issue: Economy

European App Economy Jobs Update, 2019

Posted on by The Progressive Policy Institute

In this note we update our previous estimates of European App Economy jobs. Our latest research estimates that the EU-28 countries (plus Norway and Switzerland)  have 2.093 million App Economy jobs as of July 2019.  That’s up 27% from the 1.642 million jobs that we estimated for January 2016 in our first European App Economy jobs report (released June 2016).  We follow the methodology described in the appendix to our 2017 European App Economy report. For a summary description of the basic approach, see the recent update on U.S. App Economy jobs.

We also estimate European App Economy jobs by mobile operating system. As of July 2019, there were 1.584 million jobs in the European iOS ecosystem and 1.693 million jobs in the European Android ecosystem. (The iOS and Android numbers add up to more than the total, because many App Economy jobs belong to both ecosystems).

European App Economy Jobs by Operating System (July 2019)*
(thousands)
Total app economy 2093
iOS ecosystem 1584
Android ecosystem 1693
*30 country total. Includes estimates for Norway and Switzerland
Data: ILO, PPI, Indeed

Our approach allows us to estimate European App Economy jobs by country and leading cities.  The top country for App Economy jobs is the United Kingdom, followed by France, Germany, the Netherlands, Spain and Sweden. The UK is the leader in iOS ecosystem jobs, with France closely followed by Germany.  France and the UK are tied for the lead in Android ecosystem jobs.

European App Economy Jobs by Country (July 2019)
(thousands)
Total app economy jobs iOS ecosystem jobs Android ecosystem jobs
Austria 25 19 21
Belgium 29 22 23
Czech 42 29 30
Denmark 52 41 37
Finland 48 37 42
France 350 236 296
Germany 296 233 239
Greece 10 6 8
Hungary 25 17 20
Ireland 20 16 12
Italy 94 70 77
Luxembourg 4 2 3
Netherlands 212 171 163
Norway 43 36 37
Poland 78 53 60
Portugal 37 28 27
Romania 24 19 21
Spain 101 77 82
Sweden 98 72 84
Switzerland 34 25 31
United Kingdom 366 295 296
30-country total* 2093 1584 1693
*Includes estimates for Bulgaria, Croatia, Cyprus, Estonia, Latvia, Lithuania, Malta, Slovakia, and Slovenia.
Data: ILO, Indeed, PPI

The top European city for App Economy jobs according to our research is London, followed by Paris, Amsterdam, Stockholm, and Berlin. Germany has a remarkable six cities in the top 30 and the Netherlands has four cities in the top 30. Noticeably missing from the top 30 list is Rome.

European App Economy Jobs by Major City (July 2019)
(Thousands)
Total app economy iOS ecosystem Android ecosystem
1 London 175 141 141
2 Paris 169 114 143
3 Amsterdam 84 68 64
4 Stockholm 56 41 47
5 Berlin 54 43 44
6 Rotterdam* 45 36 34
7 Barcelona 42 32 34
8 Helsinki 36 28 32
9 Copenhagen 34 27 25
10 Eindhoven 34 27 26
11 Madrid 33 25 27
12 Milan 30 23 25
13 Munich 30 23 24
14 Manchester 26 21 21
15 Utrecht 25 21 20
16 Oslo 25 21 22
17 Prague 25 17 18
18 Warsaw 22 15 17
19 Frankfurt 22 17 17
20 Stuttgart 21 17 17
21 Lisbon 21 15 15
22 Brussels 20 15 16
23 Cologne** 20 16 16
24 Budapest 20 13 15
25 Lyons 19 13 16
26 Hamburg 18 14 15
27 Zurich 18 13 16
28 Birmingham 16 13 13
29 Krakow 15 10 12
30 Dublin 14 11 9
*Radius around Rotterdam is only 45 kilometers to avoid overlap with Amsterdam.
**Includes Dusseldorf.
Urban areas are defined as 50 kilometers or 30 miles around a center city. We did not have data for urban areas in Bulgaria, Croatia, Cyprus, Estonia, Latvia, Lithuania, Malta,  Slovakia, and Slovenia.
Source: Progressive Policy Institute

We also looked at change in App Economy jobs by country over time. To reduce the effect of statistical noise, we compared the average of the 2016 and 2017 estimates with the average of the 2018 and 2019 estimates. We note that the only countries with declining App Economy jobs are Italy and Poland. The United Kingdom’s 5% increase is surprisingly small, and perhaps reflects the impact of Brexit. By contrast, Ireland’s App Economy employment rose by 24%.

