WASHINGTON — Across the country, many working-class Americans are struggling to make ends meet. One reason why is because their wages are being stolen from employers who are not paying them what they are legally owed. These employers either pay less than the minimum or agreed-upon wage, refuse to pay for overtime at the legally required rate, take secretive deductions from paychecks, withhold earned tips, fail to make final payments, or demand unpaid work after a shift has ended.
Today, the Progressive Policy Institute (PPI) released a new report titled “Ensuring Working Americans Get Paid What They Deserve,” which proposes new measures to combat wage theft. Report author Alex Kilander, Policy Analyst for PPI’s Center for Funding America’s Future, argues that former President Trump’s campaign proposal to end taxes on tips and overtime will not meaningfully increase the take-home pay for the employees that need it most, and Democratic policymakers should instead pass legislation that expands the legal toolbox for wage theft enforcement in order to help working Americans.
This new publication is the eighth in a series of papers published in PPI’s Campaign for Working America, which was launched earlier this year in partnership with former U.S. Representative Tim Ryan of Ohio. The Campaign aims to develop and test new themes, ideas, and policy proposals that help Democrats and other center-left leaders make a compelling economic offer to working Americans, bridge divides on culturally sensitive issues like immigration and education, and rally public support for the defense of democracy and freedom globally. Other papers cover career paths for non-college workers, housing, and competition.
Kilander emphasizes that lawmakers need to increase the low civil penalty for initial wage theft offenders while ensuring escalating penalties for repeat offenders. This will prevent employers from stealing money from their employees’ pockets in the first place and heavily punish those who continue to do it, and replace the Wage and Hour Division (WHD) that is now in charge of preventing wage theft. However, the WHD struggles to maintain consistent enforcement actions and resolve cases quickly, forcing the agency to pare back how many cases it can accept.
“Tackling wage theft, a crime that takes thousands of dollars out of working Americans’ pockets each year, will do far more to improve the lives of the millions of tipped and overtime workers who are at risk of being cheated than misguided tax proposals,” said Kilander. “Our government should not stand idly by as dishonest employers steal billions of dollars each year from working Americans who have rightfully earned their wages. We need to make sure that employers are held accountable for their actions and stop hurting the American people.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visitingprogressivepolicy.org.Find an expertat PPI andfollow uson Twitter.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
“[W]e should find no advantage in saying that every man should be obliged to furnish himself, by his own labor, with those accommodations which depend on the mechanic arts, instead of employing his neighbor, who could do it for him on better terms.”
— James Madison
In a stark break from nearly a century of fiscal and trade policy, former president Donald Trump has made imposing significant import tariffs a central part of his policy agenda for a second term. At various times, he has campaigned to put a 10% to 20% tariff on all imports and a 60% tariff on goods from China, and he has even speculated about completely replacing the income tax with tariff revenue. If he were elected and made good on these promises, the average tariff rate would soar to levels not seen since Congress imposed the Smoot-Hawley Tariff of 1930.
Though Trump’s proposals to base the tax system on tariffs have been virtually unheard of in the post-World War II era, debates over tariffs are as old as our country itself. During the 18th and 19th centuries, when the federal government’s obligations were dramatically smaller than today, tariffs were indeed the major source of tax revenue. Contrary to Trump’s claims that imposing Depression-Era level tariffs will restore America to a supposed former state of greatness, leaders of the past long recognized the weaknesses of relying on tariffs for revenue, and their concerns offer valuable lessons today. In particular, tariffs:
1. Fail to raise enough revenue to finance a modern federal government.
2. Are especially non-transparent taxes that invite preferential treatment.
3. Undermine equity by imposing arbitrarily unequal tax burdens on different households.
4. Cause damage to downstream industries and the economy as a whole.
As a result of these weaknesses, the United States (in line with every other advanced economy) largely abandoned tariff-heavy fiscal policy by the mid-20th century to facilitate the federal government’s expanding socioeconomic goals and greater role in the world. Revisiting the contentious history of tariffs in the United States — going all the way back to the Tariff Act of 1789 — reveals why Trump’s promise to return to using tariffs as a basis of tax policy would severely undermine the United States’ fiscal stability, tax fairness, and economic growth today.
TRADE FACT OF THE WEEK: The U.S. economy has grown by 13.5% since 2020 and employs 17 million more workers.
