PPI 2017 Ecommerce Job Review

In this note we summarize the growth in ecommerce jobs in 2017, based on the methodology described in our September 2017 report,  “How Ecommerce Creates Jobs and Reduces Income Inequality.”

  1. We find that the number of ecommerce jobs rose by 133K in 2017, with half of that amount coming from the growth of ecommerce fulfillment centers in the warehousing industry.  Local delivery contributed 38K jobs, found in the ‘couriers and messenger’ industry. These numbers do not include the ecommerce deliveries done by the USPS, or any temporary workers that fulfillment centers might hire.
  2. We estimate that brick-and-mortar retail jobs rose by 13K jobs in 2017.
  3. Measured as FTEs (fulltime equivalent), the number of ecommerce jobs has risen by 592K since 2012.
  4. Measured as FTEs, the number of brick-and-mortar retail jobs has risen by 456K since 2012 (yes, you read that right).
  5. Combined, the brick-and-mortar retail and ecommerce sectors have added more than 1 million FTE jobs since 2012.

Ecommerce Job Growth, 2016-17

     
  Change in jobs, 2016-17
  (thousands)  
Brick-and mortar retail 13  
Ecommerce 133  
       Electronic shopping 29  
       Couriers and messengers 38  
       Warehousing 66  
     
Data: BLS    

 

The Amazon Jobs Effect: Kenosha County, Wisconsin

Amazon is the fastest US company–and perhaps the fastest company anywhere–to 300,000 workers. Its rapid expansion is creating tech-enabled work in virtually every corner of the country, with our estimates showing that fulfillment center jobs pay 31% more, on average, than brick-and-mortar retail jobs in the same area.

Now, there are all sorts of interesting questions about what happens next. Some people have worried that the fulfillment center jobs will fade away as the operations get increasingly roboticized. By contrast, our view is that fulfillment centers will become critical hubs for the new “Internet of Goods“: By lowering the cost of shipping and creating a pool of tech-enabled workers, areas with ecommerce fulfillment centers will  have a head start in attracting the next wave of manufacturing startups.

The answers to these questions, of course, bear on the important debates about the value of tax and other public incentives for Amazon fulfillment centers and the company’s HQ2. I haven’t gotten involved in these discussions directly, because they really are about the shape of the future economy. If you think that robots are going to eat all of our jobs, then tax incentives never make sense. If you think that we are just at the beginning of the transformation of  physical industries and the creation of a new wave of tech-enabled jobs in physical industries such as distribution, manufacturing, and agriculture, then offering tax incentives to get a piece of the future is far-sighted thinking.

However, in the midst of all of these very interesting discussions, I really must address a new study from the Economic Policy Institute which purports to show no employment gains from the opening of an Amazon fulfillment center. More precisely,  “[t]wo years after an Amazon fulfillment center opens in a county, overall private-sector employment in the county has not increased.”

Really?  This result does not pass the smell test. You can raise all sorts of long-term questions. But in the short-term, if you build a giant new fulfillment center, first you get construction jobs in the years before the center opens. Then you get the workers themselves. There’s no plausible mechanism by which those jobs can crowd out other jobs in the samecounty in the short-term.

And I’m not sure about their sample of counties. I look on their list of ‘Amazon’ counties (Appendix Table 3), and it doesn’t include Kenosha, Wisconsin, where the construction of an Amazon fulfillment center in 2013 and 2014, and its opening in June 2015, added thousands of jobs into the local economy.

The chart below plots private sector jobs in Kenosha County against private sector jobs in all of Wisconsin.

 

You can see that right around the time that Amazon arrives in Kenosha, county employment turns up, driven in large part by the increase in warehouse jobs.

Indeed, Kenosha County is effectively becoming a tech-enabled distribution-manufacturing hub. After Amazon opened its doors, the county attracted companies like Haribo, the German candy giant (and originator of gummy bears), which is building its first North American factory in Kenosha.

