Wednesday, July 3, 2013
How Facebook’s IPO Created the Best-Paid County In America
The federal Bureau of Labor Statistics last week reported that the average weekly wage in San Mateo County, California in the fourth quarter of 2012 rose an astounding 107% from a year earlier, to $3,240. That’s the equivalent of $168,000 a year, and more than more than 50% higher than the next highest county, New York County (better known as Manhattan), which came in at $2,107 a week, or roughly $110,000 a year.
What’s behind the numbers? The labor department doesn’t discuss specific employers, but several clues point to Facebook, which is based in Menlo Park, Calif., part of San Mateo County.
The county’s wage surge was included in a detailed report on employment and wages for each of the nation’s more than 3,000 counties, based on reports filed by employers. Within San Mateo County, the industry that most stands out is “computer systems design services.”
According to the labor department, the roughly 6,200 workers in San Mateo County in that industry group collected total wages of $6.8 billion in the fourth quarter alone. That’s an average of $82,891 a week, or roughly $4.3 million a year.
Those weren’t regularly weekly paychecks, of course. That’s because the labor department’s definition of “wages” can include bonuses, stock and stock options, according to David Hiles, a supervisory economist at the department.
That’s where Facebook’s May 2012 IPO comes in. According to the social network’s securities filings, the bulk of restricted stock units that Facebook issued before 2011 vested six months after the IPO, in November 2012. In one filing, Facebook said it withheld and paid taxes of $2.86 billion when those units vested in 2012. In a previous filing, it said it expected to withhold taxes at roughly a 45% rate, suggesting the shares were valued at more than $6 billion at the time. Facebook employees also exercised roughly 51 million stock options in the fourth quarter, which might have added $1 billion to the “wage” total.
Doug Henton, chief executive of Collaborative Economics, a San Mateo, Calif., consulting firm that has worked with the detailed county reports for more than two decades, agreed that the signs pointed to Facebook as the source of the county’s growing wealth.
“That kind of a jump can only be explained by what’s happening with stock” and stock options from recent IPOs, Mr. Henton said. “It will be interesting to see if that wealth bump is reflected in giving back to the community.”
The Labor Department’s Mr. Hiles said the quarterly wage numbers tend to fluctuate, reflecting the payout of bonuses on Wall Street, for example. Prior department reports also have highlighted the impact of corporate mergers and acquisitions.
A Facebook spokeswoman declined to comment.