THE NUMBERS: 2024 vs. 2020 & 2019 –
2024
GDP (real 2023 dollars)
$28.2 trillion?*
Employment
159 million jobs
2020
GDP (real 2023 dollars)
$24.8 trillion
Employment
142 million jobs
2019
GDP (real 2023 dollars)
$25.3 trillion
Employment
149 million jobs
* International Monetary Fund, using their April 2024 World Economic Outlook database’s estimates of a $27.36 trillion GDP for the U.S. in 2023, and 2.7% real growth in 2024. Data for 2020 and 2019 from the Bureau of Economic Analysis database, with GDP converted from BEA’s “constant 2017 dollars” to “constant 2023 dollars.”
WHAT THEY MEAN:
Are we better off? In some ways, the question is harder to answer than usual, since the COVID pandemic can make comparisons of output, employment, and associated data for 2020 misleading. So accepting this and trying to provide the appropriate context when necessary, here are four then-to-now comparisons plus one optimistic bit of future-oriented data:
Size: The economy is noticeably larger. Measured by “GDP,” the U.S. economy of 2024 is likely to come in at about $28.1 trillion in “real,” inflation-adjusted, 2023 dollars or perhaps a little more depending on the last two quarters’ growth rates. In these “real dollars,” this is about 13.5% larger than the $24.8 trillion of 2020, and 11% larger than the $25.3 trillion of 2019. Put another way, the $3.4 trillion or so added since 2020 is slightly below the IMF’s forecast for India’s $3.9 trillion total GDP and the UK’s $3.5 trillion, and nearly double Russia’s $2.05 trillion.
Employment: More Americans are working. This autumn, 159 million workers, execs, and interns go to offices, labs, factories, construction sites, and so forth each morning. (Or to the restaurant kitchen in the evening, the farm or home office any time of day, the hospital ward or security office for a night shift.) That’s 17 million jobs, more than the 142 million of January 2021, and 10 million more than the pre-COVID 149 million of January 2020. An additional 10 million workers, as a point of comparison, is the same as the total labor force of the Netherlands; 17 million would fall between Australia’s 14 million workers and Canada’s 22 million.
Income: The “distribution” of money to all these people has become a bit less skewed, as we noted earlier this month, and a bit better for hourly-wage workers. The Census Bureau’s data for “median family income” — that is, income for the family in the exact middle of America’s 131 million households — provides one angle: median income (again in “real” inflation-adjusted dollars) at $80,610 as of 2023, up $1,050 from the $79,560 of 2020, with African American family median income growing fastest at $2,650. Or, taking the “worker” rather than the “household” perspective, the Bureau of Labor Statistics’ “real wage” reports show something similar: wages are up about 2% on average from the levels of early 2020 just before the pandemic, with especially fast growth in some blue-collar fields: 9% real wage growth for gas station attendants, 5% for clothing retail staff, 7% for hotel workers, 8.7% in auto repair shops, and 8.0% for beauty shop and hair salon specialist.
Composition: The economy has shifted a bit. The Commerce Department’s Bureau of Economic Analysis (the official GDP tracker) reports that growth has been fastest in information and services industries, making them now somewhat larger relative to the other parts of the economy than they were four or five years ago. Using 2019 as a base, BEA’s “GDP by Industry” reports show “information industries” — internet, computer networks, media – up by 36% or by $380 billion in real, inflation-adjusted terms, as the digital economy has grown about four times as fast as the rest of the economy. A related BEA category, with the vague and expansive title of “miscellaneous professional, scientific, and technical services,” is up 32% or by $300 billion. Elsewhere, real estate is up by 17% or (given its large original base) $410 billion), manufacturing by 12% or $200 billion, retail likewise by 12% and $150 billion; restaurants and food service, are still not fully recovered from their especially severe pandemic shock, are down by -1% or by $6 billion.
Science: Finally, looking ahead, the research-and-development workforce has boomed. Since January 2021, 150,000 new R&D scientists have joined the sci/tech workforce — 885,000 now, 735,000 then. If you start at pre-COVID January 2020, the jump is even higher: 190,000 net new lab rats. Figures for R&D spending take a few years to tabulate, but the National Science Foundation’s reports show U.S. R&D spending up from 3.0% of GDP in 2019 to 3.4% in 2022 — about 30% of all world research, and relative to the economy the U.S. ranks fourth in the world, behind only South Korea, Taiwan, and Sweden. All this hints at new inventions and rising productivity in the late 2020s and early 2030s.