 

 

 

 

 

 

 

 

 

 

 

PPI Statements Prior to the State of the Union Address: “Trump’s Infrastructure Promises Are Lies”

WASHINGTON— The Progressive Policy Institute (PPI) today released the following statements prior to President Trump’s State of the Union address, which is expected to focus on a $1.5 trillion infrastructure plan:

“The GOP’s insistence on passing tax cuts first will make it harder to tackle the infrastructure challenge,” said PPI President Will Marshall. “For example, House Republicans have proposed to kill the exemption for ‘private activity bonds’ that help leverage private investment in repairing and upgrading infrastructure. And if Republicans use revenues from repatriating overseas profits to offset the cost of their rate cuts, that money won’t be available to finance the big infrastructure push we need.

“GOP leaders have broken their promise to make tax reform ‘revenue neutral’ and now propose to add $1.5 trillion in new borrowing to the national debt. Where are the fiscal hawks of the House Freedom Caucus, who were so fierce in their attacks on Obama’s alleged fiscal profligacy? Back in their nests, cooing contentedly as their party sticks future generations with the bill for lower tax rates today.”

“The Republican tax bill gave away trillions to the richest one percent, squandering all the money needed for investments that would actually grow the economy to the benefit of all Americans; namely, rebuilding our antiquated infrastructure to be competitive in the digital economy,” said Paul Bledsoe, PPI Strategic Adviser. “Trump’s infrastructure promises are lies—because he’s given away all the money needed to pay for them. Democrats should propose rescinding the Republican tax giveaway to the rich and put forward middle class tax cuts and a robust US infrastructure plan to benefit everyone.”

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Langhorne for The 74, “As a Teacher, I Was Complicit in Grade Inflation. Our Low Expectations Hurt Students We Were Supposed to Help”

In November, NPR uncovered a graduation scandal at Ballou High Schoolin Washington, D.C., where half the graduates missed more than 90 days of school. Administrators pressured teachers to pass failing students, including those whom teachers had barely seen.

Policy wonks have had a field day with the report, adding graduation scandals to their lists of top 2018 education stories to watch and questioning the value of a high school diploma.

The one group of people who were not surprised by the scandal: teachers.

George W. Bush once claimed that as president, he would challenge the “soft bigotry of low expectations” in our nation’s classrooms by raising the K-12 education standards for of all America’s children. But in the past two decades, the soft bigotry of low expectations hasn’t been challenged; it’s been masked by grade and graduation inflation. And these low expectations are not isolated in our nation’s most impoverished schools.

Four years ago, when I began my teacher training, a tenured teacher gave me some advice: “Just give them a D; it’ll be so much extra work for you to fail anyone.” At the time, I thought it was strange wisdom, but soon I learned that it’s part of the “common sense” of survival in the world of teachers.

I worked in Fairfax County Public Schools, a more affluent, higher-performing district near Washington, where pressure to inflate grades and ensure students pass was ingrained. These district-encouraged, sometimes administrator-enforced grading policies still make me cringe.

 

Continue reading at The 74.

The App Economy in Thailand

When Apple introduced the iPhone in 2007, that initiated a profound and transformative new economic innovation. While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones, and the wave of smartphones that followed, was a rare force for growth.

Today, there are 5 billion mobile broadband subscriptions, an unprecedented rate of adoption for a new technology. Use of mobile data is rising at 65 percent per year, a stunning number that shows its revolutionary impact. More than just hardware, the smartphone also inaugurated a new era for software developers around the world. Apple’s opening up of the App Store in 2008, followed by Android Market (now Google Play) and other app stores, created a way for iOS and Android developers to write mobile applications that could run on smartphones anywhere.

Shelby County Public Schools Superintendent Hobson is “willing to voluntarily relinquish control over some struggling schools to be operated by private charter groups,” or so we hope.

Fighting for the neediest and pushing back against special interests are often unexpected actions in the realm of political battles.

However, Dorsey Hopson, Superintendent of the Shelby County Schools (SCS) in Memphis, Tennessee, might exceed our expectations.

Last week, Hopson announced that he is “willing to voluntarily relinquish control over some struggling schools to be operated by private charter groups.”

For years, SCS has been working hard to turn around struggling schools through its Innovation Zone. The iZone, however, is a costly model, and few of its schools have successfully achieved key benchmarks.

