Economy Archives - Page 30 of 81 - Progressive Policy Institute

Weinstein for The Hill, “How CEOs could help pay for tax reform”

Posted on May 23, 2017 by The Progressive Policy Institute

When Congress passed the Dodd-Frank Act, it included a requirement that U.S. companies annually report the ratio between their CEO and median worker pay. This modest provision takes effect this year, but it’s unlikely to reverse America’s widening pay gap.

In fact, if President Trump has his way on tax reform, the earnings gap will get much worse courtesy of the federal government.

That’s not to say tax reform isn’t needed; in fact, it’s long overdue. But tax reform needs to put working families first, not overpaid CEOs and top executives. Furthermore, it shouldn’t add to the national debt, which means that lower corporate rates must be paid for by eliminating some of the trillion dollars in tax breaks handed out each year.

One way to ensure that CEOs and their firms don’t gouge the American taxpayer under the guise of tax reform – and offset the cost of lowering the corporate tax rate – would be for Congress to take a simple, straightforward step: eliminate the tax break for excessively high CEO pay.

Continue Reading at The Hill.

Open Internet: Time for Congress to Act

Posted on May 18, 2017September 18, 2024 by The Progressive Policy Institute

The FCC, under Chairman Ajit Pai, voted today to start the process of eliminating Title II rules on ISPs. We applaud his move. As we have said before, the Internet was thriving under the light-touch regulatory regime that preceded Title II. Indeed, government data shows that the telecom industry was one of the top contributors to US productivity growth from 2000 to 2014, before Title II was put in place. *

Our belief is that the economy could be entering into a renewed period of productivity growth, propelled by the application of digital technology to the physical industries (see The Coming Productivity Boom). That transition would have been much more difficult under the antiquated regulatory structure that comes with Title II.

But as we have also said before, smart regulations are essential for a well-functioning economy. There’s no doubt in our mind that open internet rules are needed to govern the Internet. We think now is the right time for Congress to codify the open internet principles into law–that’s the best way to get a consistent regulatory structure that will produce faster growth for us all.

*Contribution to multifactor productivity growth, as calculated from the BEA-BLS Integrated Production Accounts.

Mandel for WSJ, “Robots Will Save the Economy”

Posted on May 15, 2017 by The Progressive Policy Institute

The problem today is too little technology. Physical industries haven’t kept up.

Some anxious forecasters project that robotics, automation and artificial intelligence will soon devastate the job market. Yet others predict a productivity fizzle. The Congressional Budget Office, for instance, expects labor productivity to grow at the snail’s pace of 1.3% a year over the next decade, well below the historical average.

There’s reason to reject both of these dystopian scenarios. Innovation isn’t a zero-sum game. The problem for most workers isn’t too much technology but too little. What America needs is more computers, mobile broadband, cloud services, software tools, sensor networks, 3-D printing, augmented reality, artificial intelligence and, yes, robots.

For the sake of explanation, let’s separate the economy into two categories. In digital industries—technology, communications, media, software, finance and professional services—productivity grew 2.7% annually over the past 15 years, according to the findings of our report, “The Coming Productivity Boom,” released in March. The slowdown is concentrated in physical industries—health care, transportation, education, manufacturing, retail—where productivity grew a mere 0.7% annually over the same period.

Digital industries have also experienced stronger job growth. Since the peak of the last business cycle in December 2007, hours worked in the digital category rose 9.6%, compared with 5.6% on the physical side. If health care is excluded, hours worked in physical jobs rose only 3%.

What is holding the physical industries back? It is no coincidence that they are heavily regulated, making them expensive to operate in and resistant to experimentation. The digital economy, on the other hand, has enjoyed a relatively free hand to invest and innovate, delivering spectacular and inexpensive products and services all over the world.

Continue reading at The Wall Street Journal.

