Facebook Is Responsible for Creating 450,000 Jobs? Really?!

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Andrew Harrer / Bloomberg via Getty Images

As Facebook prepares to file its IPO documents with the U.S. Securities and Exchange Commission — as soon as Wednesday, according to recent reports — the company is trying to make the argument that it adds more to the economy than a convenient way to waste time at work. By touting the economic activity it has generated and the jobs it’s created, Facebook is also trying to pre-empt criticism that the primary winners from the IPO are insiders who stand to reap billions from the offering.

Speaking at the World Economic Forum in Davos, Switzerland, on Sunday, Facebook chief operating officer Sheryl Sandberg touted the company’s job-creating power. “Facebook is barely seven years old and has 3,000 employees — and it has created more than 450,000 jobs in Europe and the U.S.,” she told a CNBC debate audience at the World Economic Forum. No doubt it was a pleasing message for the assembled titans of global finance and government, who are rightly focused on how to create jobs — and what technology companies can do to further that goal.

Sandberg was referring to two recent studies purporting to show the economic impact of the social-networking giant, which now boasts more than 800 million users worldwide. Both attempt to describe the impact of the so-called app economy that has sprung up around the social-networking giant.

The first study, by the University of Maryland’s Business School, found that the company had created as many as 235,644 U.S. jobs, injecting some $15.71 billion into the U.S. economy. The study found that 53,000 new jobs have been created in software companies that build apps for Facebook’s platform — fairly straightforward. The study’s next finding is a little more nebulous: as many as 182,000 people are employed in jobs “supported” by the app economy, which includes “businesses that supply app developers, and in sectors that reap the benefits of increased household spending by app developers and suppliers.”

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The second study, by research firm Deloitte, suggested that Facebook had had an economic impact on Europe of $20.2 billion supporting 232,000 jobs. Deloitte combines “narrow impacts” — such as the company’s own revenue and employees — with “broad impacts,” which enable “businesses to raise awareness of their products and therefore generating new sales through Facebook business pages, which lead to referrals to websites and brand value supported by Likes, as well as through paid advertising.”

These studies should be taken with a grain of salt because the researchers relied on Facebook to provide data about the app economy, and in Deloitte’s case, Facebook paid it to conduct the research, for which it offers the following eyebrow-raising disclosure. “Deloitte has neither sought to corroborate this information nor to review its overall reasonableness,” the firm said.

And what about how much money Facebook actually costs the economy, in the form of lost productivity as workers surf the social-networking website checking out what their friends are up to? That’s tough to quantify, but in 2007, a British law firm found that about $204 million is lost every day by British companies because of workers wasting time on Facebook. Another study, by an Australian research firm, estimated that Facebook was costing companies Down Under $5.3 billion annually.

Neither of Sandberg’s job-creation studies take into account lost productivity. It is another example of how statistics can be slippery and how they can be molded to back up just about any argument. While there is no doubt that Facebook’s rise has created a whole new ecosystem of applications and app developers, trying to quantify its impact in terms of jobs created is an inexact science, at best.

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