Will Illinois Privacy Laws Hurt App Economy Jobs?

By / 5.9.2017

One of the bright spots for the Illinois labor market in recent years has been the App Economy. By the estimate in our just-released report, Illinois had 72,000 App Economy jobs as of December 2016, ranked number 6 in the country, just behind Massachusetts.  These jobs have all been created since 2007, when Apple introduced the first iPhone. To put this in perspective, total private sector employment in Illinois has risen by only 54,000 jobs since 2007, suggesting that the App Economy may be at least partly responsible for the net gain in jobs.

As I have written in a recent op-ed, we may have finally reached the “tipping point” in the ability of the Internet to generate jobs. Not just App Economy jobs, but ecommerce and fulfillment center jobs that help mid-skilled workers. Indeed, we see that

…. advanced distribution–the ability to ensure an order-delivery lag of one day or less–represents a genuinely new advance that has the potential to generate spin-offs of its own.  For example, custom manufacturing  may become a viable business model if a customer can order a made-to-order shirt or chair and get it in one day.  That would require the custom manufacturers to be located near the fulfillment centers, giving them a durable competitive advantage that overseas rivals would not be able to match.

In that way advanced distribution could become an essential complement to advanced manufacturing,  potentially exacting a significant time penalty for offshoring.   Rather building distribution centers around factories, we’ll start building advanced manufacturing or custom manufacturing hubs around fulfillment centers.

However, these potential gains in advanced distribution and advanced manufacturing could be hindered by state-level digital privacy bills that Illinois and other states are considering. These pieces of legislation could fragment the Internet, and would make online browsing and transactions much more complicated.  Jobs would become harder to create, not easier.

Privacy is important for all of us.  We believe in a consistent, national framework for online privacy, administered at the federal level. The logical agency is the Federal Trade Commission (FTC), which has an excellent record of reacting to privacy concerns. But state-level laws are not the way to to go.