Change in App Economy Jobs by Country, 2016-17 to 2018-19
(thousands)
2016-17* 2018-19** percentage change
Austria 20 32 64%
Belgium 24 28 14%
Czech Republic 29 35 19%
Denmark 40 50 26%
Finland 51 51 1%
France 244 287 17%
Germany 289 319 10%
Greece 7 8 11%
Hungary 17 19 14%
Ireland 14 18 24%
Italy 99 92 -7%
Luxembourg 2 3 31%
Netherlands 155 193 25%
Norway 46 51 11%
Poland 68 63 -7%
Portugal 29 34 15%
Romania 21 25 18%
Spain 82 92 12%
Sweden 82 95 16%
Switzerland 32 34 7%
United Kingdom 326 342 5%
*Average of 2016 and 2017 estimates. **Average of 2018 and 2019 estimates. Source: Progressive Policy Institute

 

U.S. App Economy Jobs Update, 2019

Posted on by The Progressive Policy Institute

In this note we update our previous estimates of U.S. App Economy jobs. Our latest research estimates that the U.S. has 2.246 million App Economy jobs as of April 2019.  That’s up 30% from 1.729 million that we estimated for December 2016 in our previous report (released May 2017).

That figure translates into a 12% annualized growth rate for App Economy jobs, compared to a 6.7% annual growth rate for computer and mathematical jobs over the past 3 years, and a 1.8% annual growth rate for all nonfarm private sector jobs.

Since fall 2011, we have done a total of six App Economy job estimates for the United States. The chart below lays out our published U.S. App Economy job estimates, starting with the first one in fall  2011 (released February 2012). These numbers include a conservative estimate of indirect and spillover jobs.

We also estimate U.S. App Economy jobs by mobile operating system. As of April 2019, there were 1.853 million jobs in the iOS ecosystem and 1.736 million jobs in the Android ecosystem. (The iOS and Android numbers add up to more than the total, because many App Economy jobs belong to both ecosystems).

U.S. App Economy Jobs by Operating System, April 2019
millions of App Economy jobs
All App Economy Jobs 2.246
iOS ecosystem 1.853
Android ecosystem 1.736
Data: PPI, Indeed.com

Summary Methodology

The methodology for generating these estimates is described in the appendix to the May 2017 US App Economy report. Since then, we’ve made some small technical adjustments to make the U.S. methodology consistent with our global methodology.

For this research, a worker is in the App Economy if he or she works in:

  • An information and communications technology (ICT) related job that uses App Economy skills— the ability to develop, maintain, or support mobile applications. We will call this a “core” App Economy job. Core App Economy jobs include app developers; software engineers whose work requires knowledge of mobile applications; security engineers who help keep mobile apps safe from being hacked; and help desk workers who support use of mobile apps.
  • A non-ICT job (such as human resources, marketing, or sales) that supports core App Economy jobs in the same enterprise. We will call this an “indirect” App Economy job.
  • A job in the local economy that is supported by the income flowing to core and indirect App Economy workers. These “spillover” jobs include local retail and restaurant jobs, construction jobs, and all the other necessary services.

To estimate the number of core App Economy jobs, we use a multi-step procedure based on data from the universe of online job postings, and described in detail in the methodology appendix of the May 2017 report. The source of the data is Indeed.com, which calls itself “the #1 job site in the world.”  Indeed’s API allows us to use Boolean search to identify App economy-related job postings.

Job postings are a powerful source of information about the skills being required by employers. For example, if a job posting requires that the job candidate have experience developing apps for iOS—the iPhone/iPad operating system—then we can reasonably conclude that the posting refers to a core App Economy job.

