clustered along the San Francisco Bay, and to a lesser extent the Hudson River and Puget Sound. Geography still seems to matter. n

Justin Fox is a Bloomberg Opinion columnist.