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Today's Tech Giants Are Creating Loads Of Wealth But Pitifully Few Jobs

Unlike leaders in the early computer revolution, today's digital tech firms employ far fewer workers—and that's worrisome for the future.

[Photos: cherrytana via Shutterstock]

The rise of sites like Facebook and Airbnb has enabled a few people to get very rich. That Mark Zuckerberg has $45 billion to give away shows the sort of numbers we're talking about. But how much are these gains percolating down to the rest of the economy?

Not too much, suggests a new study from Oxford University. When researchers Carl Benedikt Frey and Thor Berger tallied up the total jobs created by "digital technologies" between 2000 and 2010, they found that only 0.5% of the U.S. labor force is employed in industries that did not exist at the turn of the century.

"Relative to major corporations of the early computer revolution, the companies leading the digital revolution have created few employment opportunities," the paper says. "While IBM and Dell still employed 431,212 and 108,800 workers respectively [in 2013], Facebook’s headcount reached only 7,185."

Using employment categories from the U.S. Census Bureau, the researchers identified 71 new types of "tech" jobs, including those in online auctions, video and audio streaming, web design, and biotech. Many of these positions are being created in "skilled cities," like San Francisco and San Jose, that are able to "adapt to new technologies to reinvent themselves." Silicon Valley had a new job rate of 1.8%, compared to the 0.5% national average and a 0.2% rate in Grand Rapids, Michigan. The study finds a strong correlation between levels of college education and new job creation.

The research adds to a growing debate about the impact of technology on jobs, with several forecasts predicting massive losses as we adopt robots and other artificially intelligent machines. Some economists think these warnings are overblown and that technology has a way of eliminating some positions while creating others. But Frey and Berger are decidedly pessimistic.

"Because digital businesses require only limited capital investment, employment opportunities created by technological change may continue to stagnate as the U.S. economy is becoming increasingly digitized," they say.