However, the number of job postings does not immediately translate into employment levels. The process for estimating the relationship between jobs postings and employment was initially described in a series of papers starting in 2012, when we produced the first-ever estimate of the U.S. App Economy. [i] We use an improved version of that methodology here, including a conservative set of multipliers relating indirect and spillover jobs to core App Economy jobs.[ii]

Future blog items will discuss App Economy jobs by state and by city.

[i] Michael Mandel. 2012. “Where the Jobs Are: The App Economy,” South Mountain Economics/Technet.

Michael Mandel and Judith Scherer. 2012. “The Geography of the App Economy,” South Mountain Economics/CTIA.

Michael Mandel and Judith Scherer. 2015. “A Low-Cost and Flexible Approach for Tracking Jobs and Economic Activity Related to Innovative Technologies,“ South Mountain Economics/Nesta.

[ii]  We assume that companies have one indirect job for every core app economy job. We then assume there are 0.5 spillover jobs for every core or indirect job.  This low number is consistent with the latest research on local job multipliers. See, for example. Timothy J. Bartik and Nathan Sotherland. 2019. “Realistic Local Job Multipliers.” Policy Brief, W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/pb2019-8.

Long for Medium: “The Canadian App Economy is Global and Diverse – But Can Improve”

Posted on by The Progressive Policy Institute

The Canadian App Economy is strong both in terms of app exports and compared to its industrialized peers. The Canadian App Economy has 262,000 App Economy workers as of November 2018, according to a recently released report by the Progressive Policy Institute (PPI). App Economy workers are those that develop, maintain, or support mobile applications. What’s more, Canada is outperforming many of its industrialized peers.

Read the full piece on Medium by clicking here. 

The Impact of Electronic Cigarettes on Cigarette Smoking By Americans and Its Health and Economic Implications

Posted on by The Progressive Policy Institute

EXECUTIVE SUMMARY

Cigarette smoking by Americans declined steadily from the mid-1960s to around 2005, when this progress began to slow. From 2013 to 2017, however, cigarette smoking rates fell sharply, during a period in which the use of electronic cigarettes or e-cigarettes increased sharply. This study examines the connection between these two developments and the implications.

 

  • Among adults, cigarette smoking rates fell from 18.0% in 2013 to 14.0% in 2017, while the use of e-cigarettes increased from 1.9% to 2.8%.
  • Over the same years, cigarette smoking rates among high school students fell from 12.7% to 7.6% while their rates of e-cigarette use increased from 4.5% to 11.7%. Among adolescents, the association between declining smoking rates and rising e-cigarette use was even stronger than among adults.
  • Statistical analysis of the changes in smoking rates and e-cigarette use by age, gender, race and ethnicity suggests that about 70 percent of the increased decline in cigarette smoking from 2013 to 2017 was associated with the rising use of e-cigarettes. The remaining 30 percent was associated with higher cigarette taxes, bans on cigarette sales by the CVS pharmacy chain, and increased use of anti-smoking prescription drugs.
  • Statistical analysis also strongly suggests that e-cigarettes are not a gateway to smoking cigarettes.
  • Rather, statistical analysis and numerous studies establish that e-cigarettes are an effective tool to help people stop smoking or avoid starting to smoke cigarettes.

 

Based on these analyses, we estimate that pre-existing trends and factors other than e-cigarettes can explain a decline in smoking rates by people ages 18 to 44 from 20.2% in 2014 to 17.9% in 2017. However, the rate fell from 20.2% to 14.6% in 2017, and the rising use of e-cigarettes can explain the additional 3.3 percentage-point decline in cigarette smoking rates.

 

  • By this account, e-cigarette use is closely linked to a reduction in cigarette smoking from 2014 to 2017 by 922,301 people ages 18 to 24 and 2,922,540 people users ages 25 to 44, or a total of 3,844,840 people.

 

We also calculated the healthcare savings and costs and the productivity benefits associated with the reductions in cigarette smoking and the increased use of e-cigarettes from 2014 to 2017 by those 3,844,840 people ages 18 to 44. These calculations are based on healthcare costs, life expectancy, and the differences in the incidence of illnesses that interfere with work for smokers, ex-smokers, nonsmokers and e-cigarette users.