So: To answer the basic question, yes, we do seem better off: a larger economy, with inflation down after the Treasury and Federal Reserve’s successful pandemic-aftermath macro management; more and better-paid workers and unemployment rates low; faster income growth in the lower tiers of the income tables; and reason for optimism about what’s coming next. The country is by no means short of problems to fix and policies that could be improved or replaced. But as the campaign season nears its end, some of the country’s largest risks come from bad ideas — trade and security isolationism, for example — or problems left untended such as long-term debt buildup. Or, put another way, from costly mistakes that voters can prevent, and from long-term challenges governments can address if they choose. In general, a pretty good record, and lots of reasons for optimism.
Ed Gresser on the risk of the Trump campaign’s economic and political isolationism, trade and hourly-wage America, and Vice President Harris’ opportunity.
Using currency-basis comparisons (current 2024 dollars, so the U.S.’ figure is slightly larger than the 2023-dollar estimate above), here’s their data on the U.S. in the larger world economy of 2024:
World
$110.4 trillion
United States
$28.8 trillion
European Union
$19.0 trillion
China
$18.5 trillion
Latin America & Caribbean
$7.0 trillion
Middle East & Central Asia
$5.0 trillion
Japan
$4.2 trillion
ASEAN-10
$4.1 trillion
United Kingdom
$3.5 trillion
India
$3.9 trillion
Canada
$2.2 trillion
Russia
$2.1 trillion
Korea
$1.8 trillion
Australia
$1.8 trillion
Sub-Saharan Africa
$1.5 trillion
All Other
$3.7 trillion
This year’s 26.2% U.S. share of world output is up from the 25.5% share of 2020, and the 24.6% share of 2019, reflecting the relatively stronger U.S. recovery after the COVID pandemic and also relatively high dollar values vis-à-vis other currencies. Note that this currency-basis approach, affected by foreign exchange rates, gives the U.S. an especially large GDP share, though. The alternative “purchasing-power parities” (avoiding currency-value distortions, and trying to calculate a world in which basic services cost as much in lower- and middle-income countries as in wealthier countries) makes the world economy much bigger — $187 trillion, with China, India, Latin America, ASEAN, Africa, and the Middle East all larger — while the U.S. count is identical and the EU, UK, Canada, Japan, Australia, and Korea pretty much the same.
The Department of Justice has presented its framework of sweeping potential remedies in the Google antitrust case, including “behavioral and structural” changes that go far beyond the specifics of the court’s findings.
But government antitrust regulators should be wary about disassembling one of America’s engines of growth. The information sector — of which Google is an important contributor — has performed amazingly well in recent years, accounting for more than a quarter of all private sector growth since 2019. Over the same stretch, the information sector also benefited customers by lowering prices while the rest of the economy was going through an inflationary surge.
Equally important, tech firms are America’s technological leaders in an increasingly competitive world, filling in the gap left by a lack of government funding for research and development. Over the past ten years, inflation-adjusted U.S. R&D spending has risen by more than 60%. Virtually none of that increase in real R&D spending came from government. Ironically, the competitiveness-enhancing R&D gains have been almost totally driven by businesses such as Google, which invested a stunning $45 billion in R&D in 2023, more than triple a decade earlier.
In a 2022 report from PPI’s Innovation Frontier Project, “American Science And Technology Leadership Under Threat: Restrictive Antitrust Legislation And Growing Global Competition,” co-authors Sharon Belenzon and Ashish Arora of Duke University argue that:
“Antitrust regulations that reduce the size and limit the scope of tech firms weaken their incentives to make the large-scale, long-run investments in science and technology, vital for national security and economic prosperity….At a time when the United States critically depends on a handful of firms to pursue large scale research projects, such proposals would play into the hands of foreign rivals.”
They further went on to conclude that:
“There is a close relationship between the incentives to invest in research and the scale and scope of the firm. Without the leadership of firms with substantial scale and scope, the full potential of general-purpose technologies may not be realized.”
Antitrust regulators may be tempted to “fix” America’s engines of growth by disconnecting parts deemed to be unnecessary. But remember: The rest of the world looks enviously at the U.S. tech sector, which is running fast and investing for the future.
WASHINGTON — Today, Diana Moss, Vice President and Director of Competition Policy at the Progressive Policy Institute (PPI), issued the following statement regarding the U.S. Department of Justice’s (DOJ) proposed remedies framework in the case U.S. v. Google (2020):
“Even before a decision is made to file a case, public antitrust enforcers pragmatically have their eye on the ‘end-game.’ That is, if the government wins its case, what remedies are needed to restore the competition lost by consolidation or business practices that stifle competition and hurt consumers? The U.S. Department of Justice (DOJ) case against Google in online search markets is the first modern monopoly case to take on this important question. It follows a federal district court opinion finding that Google holds monopoly power and illegally maintained that power in two online search markets.
