The theme of this year’s Investment Heroes report is the recovery of U.S. capital investment from the shock of the pandemic and the benefits for workers. Every year, the Progressive Policy Institute (PPI) analyzes the financial reports of large U.S. companies and ranks them by their capital investment in the United States. Eight of the top 10 companies on this year’s Investment Heroes list are in tech, broadband, or e-commerce industries. Amazon is at the top of the list, investing $46.5 billion in the United States in 2022, according to estimates by PPI. Next comes Meta, Alphabet, AT&T and Verizon, followed by Microsoft, Intel, Walmart, Comcast, and Duke Energy.
All told, the 25 companies in the Investment Heroes list invested $324 billion in the U.S. in 2022 (Table 1).
But it is not simply that the companies on the list invest the most in the U.S. — they also show faster recovery from the pandemic. Since 2019, domestic capital expenditures by the 25 companies on this year’s list has risen 38%, without adjusting for inflation. By comparison, overall nonresidential investment as measured by the Bureau of Economic Analysis rose by only 15% over the same period, also without adjusting for inflation.
And while this report focuses only on U.S.-based companies, the difference was not being made up by money from abroad. New direct investment by foreign companies in the U.S. actually fell by 20% from 2019 to 2022.
The domestic capital investment by the companies on the list is the lifeblood of the economy, producing job and income gains, and setting the country on a path to a greener future. It ranges from e-commerce fulfillment centers employing thousands of workers at good wages, to data centers supporting small businesses across the country, to 5G and broadband networks linking rural areas, to factories building batteries for the next generation of electric vehicles, to new fabs, to new fuel-efficient planes.
It should be noted that the financial data we use for our list focuses mainly on spending on structures and equipment — what’s known as tangible investment. But the government’s definition of investment includes key intangibles such as software and research and development. Very few companies report software spending, and not all companies break out their R&D expenditures. But the ones that do tend to show big gains. For example, Alphabet boosted its spending on R&D by more than 50% from 2019 to 2022, compared to a 32% gain in overall private R&D spending. Apple showed a 62% increase in R&D spending from FY 2019 to FY 2022. General Motors increased its R&D spending by 44%. Such increases fuel new product development and innovation, which shows up as faster growth going forward.
From the perspective of policy, it’s worth comparing the U.S. capital investment performance during the pandemic years with Europe’s. Europe has consistently adopted a more aggressive regulatory stance. Has it paid off in the form of higher investment?
The short answer is no. When the European Investment Bank (EIB) did its comparison of U.S. and European investment spending in a February 2023 report, it focused on a measure called “non-construction investment” — basically machinery, equipment and intellectual property assets such as software and R&D. Using the EIB’s methodology, we calculated that nonconstruction investment in the United States rose by 20% from 2019 to 2022, compared to only 12% in the European Union. Overall, the EIB study finds a widening gap between the US and Europe in terms of productive investment.
Before we dive into the details of this year’s study, it’s worth taking a long-run perspective. Our first Investment Heroes report, released in 2012, tracked 2011 domestic capital spending. Five out of the top ten companies that year were energy companies. The only tech company in the top ten was Intel. Google and Apple were 24 and 25 on the list, respectively, and Amazon was nowhere to be found. Neither was Microsoft or Meta. It was a completely different list.
Figure 1 shows the full history of aggregate capital spending of the Investment Heroes list on a year-by-year basis (right axis), plotted against annual U.S. nonresidential investment (left axis). From 2011 to 2017 the two figures rose by the same amount, 36% without adjusting for inflation.
But after 2017, the situation changed. The companies on the Investment Heroes list began driving national capital expenditures. From 2017 to 2022, domestic capital expenditures by PPI’s Investment Heroes rose by 75%, compared to 29% for the BEA’s nonresidential investment figures.
The key leader was Amazon. In the five years ending with 2022, the company invested the staggering sum of $162 billion in the United States, creating hundreds of thousands of jobs in the process and creating massive gains in consumer welfare.
But it wasn’t simply Amazon. Table 2 sums our 2022 Investment Hero estimates into seven economic sectors: tech/ internet; broadband/ wireless; ecommerce/retail; energy distribution; energy exploration; transportation; and automotive. We call these the “high-investment” sectors. We then compare capital spending in those sectors with our estimates of domestic capital spending for those same companies in 2019.
For six out of seven economic sectors, we find significant growth in domestic capital spending from 2019 to 2022. In other words, the companies on our Investment Heroes List typically have high and growing levels of domestic capital investment compared to before the pandemic.
In addition, our analysis shows that capital investment creates jobs and raises wages. Between 2019 and 2022, the high-investment sectors on our list added more net new jobs than the entire rest of the private sector put together. We calculate this number by looking at the employment in domestic industries corresponding to the seven sectors in Table 2, as reported by the BLS. (We use industry data because domestic employment data is not available for all companies. The industry-level data also accounts for broader impacts of investment).
By our estimate, the high-investment sectors added 1.3 million net new jobs between 2019 and 2022, accounting for 55% of private sector job creation. Employment in the high-investment sectors grew by almost 5%, compared to a 1% gain in the rest of the private sector.
The leader was the ecommerce/retail sector, which added more than 800,000 jobs between 2019 and 2022, as job gains in ecommerce fulfillment and delivery more than made up for any losses in brick-and-mortar retail. Next was the combined tech/internet/broadband/wireless sector, which added almost 500,000 jobs.
What about pay? Real wages per worker in the ecommerce/retail sector rose by 7% from 2019 to 2022 (using QCEW data from the BLS and the PCE deflator). Overall, real wages per worker in the high-investment sectors rose by about 6%, a slightly larger gain than the rest of the private sector.
We also note the importance of investment in human capital — the training and education of workers. Companies are not required to report spending on training and education, but it’s more essential today than ever before.