 

  • E-cigarette use lowers people’s annual per capita healthcare costs, compared to cigarette smokers and ex-smokers, for all age groups up to age 75.
    • For people ages 25 to 44, the annual per capita healthcare costs of cigarette smokers are 9.8 percent greater than those of e-cigarette users, and the average annual per capita healthcare costs for ex-smokers are 19.8 percent greater than for e-cigarette users.
    • For people ages 45 to 64, annual per capita healthcare spending for cigarette smokers is 8.8 percent greater than for e-cigarette users, and average per capita healthcare costs for ex-smokers are 34.4 percent greater than for e-cigarette users.
    • Treating cigarette-smoking-related diseases accounts for an estimated 8.7 percent of annual healthcare spending, or $303.8 billion in 2017.
  • By reducing the number of people who smoke cigarettes, e-cigarette use also extends the lifespans of millions of people, raising their lifetime medical costs across all age groups except those 18 to 24.
    • We calculate that the use of e-cigarettes by the 922,301 people ages 18 to 24 in 2017, who otherwise would have started smoking cigarettes, should reduce their lifetime healthcare costs by $11.3 billion.
    • However, the use of e-cigarettes by the 2,922,540 people ages 25 to 44 in 2017,
      who otherwise would have started smoking cigarettes, increases their lifetime healthcare costs by $284.5 billion.
  • Those higher lifetime healthcare costs reflect spending for 330,489 people whom we would expect to have died before their mid-to-late 60s if they started smoking cigarettes in 2014- 2017, and for 500,865 people whom we would expect to have died before their mid-to-late 80s if they had started smoking instead of using e-cigarettes.
  • E-cigarette users (and nonsmokers) also are more productive than smokers, because smokers miss more work due to illness, come to work still impaired by illness more often, and take smoking breaks. We found that e-cigarette users are on average $820 more productive per-year than ex-cigarette smokers and $2,371 more productive per-year than current smokers, and that ex-smokers who shifted to e-cigarettes are on average $1,554 more productive per-year than current smokers.
    • The additional productivity of the share of the 922,301 e-cigarette users ages 18 to 24 in 2017 who worked from 2017 on, and who otherwise would have become smokers in 2014-2017, would be worth $14.7 billion over the 10 years from 2017 to 2027;
    • The additional productivity of the share of the 2,922,540 e-cigarette users ages 25 to 44 in 2017 who worked from 2017 on, and who otherwise would have continued to smoke in 2014-2017, would be worth $29.2 billion over the years from 2017 to 2027.

 

Read the full report.

Funding America’s Future: A Progressive Budget for Equitable Growth

Posted on by The Progressive Policy Institute

OVERVIEW:

PPI’s Progressive Budget for Equitable Growth gives the next administration a framework for investing in our country that doesn’t stick young Americans with the bill. It powers the engines of American innovation by increasing investments in infrastructure, education, and scientific research by more than 70 percent relative to what they would be under current law. We tackle the greatest challenges facing our society, from rising economic inequality to climate change, through dynamic tax and spending policies that also help smooth the business cycle. And we pay for all of it, giving future policymakers the fiscal space necessary to respond to other unforeseen challenges and demonstrating that fiscal responsibility and investing in the American people are not contradictory – they are in fact complementary. By supporting both equity and growth, our blueprint would once again make fiscal policy an instrument of national progress.

Read the Blueprint:

 

 

Media Advisory: Building a #BetterBudget, A Forum on Investing in America’s Future and Tackling Our National Debt

Posted on by The Progressive Policy Institute

WASHINGTON—The Progressive Policy Institute and House Blue Dog Coalition will host a lunchtime discussion today at the Longworth House Office Building about what leaders in Congress can do to invest in equitable growth while reducing our national debt.

America suffers from a shortsighted fiscal policy that promotes consumption today instead of investing in tomorrow. The federal government now spends more to service our growing national debt than it does on public investments in education, infrastructure, and scientific research combined. Meanwhile, a perfect storm of fiscally irresponsible tax cuts and an unwillingness to tackle escalating health and retirement spending are feeding trillion-dollar deficits as far as the eye can see. This is not a fiscal policy for strengthening America’s future – it’s blueprint for American decline.