In defense of his decision, Hopson said:  “We spend so much money, whether it’s philanthropic dollars, state dollars, our dollars, on trying to improve these Priority Schools over the last five or six years, and we’ve gotten some gains but certainly nowhere near the transformative results that we would like to have had …So I think we’ve got to take another shot at it and do it differently.”

Hopson is showing strength of character by acknowledging the success of the charter school model at a time when the anti-charter propaganda machine is in full swing. Because he recognizes the district’s need for “transformative results,” Hopson is willing to throw out the old, unsuccessful model of education that has failed urban students for decades in favor of embracing public charters, which have created profound changes in cities like New Orleans, Washington D.C., Denver, and Indianapolis.

Strong superintendents cannot, and should not, sit idly and continue to  support schools that are not helping children achieve, especially when public charters schools can help thousands of our nation’s most disadvantaged kids.

After all, the Tennessee Charter School Center reminds us that a charter sector benefit students because:

  • Public charter schools are held accountable.  Test scores and performance results are published and are part of the school district findings.
  • Public charter schools provide healthy learning environments for all students, including students with special needs, English Language Learners and the gifted.
  • Public charter schools are not allowed to turn away any child, for any reason.
  • Public charter school teachers want to be in their school; it was their interest that brought them to the school.

If none of these key points brings you to the table with Superintendent Hopson, then looking at the data from the 2017 Shelby County Schools Charter Schools Annual Report might. The existing charter schools have already paved the way for more innovation, progress, and success.

The report notes that student enrollment in Shelby County charter schools has increased annually by an average of 1,500 students per year. More parents are choosing the charter option than ever before.

The charter sector also has lower suspension rates for secondary schools, and public charters in Shelby County have a lower withdrawal rate than district-managed schools. More students receive more days of instruction.

Finally, charter schools participate in a program that offers transparency and encourages oversight.  The Operations Score Card (OSC)  assesses the charter schools’ performance regarding non-academic expectations, like school budgets, operation, legal compliance and other issues.  The OSC stated that Shelby County Charter schools “are consistently managing operations well and to respond appropriately in the interest of protecting SCS and its students when charters are at risk for non-compliance.”

In  Reinventing America’s Schools, David Osborne underscores the findings and points out, “As in most charter cities, Memphis’s charters outperform traditional public schools.”  

The data supports the promise of having public charters take over operation of SCS’s failing schools. It’s no wonder that Hopson supported the idea too.

Of course, not everyone was pleased at Hopson’s announcement. United Education Association of Shelby County President Tikeila Rucker was dismayed that Hopson would consider partnering with charter organizations: ““UEA along with parents, teachers and community leaders stands behind the district turning schools around, not giving schools away.”

Unfortunately, in the face of such commotion, Hopson has begun to placate those who want to keep the status quo.  In an email to principals, he clarified his remarks, writing: “All that said, I want to be very clear that my preference would always be to keep schools under the governance of (Shelby County Schools).”

Please, Superintendent Hopson, continue to stay strong and do what’s right. Put politics aside and put kids first.

Tax Cuts for the Companies That Deserve It: It’s not too late to put people on par with profits.

Corporate tax cuts have long been on the wish list of American businesses, which have rightly argued that both the rates and structure of the U.S. corporate tax code hurt America’s ability to compete globally. U.S. companies are now on track to see dramatic reductions in their tax rates, thanks to the $1.5 trillion tax cut package just passed by the GOP-led Congress and signed by President Donald Trump.

Trump and GOP Congressional leaders claim this relief will spur economic growth through new jobs and higher wages. As proof, they point to a series of commitments by companies such as Boeing and AT&T to provide their workers with bonuses and more worker training.

Unfortunately, it’s far more likely that shareholders, not U.S. workers, will reap the biggest benefits from the Trump tax cuts. According to Bloomberg, for example, many major corporations reportedly told investors in earnings calls this fall that they plan to “turn over most gains from proposed corporate tax cuts to their shareholders” through share buybacks or higher dividends. The Washington Post reported in December that, among America’s 20 biggest companies, just two explicitly promised to hire more workers – and no one committed to raising wages.

The App Economy in Vietnam, 2017

When Apple introduced the iPhone in 2007, that initiated a profound and transformative new economic innovation. While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones, and the wave of smartphones that followed, was a rare force for growth.

