Thumbtack claims San Francisco economy is booming for "headshot photographers," not so much for cleaners or bartenders
Service industry prices in San Francisco have grown at a significantly slower rate than median income, rent and house price.
Or at least, so finds a recent study of its own data by local one-horned Craigslist killer Thumbtack:
According to the Thumbtack “price index” [quotations theirs], since 2013 service prices have only increased by 6% in San Francisco, compared to much larger cost-of-living increases, and rising incomes across the economy as a whole. Thumbtack’s cost-of-living statistics derive from census data. Its service-industry numbers are extracted from activity on the Thumbtack platform. More on that in a moment.
Some sectors of service on the Thumbtack platform have actually seen price decreases:
These charts and an accompanying write-up appeared last week on the Thumbtack blog, under the heading “Is San Francisco’s Wealth Trickling Down?” The conclusion?
Our data show that some of this wealth has trickled down to service providers, particularly those who are in industries like interior design and headshot photography, which cater to high end or corporate clients. Other services providers have not seen their prices grow, probably because supply has increased at the same time as demand, dampening down wages.
The passage above, like the rest of the report, omits a crucial phrase “on Thumbtack” in such a way as to present this data as an objective, scientifically rigorous window into wider economic performance. For accuracy sake, the above could be amended to read as follows:
"Our data show that some of this wealth has trickled down to service providers on Thumbtack, particularly those who are in industries like interior design and headshot photography on Thumbtack, which cater to high end or corporate clients on Thumbtack. Other service providers on Thumbtack have not seen their prices grow on Thumbtack, probably because supply has increased on Thumbtack at the same time as demand, dampening down wages on Thumbtack."
It may seem tedious, but it is an important distinction. Though obscured by the language of the report, this data certainly says more about behavior on the Thumbtack platform than in San Francisco as a whole.
“It’s safe to say that Thumbtack has grown significantly since 2013 in all categories,” said the company’s “chief economist” Jon Lieber, who led the analysis. Lieber confirmed that the conclusions about the state of the service sector are derived solely from Thumbtack data, without corroboration.
“No one else has this kind of data,” he said.
Which is sort of true. No one else has Thumbtack data. But Uber, Postmates, Luxe, Handy, et al., have their own. Notably, changes in income among service professionals participating in the on-demand economy are missing from the Thumbtack analysis, as if this teeming petrie dish of new venture-subsidized, service-sector employment had not surged here in the years since 2013.
The report does note the effect that technology may have on market behavior:
It isn’t just the economy in San Francisco that’s changing – new technology is also changing how people find and book service professionals. As new technology has lowered the transaction costs associated with bringing a house cleaner into your home, this could bring more house cleaners into the market to and push down the prices of house cleaners thanks to increased competition.
However, there is no indication of how reliance on only Thumbtack data might skew the analysis.
The Thumbtack report joins recent, bubble-cautioning findings in the San Francisco real estate market, as revealed in the proprietary data of real estate tech companies like Zillow and Zumper. Yesterday, articles derived from these two sources appeared in the same publication (the San Francisco Business Times), and together seemed to suggest that San Francisco was in a housing bubble (based on a survey of experts conducted by Zillow) and that the bubble may losing air, as Zumper found that rents had decreased in the month of November.
Craigslist has stayed conspicuously silent on these points.
What we’re left with, then, is hand-selected data from technology firms presented as general information about the local economy. Specifically, these recent “studies” inveigh on the bubbliciousness of the market, a hot topic but one that is notoriously difficult to parse.
While this data analysis might be wanting in terms of objectivity, it is significant in giving a “curated” glimpse of the businesses releasing it. It may also speak to the marketing goals of those companies. San Francisco’s rents fell last month – great time to find an apartment on Zumper. The housing bubble is real – Zillow can help you sell your house now and get the best price. Rates for certain services are dipping – better leverage a platform like Thumbtack to make sure your booking as much of your time as possible.
In the past, companies and industry groups would go to great length to obscure their connection to economic reports, using intermediaries such as think tanks, academia and non-profits. These days, a new wave of companies is dispensing with that pretense, tacking their names onto the research for publicity’s sake, while eliding discussion of the limits their methods may place on objectivity or scientific fitness.
Still, assuming that the Thumbtack data accurately reflects what is happening on that platform, it seems that it’s a difficult time to be an independent service professional who relies on Thumbtack for bookings.
Thumbtack recently closed its second $100 million plus round of late state investment, led by an obscure Scottish wealth management fund.
Doesn’t this report undermine the company’s marketing somehow?
“I don’t think so, I think it’s great,” said Lieber. “Our pros are the ones setting the rates, they know whether it is a good market to be in… I don’t think we are telling our pros anything they don’t already know.”