At the event, PPI will release a comprehensive budget plan with over 50 policy recommendations for the next administration to make room for public investments in education, and infrastructure, and scientific research; modernize federal health and retirement programs to reflect an aging society; and create a progressive, pro-growth tax code that raises the revenue necessary to pay the nation’s bills.

Lunch will be provided. This event is open to the press.

Who:

  • Rep Stephanie Murphy (D-FL), Co-Chair of the House Blue Dog Coalition
  • Rep. Ed Case (D-HI), Co-Chair of the Blue Dog Task Force on Fiscal Responsibility and Government Reform
  • Rep. Ben McAdams (D-UT), Co-Chair of the Blue Dog Task Force on Fiscal Responsibility and Government Reform
  • Ben Ritz, Director of PPI’s Center for Funding America’s Future
  • Marc Goldwein, Senior Vice President at the Committee for a Responsible Federal Budget
  • Emily Holubowich, Executive Director of the Coalition for Health Funding and Co-Founder of NDD United
  • Will Marshall, President of PPI, Moderator

When: Thursday, July 25, 2019
12:00 PM – 1:30 PM

Where: Longworth House Office Building, Room 1302
15 Independence Ave, SE
Washington, D.C. 20515

For press inquires, please contact Carter Christensen, media@ppionline.org or 202-525-3931.

Ritz for Medium: “Budget Deal Perpetuates Broken Status Quo”

Posted on by The Progressive Policy Institute

The budget deal scheduled for a vote tomorrow gets two things right and nearly everything else wrong. The main thing it gets right is the need to unshackle domestic public investment that would be subject to an across-the-board cut known as “sequestration” in the absence of legislative action. It also suspends the federal debt limit for two years, which will allow the Treasury Department to continue paying the bills America has already incurred without risking the prospect of a catastrophic default on our debts. What it gets wrong is charging $320 billion in new spending to our national credit card, which will further grow those debts and so perpetuate Washington’s governing dysfunction.

 

Read the full piece on Medium by clicking here. 

Regulatory Reform Could Revitalize Sluggish Business Creation

Posted on by The Progressive Policy Institute

The U.S. economy recently marked 10 years of economic expansion – its longest in history – but there’s an important exception: new business creation. In recent decades, the American entrepreneurial engine has decelerated. Regulatory reform could help revive American entrepreneurship, reducing the burden on new businesses and realizing gains in economic growth. That doesn’t necessarily mean deregulation, but rather streamlining and updating old or obsolete rules to provide entrepreneurs with flexibility in today’s fast-changing world.

New and young businesses are the foundation of the United States’ economy, creating jobs and spreading wealth across our society. “Together, startups and high-growth firms (which are disproportionately young) account for about 70 percent of firm-level gross job creation in a typical year,” write entrepreneurship researchers Decker et al. Many of these young companies go on to become the next generation of small businesses, which employ 48 percent of private sector employees.

Unfortunately, the rate at which new businesses are being created has fallen off in the wake of the Great Recession. While firm deaths have returned to their pre-recession levels, firm births are down 22 percent compared to 2006 levels. And, for the first time since the Census Bureau began collecting data, firm deaths exceeded firm births from 2009 to 2011.

Smart policy can help increase the number of new businesses that are created and the number that scale up, though. Regulation is one area where policy can be made more efficient. A 2017 National Small Business Association survey estimated that the average small business owner spends at least $12,000 every year on compliance, with nearly one in three spending more than 80 hours every year dealing with federal regulation.

We know from research by Victor Bennett and Ronnie Chatterji that many people have entrepreneurial aspirations, but fail at many steps along their path to move to actual business formation. While many fail at early stages, such as basic market research, others undoubtedly run up against these mountainous regulatory costs and say, “not worth it.”

One way to reduce these costs is to focus on the steady buildup of regulation, or regulatory accumulation. The Code of Federal Regulations, where rules promulgated by the federal government are published annually, swelled by 17 percent from 2008 to 2018 alone. While Washington has dozens of agencies that issue new rules, not one institution is dedicated to streamlining the accumulated body of regulations. That’s why PPI proposed the Regulatory Improvement Commission (RIC). The RIC would fill an institutional vacuum in regulation policy by creating a mechanism for the periodic clearing out of obsolete rules.