Today, there are 5 billion mobile broadband subscriptions, an unprecedented rate of adoption for a new technology. Use of mobile data is rising at 65 percent per year, a stunning number that shows its revolutionary impact.

More than just hardware, the smartphone also inaugurated a new era for software developers around the world. Apple’s opening up of the App Store in 2008, followed by Android Market (now Google Play) and other app stores, created a way for iOS and Android developers to write mobile applications that could run on smartphones anywhere.

Regulation and the Productivity Revolution in Japan’s Handset Market

The Progressive Policy Institute has long been focused on the interaction between regulation and innovation across the United States, Europe, and Asia. We are particularly concerned with the broad class of pricing of innovative products and services.

From this perspective, we note that the Japanese government, acting through the Ministry of Internal Affairs and Communications (MIC) and the Japan Fair Trade Commission (JFTC), has required or encouraged mobile providers to reduce or eliminate their subsidies for consumer purchases of smartphone handsets. The government’s explicit goal is to persuade the providers to use the money saved from reduced subsidies to lower rates for long-term consumers.

Marshall for the NY Daily News, “How Democrats can connect with middle America again: Advice from successful rural pols from left of center”

Washington Democrats employ legions of political consultants, entrail readers and data-crunchers to help them figure out how to sway voters. They could save a lot of money by listening instead to Democrats who win elections in red and purple states.

That’s the idea behind a trenchant new report that should be required reading for national party strategists. Despite its optimistic title, “Hope for the Heartland,” the study shines a pitiless light on how badly Democrats have lost touch with rural and working-class America.

Its authors are Rep. Cheri Bustos, a rising star in Congress who represents a mostly rural district in Illinois won by Donald Trump in 2016, and Robin Johnson, an acute observer of heartland politics who hosts a radio show in Iowa on the topic.

Continue reading at NY Daily News.

Osborne and Langhorne for The 74, “Is Chicago Really America’s Fastest-Improving Urban School District? Why Claims Made by the NYT & Others Are Misleading”

A recent New York Times article suggested that Chicago had the nation’s fastest-improving large urban school district. In it, reporters Emily Badger and Kevin Quealy summarized data from a new study by Sean Reardon of the Stanford University Center for Education Policy Analysis.

For many, that was surprising news, since the district has received heat for inflated graduation rates and three years of flat scores on PARCC (Partnership for Assessment of Readiness for College and Careers) tests, which reveal that only 1 in 4 CPS elementary students reads at grade level.

A look at more comprehensive data makes it clear that while Chicago did improve from 2009 to 2014, New Orleans and Washington, D.C., have improved faster. A key reason for rapid improvement in all three cities appears to have been aggressive replacement of failing schools with stronger schools, most of them charters. Unlike in New Orleans and D.C., however, Chicago’s leaders virtually halted charter growth five years ago — which could explain the stalled growth since 2014.

Continue reading here.

Press Release: PPI Report Highlights How Policy Can Drive New, Digitally Enabled Manufacturing Growth & Economic Revitalization

Report uses Upstate New York as case study for potential economic boon from ‘Internet of Goods’

WASHINGTON —The Progressive Policy Institute (PPI) today released a new report by Chief Economic Strategist Michael Mandel highlighting how the next wave of digitally-driven manufacturing – an essential part of what he calls the “Internet of Goods” – has the potential to revitalize local economies across the country under the right public policies. The report uses the conditions in Upstate New York – particularly the region from Buffalo to Rochester to Syracuse – as a real-world test bed to determine best practices for attracting and retaining Internet of Goods industries.

“Because new Internet of Goods industries incorporate real-time data and advanced analytics into their business practices, high-speed high-capacity mobile broadband is essential. … What’s needed are policies that encourage broadband companies to bring high-speed broadband networks to these areas of the country that are ideally suited for digitally-driven manufacturing companies, while not taking actions that delay or depress the build-out of these networks by making it cost prohibitive to build them.”

“With its world-class universities, access to interstate highways and shipping routes, educated workforce, and ample building space vacated by former manufacturing plants and other industries, [Upstate New York] possesses many essential qualities to forge a robust Internet of Goods economy,” Mandel writes.