“Yesterday, the DOJ issued its proposal for a framework of possible remedies to restore competition in online search markets. The wide-ranging document includes remedies that are responsive to Judge Mehta’s ruling that Google has too much market power in online search. These include a ban on paying some equipment manufacturers to make the Google search engine the exclusive default on smart phones and web browsers.
“But some of the remedies on DOJ’s list appear to go beyond the scope of the court’s findings, with broad impact on Google’s business model, value proposition, and complex engineering-economic machinery. For example, it covers structural remedies, such as the spin-off of Google’s Chrome browser. It is no secret that the administration’s antitrust enforcers have been searching for ways to break up America’s big tech firms. It is unclear at this time, however, if such a remedy is either necessary or appropriate to resolve the specific issues that Judge Metha identified.
“Breakup remedies may not be effective, either, because they have not been tested in complex digital ecosystems. If remedies failed in a grocery store merger like Safeway-Albertsons, then only imagine the challenges in a complex digital ecosystem. As always, consumers will ultimately bear the burden of a failed remedy, emphasizing the great care necessary to connect it to specific competitive harms.
“Perhaps most important, DOJ’s filing includes extensive behavioral conditions, or restrictions on business operations. Unlike its monopolization case, which is grounded in facts, the DOJ’s fixes are unfettered by the constraints of evidence and experience. Behavioral remedies are well-known to be ineffective, as is clear from years of violations following the Live Nation-Ticketmaster merger.
“Other behavioral remedies suggested by the DOJ seem hubristically divorced from their potential adverse impact on user privacy or online security. They also involve sharing of data and APIs that could transform search into an essentially open source, open access platform. Such remedies, which amount to de facto regulation, are likely to impact innovation — potentially disrupting the incentives to innovate that anti-monopoly law is designed to promote.
“The U.S. v. Google case is at a critical stage. The DOJ will propose more detailed remedies in November 2024. These remedies could well set the mark in other, pending digital monopolization cases. This makes it even more important to avoid a ‘kitchen sink’ approach to proposed remedies and instead bear down on the most effective fixes for restoring specific competitive concerns.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.
RECENTLY, A THREAD THAT CALLED FOR a return to communal kitchens and handwashing laundry went viral on X, prompting a high-pitched conversation about the concept of “degrowth.” Mainstream liberals and conservatives both got in someentertainingdunks on the idea, but the episode also gave rise to some worthwhile discussions on the nature of economic growth. The ideology of degrowth as it’s most often articulated is stupid, and I won’t rehash the manygoodarguments against it here. What’s harder to explain is exactly why we value growth as opposed to other possible core values.
In this episode of The Abundance Podcast, Richard Kahlenberg chats about the persistence of economic segregation, the connection between housing and education, and what the federal government in particular could do about it.
Getting public policy right is never easy. There are almost always unintended consequences and miscalculations that can lead to negative outcomes. However, when it becomes clear that a policy will not work as promised, policymakers have a responsibility to reconsider and withdraw the proposal.
This is the case with Oregon Measure 118, also known as the Oregon Rebate. The ballot measure proposes a 3% tax on a business’s gross sales above $25 million, and would apply to both S corporations and C Corporations. The revenue generated from this tax will be distributed equally among Oregonians of all ages and income levels, providing, according to the measure’s proponents, a $1,600 rebate for each person in the state.
Unfortunately, despite its good intentions, this measure will hurt, not help Oregon families.
It would create a budget shortfall. Several nonpartisan studies indicate that a 3% tax on corporate sales is unlikely to raise enough revenue to sustain a statewide $1,600 per person rebate. To maintain the rebate, the state legislature would have to cut expenses elsewhere, potentially affecting critical services like road maintenance, firefighting, and addiction recovery. Some estimates suggest that if the rebate were to become law, the state could end up with about $400 million less to spend on basic government services in the 2025-27 budget cycle.
The most vulnerable in Oregon would be left worse off. Although the Oregon Rebate was designed to create a basic level of income for all state residents, in reality, the budget shortfall will likely encourage cuts to vital safety net programs.