Modeled on the Base Realignment and Closure Commission (BRAC) and comprised of a bipartisan group of highly qualified stakeholder appointees, the RIC would be an independent commission of eight members, appointed by the President and Congress, with regulatory expertise across industry and government. It would meet as authorized by Congress to review and, following a public comment period of 60 days, draw up a list of 15 to 20 rules for elimination or modification. The package would be sent to Congress for an up-or-down vote, and the RIC would be disbanded. If the proposed changes pass Congress, they would go to the president’s desk for signature or veto.

In 2015, bipartisan groups of lawmakers introduced bills in the House and Senate to establish the RIC based on the BRAC model. House cosponsors included Mick Mulvaney (R-SC), now acting White House Chief of Staff, and Kyrsten Sinema (D-AZ), now a Democratic Senator from Arizona.

Startup-friendly policies such as the RIC can help reduce compliance and opportunity costs, catalyzing a rebound in America’s startup rate and spurring economic growth. Streamlining regulation would help inventors and entrepreneurs spend less time and resources on regulatory compliance and focus instead on delivering goods and services and scaling their enterprises.

Research assistance was provided by Roman Darker, economics intern at the Progressive Policy Institute.

A Preliminary Analysis of Pricing by App Stores

Posted on by The Progressive Policy Institute

Summary

How much do the Apple App Store and Google Play, the two major mobile application stores, charge? The short and obvious answer is that Apple and Google levy a fee of 30% of the revenue from downloading paid apps; 30% of revenue from in-app purchases of digital goods and services; and a lower charge of 15% for renewed subscriptions.

But this answer is at best incomplete, and perhaps wrong. The two major app stores also provide a distribution and download service for millions of “free” apps—including testing them for malware—while charging only a minimal fixed fee to each developer. These free apps can potentially generate a big benefit for consumers and a large return for their owners.

To put it more precisely, the app stores provide a distribution, search and validation service to all app developers and app owners for nearly nothing. This service is the equivalent of a major retailer like Walmart providing free shelf space to millions of different goods owned and sold by other companies.

The average price charged by Apple and Google is therefore much less than the face value of 30%, if we take into account the large number of free apps. Our preliminary scenario analysis suggests that the revenues collected by the app stores could be in the range of 4-7% of the value generated by all apps in the app stores, including both free and paid.

Read “A Preliminary Analysis of Pricing by App Stores”

 

Kim for Medium: “The Next Step in Criminal Justice Reform”

Posted on by The Progressive Policy Institute

For many Americans, one traffic ticket could be all it takes to derail their financial security — and perhaps even their livelihood.

Loathe to raise taxes, many states and cities are increasingly relying on fines and fees — whether for traffic offenses, court costs or misdemeanors such as littering — to fill their coffers. The amounts demanded are often exorbitant, and fall disproportionately on low-and moderate-income Americans who can least afford to pay. In California, for instance, the Lawyers’ Committee for Civil Rights found that a $100 traffic ticket can ultimately cost a motorist as much as $815 after various surcharges, “administrative” fees and late penalties are factored in — a cripplingly large figure even for someone who is relatively wealthy.

 

Read the full piece on Medium by clicking here. 

Marshall for Medium: “Trump’s Biggest Broken Promise”

Posted on by The Progressive Policy Institute

Unlike such polarizing issues as health care, immigration and climate change, repairing and updating our economic infrastructure is something both parties say they are for. Yet somehow our political leaders can’t get the job done.

President Trump often complains about the shabby state of America’s airports, highways and railways. “The only one to fix the infrastructure of our country is me — roads, airports, bridges,” he tweeted just before launching his 2016 presidential bid. “I know how to build, pols only know how to talk!”

Yet Trump’s lack of focus and discipline, along with his clownish political antics, keep sabotaging bipartisan progress on infrastructure. In a meeting with House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer in April, Trump proposed to spend $2 trillion on infrastructure. But the deal quickly unraveled as Republican Senators made clear they wouldn’t support gas or other tax increases to pay for it.

