Some commentators such as Tyler Cowen opine that social networks and other elements of the online ecosystem are good for mental stimulation and consumer benefits, but not for job creation or economic growth. Cowen reported that despite having 700 million active users, Facebook had only 1,700 people working for it as of 2010
But Cowen’s conclusion is wrong. For one thing, employment at Facebook is growing very fast – it’s over 2,000 now in 2011. But its importance to the economy, job creation and growth is a function not just of the people it actually employs, but also of the economic activity it makes possible. A recent study, for example, finds that Facebook generates more than 53,000 jobs at companies that provide apps for Facebook. A major app developer like Zynga is one source of these jobs, but there are hundreds of other smaller app developers whose employees are focused on providing entertaining and productive apps for the Facebook platform.
But the economic effect doesn’t stop there. Companies that supply the app developers also create more jobs and those employed at app developers create more jobs through the increase consumer demand that their own spending generates. Using a standard estimate of these multiplier effects, the Facebook app platform creates as many as 182,000 jobs in other sectors of the economy. Overall, the Facebook app economy generated as many as 235,000 jobs. The wages and salaries associated with these jobs amounted to $15.7 billion.
Not bad for Facebook. But the platforms for apps provided by Google and Apple and RIM also generate employment. In a time of economic crisis, it is important to remember that the app ecosystem generates economic growth and creates jobs.