It would lead to higher prices for goods and services. The sales revenue tax established to fund the rebate would likely lead to higher prices, including for basic goods like food and transportation. The Legislative Revenue Office estimated that the gross receipts tax established in the measure is expected to increase prices by 1.3%. With average annual personal consumption expenditures estimated at $52,200 by the Bureau of Economic Analysis, a 1.3% increase in prices would add $679 in expenses per household. This would effectively diminish the value of the $1600 rebate, making it far less beneficial than it initially appears.
It would create unnecessary job losses. While historically low at 4.1%, the unemployment rate in Oregon has risen since last year, and many predict job creation will slow nationally. Unfortunately, Measure 118 could exacerbate this trend because a tax on gross corporate sales would harm businesses that have low profit margins. Unlike a traditional corporate income tax which is levied on net income or profits, the Oregon Rebate proposes a tax on gross sales, applying the same tax rate regardless of a company’s profitability. This would place a disproportionate burden on businesses with high revenues but low profit margins. In response, companies with marginal profits might choose to move out of Oregon or distort their business decisions by reducing sales to minimize tax exposure, which would negatively impact corporate growth and innovation.
Given the problems with the design of the Oregon Rebate, it is not surprising that the proposal is opposed by leaders from both political parties, including Oregon House Speaker Julie Fahey, Senate President Rob Wagner, House Majority Leader Ben Bowman, Senate Majority Leader Kathleen Taylor, Oregon Governor Tina Kotek, and Senate Republican Leader Daniel Bonham. Ensuring corporations pay their fair share is an important goal and one that should be pursued. But that is not what would be achieved should Measure 118 become law.
With inflation easing, the wages of working-class Americans are finally moving into the plus column. Average hourly pay for production and nonsupervisory workers — who make up four-fifths of employees — hit $30.27 in August, according to the latest report from the Bureau of Labor Statistics.
According to my organization’s analysis, working-class Americans’ wages, adjusted for inflation, have just edged higher than they were on Election Day, 2020. The average working-class American can now answer “Yes” to the question, “Are you better off now than you were under Donald Trump?”
That’s obviously important for political symbolism. But the milestone for real wages also explains a lot about why Americans have felt so badly oppressed by inflation up to now. The price of food and housing matters, but they matter more if price increases exceed wage gains.
WASHINGTON — As the U.S. seeks to bolster its domestic manufacturing, the role of foreign direct investment (FDI) is more critical than ever, particularly from trusted allies. This insight is at the heart of a new report from the Progressive Policy Institute (PPI), titled “The U.S. Wants Manufacturing to Drive Growth. Foreign Friends Can Help.” The report examines the converse of U.S. “friendshoring” in friendly countries: the potential for allied nations like Japan, South Korea, Canada, the UK, and Germany to support U.S. economic growth through investment in sectors ranging from electric vehicles to biopharmaceuticals.
The report, authored by Yuka Hayashi, is the second in a two-part series. The first, “Behind Japan’s U.S. Steel Bid: An Aging, Shrinking Home Market,” provides a fresh perspective on Nippon Steel’s proposed acquisition of U.S. Steel and closely examines the economic realities behind Nippon Steel’s pursuit of the American industrial icon.
The new report highlights how these investments can create high-paying jobs, drive technological innovation, and strengthen America’s position in the global economy. Drawing on examples from states like Ohio, Michigan, and North Carolina, where Japanese companies have built major manufacturing hubs, the study argues that such partnerships are essential to America’s economic future.
“If the U.S. wants to strengthen domestic manufacturing, promoting foreign investment from friendly countries is a smart strategy,” said Hayashi. “Not only does it create good-paying jobs and spur innovation, but it also deepens our economic ties with trusted allies, ensuring that critical industries remain secure.”
The report stresses that the U.S. must be strategic in welcoming investment from allied nations, especially in the context of growing tensions with China. As part of this strategy, the report calls for expanding “friend-shoring” partnerships — moving supply chains to allied nations to ensure resilience and stability.
In light of the Inflation Reduction Act and the CHIPS and Science Act, both passed in 2022, PPI’s report underscores the opportunity for the U.S. to attract even more foreign investment, particularly in green technology and semiconductor manufacturing. It also warns that protectionist policies could deter friendly nations from further investing in the U.S. economy.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
As the world grappled with shortages and soaring prices of energy and food following Russia’s invasion of Ukraine in the spring of 2022, Treasury Secretary Janet Yellen introduced the term “friend-shoring” to describe a new dynamic needed for America’s economic engagement with the world. She called for building and deepening integration among trusted partners to secure supplies of critical raw materials, technologies, and products.