 

Read the full piece on Medium by clicking here. 

Bledsoe for Forbes: “Tax Credits for Affordable Electric Vehicles Gain Speed, But Legislation Must Avoid Stop Signs

Posted on by The Progressive Policy Institute

As Congress begins to turn toward tax policies to help clean energy manufacturing, electric vehicle tax credits aimed directly at more affordable vehicles are gaining speed, just as a previous Forbes column and a Progressive Policy Institute (PPI) white paper urged several months ago.

The question now is will EV advocates in Congress, the U.S. auto industry and labor unions get the message and reform tax incentives to benefit middle-income Americans. Such revised tax credits focused on more affordable EVs will increase the chances new incentives become law, and will better allow the U.S. to reap the remarkable economic, health, manufacturing and environmental benefits of EVs. Yet as of now, new EV tax credits have been left entirely out of a so-called “tax extenders” outline circulating among House Ways and Means Committee members.

But a series of new developments are demonstrating that tax credits focused on affordable vehicles are gaining momentum.

 

Read the full piece on Forbes by clicking here. 

Kim for Medium: “The Dismal State of America’s Working Class”

Posted on by The Progressive Policy Institute

President Donald Trump staked his successful claim to the U.S. presidency with his appeal to the discontents of blue-collar America — i.e., non-college-educated Americans who have perhaps been the hardest hit by globalization and technological change.

The same voters are the target of some of Trump’s Democratic 2020 challengers, most notably former Vice President Joe Biden. Biden, for instance, launched his campaign in a Pennsylvania union hall, declaring himself to be “a union man, period.”

Both Biden and Trump are right to focus their attentions on this group of Americans, whose fortunes have not risen with the overall economy but stagnated or even fallen. Without the benefit of higher education, working class Americans have been unable to compete for jobs demanding specialized technical skills, while the places they live have been hollowed out by shifts in global supply chains and the death of low-skilled manufacturing. So long as these workers feel left out of the economic mainstream, they will remain a potent political force, including in the upcoming 2020 election.

Read the full piece on Medium by clicking here. 

Gerwin for Medium: “Getting Democrats to ‘Yes’ on Trump’s New NAFTA”

Posted on by The Progressive Policy Institute

President Trump is apparently a trade alchemist. He’s taken the core of NAFTA (the “worst trade deal ever”), liberally sprinkled in modern rules from the Trans Pacific Partnership (a “potential disaster”), and created a “brand new” trade deal — the US-Mexico-Canada Agreement (USMCA).

Trump’s hyperbole aside, the USMCA, while not perfect, would do a creditable job of preserving the essential rules of the road for North America’s highly integrated, $22 trillion economy. It would also update the decades-old NAFTA by, among other things, adding enforceable labor and environmental rules, promoting digital commerce, and cutting red tape for small business. Given Trump’s years of railing against NAFTA and repeated threats to terminate the Agreement, this is a positive development.

For the USMCA to enter into force, it must be approved by Congress, including the Democratic-controlled House. In recent weeks, Trump hasn’t been helping this process. Insulting and trying to bulldoze House Democratic leaders and threatening damaging new tariffs on Mexico are hardly constructive strategies.

 

Read the full piece on Medium by clicking here.  

Joe Biden and Amazon

Posted on by The Progressive Policy Institute

Progressives say that they want Corporate America to think long-term rather than short-term: To invest in research and development, to spend more on domestic plant and equipment, and to hire more workers with decent pay and decent benefits. In fact, we’ve designed the tax system specifically to give companies incentives to do that.

That’s why Joe Biden should be applauding Amazon rather than criticizing it. In a tweet on Thursday, Biden wrote: “I have nothing against Amazon, but no company pulling in billions of dollars of profits should pay a lower tax rate than firefighters and teachers. We need to reward work, not just wealth.”