Mandel argues the next generation of wireless broadband networks, usually called 5G networks, are essential infrastructure for the Internet of Goods. They provide enough bandwidth to power driverless trucks, guide drones without interruption, and support digital manufacturing. These networks will be built on millions of small cells throughout the country — in buildings or outdoors on utility poles, light poles, traffic lights, or exterior walls of buildings — and can transmit a lot of data over a short range. Thus, a robust broadband network needs to have many cells.

However, in terms of attractiveness for small cell build-out, Mandel writes, Upstate New York starts out with a handicap relative to comparable regions due to lower GDP density. On top of that, local government policies are hindering the deployment of small cells or 5G networks by imposing or considering new and prohibitive costs on the installation of the equipment needed to bring high-speed mobile broadband to the region.

“As a result, broadband companies will find alternative sites for building out their networks, jeopardizing not only the future of new industries that have located Upstate, but also closing the door to future industries and revenues they would generate,” Mandel concludes.

“Upstate New York should complement its universities, workforce, transportation and affordable land advantages by encouraging the essential high-speed, high-capacity broadband network to power future industries and create jobs.”

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The Internet of Goods and a Revitalized Economy: Upstate New York as a Template

A revival in local manufacturing could provide a new source of jobs for areas of the country that have suffered disproportionate job losses in recent years. The key to this revitalization is integrating digital technology into every stage of the research, development, distribution and delivery of the goods produced. We call this integration the Internet of Goods and believe it is poised to revitalize physical industries such as manufacturing, agriculture and transportation.

Based on new business models, as well as new technology, digitally-driven manufacturing can provide an essential jumping-off point for growth. As we recently wrote in a policy report:

We believe that, through additive manufacturing and other new technologies, combined with the new faster local distribution networks, there is the possibility of creating new business models for manufacturing. In particular, there is the potential for the revival of small-scale manufacturing operations, relatively close to customers, making small-batch and custom goods.

Digitally-driven manufacturers won’t locate in dense urban areas where land prices are high and logistics for transporting the manufactured goods are complex, time consuming and expensive. Instead, they will gravitate to areas of the country that have sufficient, available land; have a strong base of workers comfortable with technology; and have access to a high-capacity broadband network infrastructure.

PPI Tech Job Index 2017: States

Tech and tech-enabled jobs are becoming increasingly important to many state economies–not just the tech hubs like California and Texas.  Particularly important is the role of ecommerce, which is driving the creation of hundreds of thousands of tech-enabled electronic shopping and fulfillment center jobs around the country (for example, see here).  Going forward, we expect tech-enabled manufacturing to help revive job growth in areas that were hit hit hard by the decline in factory jobs (for example, see here).

For this study, we define the  PPI Tech Job Index for a state or local area as the increase in tech and tech-enabled jobs from 2010 to 2016, as a percentage of the total number of private sector jobs in that state or local area in 2010. Thus, the PPI Tech Job Index serves as a measure of the importance of tech growth to the economy of that state.

The industries that we include, and their NAICS codes, are listed below in Table 1. These include computer and electronics manufacturing, electronic shopping, software publishing, internet publishing and search, computer systems and programming,  management and technical consulting, and the increase in warehousing jobs since 2007.  As we have shown in earlier work, this last category picks up the growth of employment in ecommerce fulfillment centers, which do not yet have their own industry.

 Table 1: Tech and tech-enabled industries
334 Computer and electronics manufacturing
4541 Electronic shopping
5112 Software publishing
51913 Internet publishing and search
5415 Computer systems design and programming
5416 Management and technical consulting
493 Warehousing (change since 2007, reflects ecommerce fulfillment)

Table 2 below shows the top states, ranked by the PPI Tech Job Index. We can see Washington at the top, propelled by Amazon’s growth. And California, not surprisingly, is in the top 5. But the top 10 also includes states such as Utah, Tennessee, and Georgia, with North Carolina, Missouri, and Indiana not far behind. Utah’s high ranking is due to growth in computer systems design and programming,  and electronic shopping jobs, while Tennessee showed strong gains in  ecommerce, computer systems design and programming, and management and technical consulting. Missouri’s ranking came from gains in computer systems design and programming, while Indiana benefited from growth in ecommerce and computer systems design and programming. Massachusetts’ ranking is dragged down a bit because of the continuing decline of tech hardware jobs.