“Let’s do it with countries we know we can count on,” she said in a Washington speech. “Favoring the ‘friend-shoring’ of supply chains to a large number of trusted countries, so we can continue to securely extend market access, will lower the risks to our economy, as well as to our trusted trade partners.”
Yet, when it comes to working with friendly partners seeking to invest in the U.S., Washington’s message has been less than
welcoming. Amid the rise of “America First” economic nationalism, its policies have been inconsistent and muddled, even for companies from the closest allies in Europe and East Asia. Election-year politics have further complicated its stance, casting in doubt the fate of a high-profile pursuit of U.S. Steel by Japan’s top steel maker.
President Biden wants to strengthen American manufacturing. Foreign investors can help speed it up. They have for decades created more jobs, paid higher wages and spent more on factories and equipment than the average U.S. manufacturer. Their spending on research and development has enhanced productivity and accelerated America’s strong innovation.
America’s manufacturing is already starting to benefit as companies from allied nations take up Yellen’s concept and “friend-shore” some of their production to the U.S. Amid growing U.S.-China tensions, South Korea’s LG Energy is building an EV battery plant with Hyundai Motor in Georgia and another with Honda in Ohio, while BMW is adding EV assembly lines to its South Carolina plant. Multi-billion-dollar semiconductor factories are under construction by Samsung in Texas and Taiwan Semiconductor Manufacturing in Arizona.
Yet, after hitting a record $440 billion in 2015, annual flows of foreign direct investment into the U.S. fell sharply — declines economists attribute to technical changes in corporate accounting strategies, as well as a protectionist turn in U.S. trade policy brought by former President Trump.
The pandemic then further lowered inflows. Between 2016 and 2023, the annual value of FDI averaged $256 billion. Investment flows have been helped by Washington’s efforts to bolster green technology and semiconductor manufacturing, but overall fell 28% in 2023 to $145 billion.
With the right set of policies, America can go a long way toward bolstering its domestic economy while strengthening its ties to close allies. To maintain strong alliances, the U.S. must not just talk, but show them it has their back.
WASHINGTON — Amid growing concerns about economic instability and the risk of a wider economic downturn, the Progressive Policy Institute (PPI) has released a new report examining the rapidly expanding “‘Buy Now, Pay Later”’ (BNPL) trend. The report, titled “Buy Now, Pay Later: The New Face of Consumer Credit,” explores the benefits and risks of this emerging form of consumer credit and advocates for targeted regulations to protect consumers while encouraging ongoing innovation in the credit market.
Authored by Andrew Fung, an Economic Policy Analyst at PPI, the report highlights the growing popularity of BNPL services among young and low-income consumers, who are attracted to the flexibility these services provide in accessing goods and services that may otherwise be unaffordable. While BNPL loans can improve financial inclusion, they also carry significant risks, especially for consumers with limited financial literacy or those prone to overextending themselves financially.
“In today’s uncertain economic climate, it’s crucial to understand the patterns of consumer spending,” said Fung. “BNPL loans present a new way for consumers to access credit, but the rapid growth of this market requires careful attention to potential financial risks.”
The report outlines the current state of consumer credit, noting that while overall debt levels remain stable, there are emerging areas of concern that should be closely monitored. BNPL loans, with their smaller, fixed payment structures, are generally less risky than traditional credit cards. However, the report recommends sensible regulations, such as interest rate caps, clear loan term disclosures, and standardized dispute resolution processes, to protect consumers and support the sustainable growth of this credit option.
“As policymakers continue to navigate economic challenges, it’s important to examine the current state of consumer credit closely,” added Fung. “Our report provides a practical approach for ensuring BNPL can benefit consumers while mitigating potential risks to both individuals and the broader economy.”
The report also examines the demographic profile of BNPL users, revealing that these services are especially popular among Black, Hispanic, and female consumers, as well as those with household incomes between $20,000 and $50,000 per year. Although BNPL has grown rapidly, it still represents a relatively small portion of the overall American economy. However, its differences from traditional credit methods and the unique risks it presents are drawing increasing attention from policymakers.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
Consumer credit plays two essential roles in our everyday lives. Instruments like credit cards make it possible for Americans to purchase everything from their daily latte to groceries and furniture with less friction, even if we have enough money in the bank. Beyond these smaller purchases, consumer credit also allows us to borrow to pay for bigger ticket items that may be too expensive to buy with their current resources. The second scenario can lead to a potentially dangerous expansion of household debt, which can trap some households in a debt spiral that’s hard to escape or have larger systemic effects.