But if there’s any company that’s about investing in America and American workers, it’s Amazon. Amazon was #3 in our 2017 list of the top companies ranked by U.S. capital spending, putting $12 billion into the U.S. economy that year alone. Because of the productivity gains from these investments, the company was able to institute a $15 minimum wage for all full-time, part-time and temporary workers, covering even low-wage states like Tennessee, where the hourly median wage for all workers is less than $17. The productivity gains have also sent the stock price soaring, putting billions of taxable dollars into the hands of Amazon employees in the form of restricted stock units. And Amazon funnels back billions of dollars each year in long-run R&D spending.

The federal tax system is intentionally designed to reward this type of corporate behavior and strong performance. For example, the 2017 changes to the tax code allow a company like Amazon to deduct much of its capital spending from its taxable income right away, lowering its tax bill. R&D spending gets a sizable tax credit from the federal government as well. And the rules covering the exercise of stock grants, while lowering Amazon’s tax bill, could be generating a great deal of personal tax revenue for the government.

Here’s why: A stock grant—which were given to many Amazon employees, and not just the top ranking executives—is more valuable the higher the stock goes. When the employee is granted stock, it is generally taxed by the government as ordinary income. Meanwhile, part of that cash is deducted from the company’s income, just like any other worker pay, lowering the company’s taxable income. In other words, the more successful the company is, in terms of a rising stock price, the more money flows to employees. And the more money that flows to employees, the more taxes are paid by the employees as personal taxes rather than corporate taxes.

So it’s not surprising that a successful company like Amazon that is investing in America is going to have a lower tax rate than workers—the tax system is designed that way. Conversely, a company that is not investing in R&D or capital spending, and has a falling stock price, may be paying a bigger share of its income in taxes—but is it really benefiting Americans?

Progressives may not be satisfied with everything that Amazon is doing. But Biden and other Democrats shouldn’t blame Amazon for investing in America, and then following the rules of a tax system that is specifically designed to encourage corporate investment. It’s good for workers and consumers.

 

How The China Trade War Will Jump Start Digital Manufacturing

Posted on by The Progressive Policy Institute

(As originally appeared on Forbes.com)

Trade war! In my previous column on China and digital manufacturing, I observed that the low price of Chinese imports has been artificially suppressing domestic investments in manufacturing automation. The process of digitization is expensive and risky,  and rational investors and managers won’t spend money if they know they will be immediately undercut by Chinese competitors.

Now President Donald Trump has amped up a trade war with China. The new tariffs will hit consumers in their wallets, as even Trump economic advisor Larry Kudlow agrees.  Moreover, the trade war runs the risk of boosting inflation, raising interest rates, and potentially tipping the economy into recession.

But for companies in the digital manufacturing space, there’s a silver lining to the dark cloud of the trade war. Suddenly the risk-benefit calculation of investment in digitization starts to look more attractive, purely as an economic proposition.  For one, sourcing parts out of China is becoming riskier and potentially more expensive.

With perfect timing, Xometry, a Gaithersburg, Md-based manufacturing platform which calls itself “the largest on-demand manufacturing marketplace,” with more than 2500 U.S. manufacturing partners, just announced a $50 million equity funding round to further build out its capabilities. An article in the  Wall Street Journal noted that Xometry’s business “can help blunt small companies’ exposure to price fluctuations and shortages as trade tensions and U.S. tariffs on steel and aluminum make prices more volatile.”

“We’ve definitely seen more requests for reshoring but I don’t think the tides have fully turned,” adds Dave Evans, CEO and co-founder at Fictiv, a high-profile San Francisco-based manufacturing platform. Rather,  says Evans, companies are “tariff engineering” their product to reduce costs by making specific parts or assembling locally in the U.S.

For manufacturers of robotics and other industrial automation equipment, the trade war is a mixed bag. On the one hand, domestic companies are gearing up to invest more in robotics.  On the other hand, China has been investing heavily in automation, and those markets may be in trouble as the trade war heats up.

For now, manufacturers are still hoping that the China-US trade war will turn out to be only a skirmish. But at some point, companies that have relied on China for their production will decide that the combination of trade tensions and new technology and new business models–what we have called the Internet of Goods–make it more profitable to produce in the domestic market for the domestic market. And that’s when the digital revolution in manufacturing will really take off.