The conclusion: The economic impact of tech and tech-enabled jobs reaches across the entire country.  We will shortly be publishing a more detailed study where we look at the PPI Tech Job Index for individual counties.

 Table 2 PPI Tech Job Index: Top States
    PPI Tech Job Index* Tech jobs created, 2010-2016 (thousands)
1 Washington 3.4% 77.2
2 Utah 2.8% 26.2
3 California 2.1% 256.9
4 Tennessee 2.0% 42.2
5 South Carolina 1.9% 26.5
6 Texas 1.8% 146.7
7 Delaware 1.7% 5.7
8 Colorado 1.6% 29.0
9 Georgia 1.6% 49.0
10 North Carolina 1.6% 48.9
11 Missouri 1.5% 31.9
12 Massachusetts 1.5% 40.7
13 Indiana 1.5% 34.2
14 Oregon 1.4% 18.8
15 Minnesota 1.3% 28.3
16 Illinois 1.3% 58.9
17 Florida 1.2% 74.3
18 New York 1.2% 84.7
19 New Jersey 1.2% 38.3
20 Kentucky 1.2% 16.8
21 Virginia 1.2% 33.3
22 Pennsylvania 1.1% 53.5
23 Maryland 1.1% 21.1
24 Oklahoma 1.0% 11.8
25 Nevada 1.0% 9.7

*Change in tech and tech-related jobs from 2010 to 2016, as a percentage of total private sector jobs in 2010.

Data: BLS QCEW, PPI

Moynihan was right: The GOP tax giveaway will lead to safety net cuts

When Congress passed a massive tax giveaway to the richest that will add at least $1 trillion to America’s debt late last year, GOP lawmakers were remarkably candid about the next step: cutting the safety net for hundreds of millions of Americans by going after Social Security, Medicare and Medicaid benefits.

As Sen. Marco Rubio (R-Fla.) noted recently when asked about the huge debt the tax bill creates, he said Republicans plan on “instituting structural changes to Social Security and Medicare for the future” to pay for their tax cuts. House Speaker Paul Ryan (R-Wis.) agreed: “We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” he said in December.

This unusual candor may owe something to history.

In many quarters of Washington, the connection between the GOP’s history of reckless tax cuts to the rich and desire to slash the social safety net has been an open secret for almost three decades, thanks largely to former New York Sen. Daniel Patrick Moynihan (D).

In the 1980s, as U.S. debt ballooned because of President Reagan’s tax cuts and defense spending increases, Moynihan maintained that piling up debt to unsustainable levels was part of a deliberate strategy by Republicans, providing them an excuse to then cut the social safety net.

Continue reading at The Hill.

Rotherham for U.S. News, “Why the new tax break for private schools is such bad policy”

Education was mostly a sideshow in the massive tax overhaul Congress passed just before Christmas. But one marginal issue passed in the dead of night may end up playing a big role in the school choice debate going forward.

Under the new law, money from 529 college savings accounts can now be used for private elementary and secondary education expenses. 529s are savings accounts where you can put after-tax dollars earmarked for college expenses (and now elementary and secondary expenses) into an account where that money grows tax free.

That change was the result of a late-night amendment by Republican Texas Sen. Ted Cruz that only passed with Vice President Pence casting a tie breaking vote. The provision is lousy public policy and even many choice advocates opposed it, but it’s a big political win for proponents of education tax credits and using the tax code rather than direct spending to advance school choice.

Although proponents of school choice are frequently lumped together, there are actually lively and important policy differences around preferred strategies to expand choice. The role of government regulation is a particularly acute flashpoint. For some choice proponents, tax policy offers the advantage of side-stepping a variety of regulatory questions. Tax credits or accounts like 529s allow parents to spend money as they see fit without various rules about everything from student assessments to civil rights. In addition, tax proposals are an easier budget lift than direct government expenditures.

Continue reading at U.S. News.