This paper will consider the economic and policy ramifications of the current rapid expansion of one form of consumer credit, known as buy now, pay later (BNPL). Buy now, pay later loans serve as an alternative to traditional payment methods like credit cards when shopping online, allowing consumers to break up the cost of their purchase into several installments to be paid over the course of a few weeks or months, often with very low or zero interest. Understanding how this new form of consumer credit fits into the larger American economy is important, and this paper will explain why BNPL falls under the first category of consumer credit but does merit scrutiny and potential regulation as it continues to develop.
WASHINGTON — The past several years have been marred by turbulent economic times for the United States, with the COVID-19 pandemic, stubborn inflation, and high interest rates threatening Americans’ economic well-being. Despite these headwinds, some companies continue to show their faith in America’s future by making significant capital expenditures. The Progressive Policy Institute (PPI) yesterday released its annual report, titled “Investment Heroes 2024: Faith in the Future,” highlighting the top 25 companies with the highest capital expenditures in the United States for 2023.
For the fifth year in a row, Amazon leads the list, investing an estimated $36.8 billion in the U.S. in 2023. This brings Amazon’s total investment in the U.S. to $183 billion since 2019. Such substantial spending has not only created hundreds of thousands of jobs but has also helped hold down consumer price increases.
“From 2021 until 2023, the first three years of the Biden-Harris administration, PPI’s Investment Heroes invested more than $900 billion in the U.S. economy. That’s nearly 40% more than the comparable total in the first three years of the Trump-Pence administration,” said Michael Mandel, Vice President and Chief Economist at PPI. “This massive surge in capital spending has been a critical driver of job creation and economic growth.”
In second place is Alphabet, with an estimated $24.5 billion in domestic capital spending in 2023. It is followed by Meta, AT&T, Verizon, Walmart, Intel, Microsoft, Comcast, and Duke Energy, rounding out the top ten.
This year’s top 25 Investment Heroes invested a record $328.3 billion in the United States in 2023, up 1.3% compared to 2022. The growth of domestic capital expenditures by PPI’s Investment Heroes has outpaced the overall growth of U.S. nonresidential investment. Since 2019, domestic capital expenditures by PPI’s Investment Heroes has risen by 34.8%, compared to a 24.2% increase in total nonresidential investment over the same period.
“Our report showcases how leading companies are committing substantial resources to the U.S. economy, driving innovation, job creation, and long-term growth,” said Andrew Fung, co-author of the report. “These investments are vital for maintaining America’s competitive edge and ensuring economic stability.”
PPI’s Investment Heroes report emphasizes the critical role of capital expenditures in powering job creation and economic growth. The U.S. economy continues to outperform its industrialized peers, thanks in significant part to the domestic investments made by the companies on this year’s list. Furthermore, these investments help hold down price increases over the long term, particularly in sectors like e-commerce, broadband, data processing and wireless, where high investment correlates with lower long-term inflation.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
The United States is going through turbulent times. The shock of the pandemic, followed by soaring inflation and high interest rates, buffeted Americans. Now, despite strong labor markets and continued economic growth, many people feel pervasive uncertainty about what’s next for the country.
Against this backdrop, some companies continue to show their faith in America’s future by putting their money on the line. PPI’s annual Investment Heroes report highlights how the country’s largest companies are investing in the United States using information from annual financial reports. This year’s 2024 Investment Heroes are the 25 companies with the highest capital expenditure investment in the United States in 2023, as measured by PPI’s methodology.
For the fifth consecutive year, Amazon was #1 on the list, investing an estimated $36.8 billion in the U.S. in 2023. Since 2019, Amazon has invested $183 billion in the U.S., according to PPI’s estimates. This staggering spending on productive capital has created hundreds of thousands of jobs, while holding down consumer price increases.
In the #2 spot of the 2024 Investment Heroes list is Alphabet, with an estimated $24.5 billion in domestic capital spending in 2023. It is followed by Meta, AT&T, Verizon, Walmart, Intel, Microsoft, Comcast, and Duke Energy.
Taken as a whole, this year’s top 25 Investment Heroes invested a record $328.3 billion in the United States in 2023, up 1.3% compared to 2022. In recent years, the growth of domestic capital expenditures by PPI’s Investment Heroes has outstripped the growth of overall U.S. nonresidential investment (Figure 1). For example, since 2019, domestic capex by PPI’s Investment Heroes has risen by 34.8%, compared to a 24.2% increase in total nonresidential investment over the same period.
Here’s another sign of growth, In 2021-2023, the first three years of the Biden-Harris administration, PPI’s Investment Heroes
invested more than $900 billion in the U.S. economy. That’s almost 40% more than the comparable total in the first three years of the Trump-Pence Administration.
This massive surge in capital spending has helped power job creation and economic growth. The U.S. economy is outperforming its industrialized peers in Europe and Japan, to a significant degree due to the domestic investments by the companies on this year’s list.
But there are more benefits to capital expenditures. Over the long run, more investment in capacity helps hold down price increases. In this report, we highlight the relationship between sectors with strong investment, such as e-commerce and wireless, and long-term low inflation trends for some goods and services.
In this report, we also consider patterns of spending on research and development, which boosts innovation and productivity growth. We note the reasons that R&D spending cannot be directly integrated into the Investment Heroes ranking. Nevertheless, many Investment Heroes have huge R&D budgets. Alphabet, for example, spent $45.4 billion on R&D in 2023. Some companies are making big investments in R&D, but do not appear on the Investment Heroes list because their spending is not reflected in their capital expenditures.
We examine patterns of domestic capital investment by sector and company. The biggest contributor to the Investment Heroes list is the tech/internet sector, with six companies on the list investing a total of $97 billion in the U.S. in 2023. The second biggest contributor is the broadband/wireless sector, with 4 companies and $68 billion in domestic capital investment.
The next administration must confront the consequences that the American people are finally facing from more than two decades of fiscal mismanagement in Washington. Annual deficits in excess of $2 trillion during a time when the unemployment rate hovers near a historically low 4% have put upward pressure on prices and strained family budgets. Annual interest payments on the national debt, now the highest they’ve ever been in history, are crowding out public investments into our collective future, which have fallen near historic lows. Working families face a future with lower incomes and diminished opportunities if we continue on our current path.
The Progressive Policy Institute (PPI) believes that the best way to promote opportunity for all Americans and tackle the nation’s many problems is to reorient our public budgets away from subsidizing short-term consumption and towards investments that lay the foundation for long-term economic abundance. Rather than eviscerating government in the name of fiscal probity, as many on the right seek to do, our “Paying for Progress” Blueprint offers a visionary framework for a fairer and more prosperous society.
Our blueprint would raise enough revenue to fund our government through a tax code that is simpler, more progressive, and more pro-growth than current policy. We offer innovative ideas to modernize our nation’s health-care and retirement programs so they better reflect the needs of our aging population. We would invest in the engines of American innovation and expand access to affordable housing, education, and child care to cut the cost of living for working families. And we propose changes to rationalize federal programs and institutions so that our government spends smarter rather than merely spending more.
Many of these transformative policies are politically popular — the kind of bold, aspirational ideas a presidential candidate could build a campaign around — while others are more controversial because they would require some sacrifice from politically influential constituencies. But the reality is that both kinds of policies must be on the table, because public programs can only work if the vast majority of Americans that benefit from them are willing to contribute to them. Unlike many on the left, we recognize that progressive policies must be fiscally sound and grounded in economic pragmatism to make government work for working Americans now and in the future.
If fully enacted during the first year of the next president’s administration, the recommendations in this report would put the federal budget on a path to balance within 20 years. But we do not see actually balancing the budget as a necessary end. Rather, PPI seeks to put the budget on a healthy trajectory so that future policymakers have the fiscal freedom to address emergencies and other unforeseen needs. Moreover, because PPI’s blueprint meets such an ambitious fiscal target, we ensure that adopting even half of our recommended savings would be enough to stabilize the debt as a percent of GDP. Thus, our proposals to cut costs, boost growth, and expand American opportunity will remain a strong menu of options for policymakers to draw upon for years to come, even if they are unlikely to be enacted in their entirety any time soon.
The roughly six dozen federal policy recommendations in this report are organized into 12 overarching priorities:
I. Replace Taxes on Work with Taxes on Consumption and Unearned Income II. Make the Individual Income Tax Code Simpler and More Progressive III. Reform the Business Tax Code to Promote Growth and International Competitiveness
IV. Secure America’s Global Leadership
V. Strengthen Social Security’s Intergenerational Compact
VI. Modernize Medicare
VII. Cut Health-Care Costs and Improve Outcomes
VIII. Support Working Families and Economic Opportunity
IX. Make Housing Affordable for All
X. Rationalize Safety-Net Programs
XI. Improve Public Administration
XII. Manage Public Debt Responsibly