Update on ecommerce and brick-and-mortar retail jobs

Posted on May 12, 2017September 18, 2024 by The Progressive Policy Institute

This post updates our March 2017 paper on ecommerce jobs, based on the latest data from the Bureau of Labor Statistics (we also call this sector “advanced distribution”) . Here’s what we find:

Since the last business cycle peak, December 2007, the number of ecommerce jobs is up by 397,000. These gains are being driven mainly by the growth of fulfillment centers in states such as Kentucky, Tennessee, Indiana, and Pennsylvania.
Since December 2007, the number of brick-and-mortar retail jobs, as reported by the BLS, is up 186,000. However, that’s a deceptive gain, because hours worked has fallen. In fact, the number of full-time equivalent jobs in brick-and-mortar retail has fallen by 76,000 since December 2007.
That means the gains in ecommerce jobs far exceeds the loss in full-time equivalent jobs in brick-and-mortar retail.
At an annual rate, wage and salary payments to ecommerce workers are up by $19 billion since December 2007, measured in 2016 dollars. Wage and salary payments to brick-and-mortar retail workers are up almost $4 billion, in 2016 dollars, over the same stretch.
In an upcoming piece, we do a detailed analysis of the wage difference on a local level between ecommerce (advanced distribution) and retail. Our conclusions–that ecommerce pays significantly more than bricks-and-mortar retail–remains the same.

Will Illinois Privacy Laws Hurt App Economy Jobs?

Posted on May 9, 2017September 18, 2024 by The Progressive Policy Institute

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

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

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

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

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

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

U.S. App Economy Jobs Update

Posted on May 3, 2017 by The Progressive Policy Institute

In this paper, PPI estimates that App Economy employment in the United States totaled 1.729 million as of December 2016. Based on our previous work, the number of App Economy jobs in the United States has nearly quadrupled over the past five years, growing at a 30 percent annual rate. Looking at the top mobile operating systems, roughly 1.53 million jobs belong to the iOS ecosystem, while 1.35 million jobs belong to the Android ecosystem (many jobs belong to both ecosystems). We also list the top 25 states by their App Economy employment.

This work is part of a larger PPI research project examining App Economy employment in different countries and regions, including Europe, Latin America, and Asia. These are not numbers that can be found in government statistics, because the App Economy doesn’t fit neatly into the old economic paradigms. For example, statistical agencies that count exports have no category in trade statistics for the revenues generated by the export of domestically-created apps to other countries, even though these revenues may be very significant. Indeed, statisticians may not be counting these exports at all.

Moreover, the explosive growth of App Economy employment bears directly on the broad ongoing debate about the link between technological innovation and jobs. There’s a pervasive worry that new technologies destroy jobs without creating very many new ones.

But our work has consistently demonstrated that innovation creates better and more jobs–not just on the coasts, but across the whole country. In addition to the large number of App Economy jobs, our recent research shows rapid growth in ecommerce (“advanced distribution”) jobs, which are better paid than retail jobs, and located in states such as Indiana, Kentucky and Tennessee. More broadly, we have shown that job growth in the digital sector of the economy has been faster than job growth in the physical sector, despite faster productivity growth in the digital industries.

Finally, we expect that the long-term growth prospects of the App Economy are still strong. Yes, the great surge of new game, media, and ecommerce apps is probably close to its peak. However, the rise of the Internet of Things means that more and more objects and physical processes will be connected to the Internet. Increasingly, individuals will be using mobile apps as their interface to their home, travel, entertainment, car, schools, health providers, and state and local governments. Employees in many enterprises are using mobile apps to monitor or control work processes. These apps will be highly functional and sophisticated, serving an essential role in interacting with our environment–and they will require ever more workers to build and maintain.

L.A. Times: Don’t stress over robots; a bright new economy is being born

Posted on May 1, 2017 by The Progressive Policy Institute

Good news: The robots may not destroy us after all.

A few weeks ago, I wrote a column that outlined the worries of big thinkers such as Stephen Hawking and Andrew Yang who are predicting a wave of job destruction caused by automation, robots and artificial intelligence.

Michael Mandel begs to differ. Mandel is chief economic strategist at the Progressive Policy Institute. He and Bret Swanson, president of Entropy Economics LLC, just completed a study for the Tech CEO Council that foresees a rather bright economic future brought about by technological innovation.

I recently interviewed Mandel and he made a compelling argument that the application of technology to the physical economy will, in time, produce more jobs, higher wages, greater productivity and all kinds of as-yet-unimagined business activity. The two doomsday narratives that are currently circulating — that robots will steal jobs and that productivity will lag more or less permanently — are as wrong as the 19th century fears that electrification would put people out of work, Mandel said.

Continue reading at L.A. Times.

Ecommerce job gains are much larger than retail job losses: Here’s Why

Posted on April 7, 2017September 18, 2024 by The Progressive Policy Institute

There is a huge debate about whether automation leads to an aggregate loss of jobs. On the one side are those who believe that robots are about to unleash a massive wave of job destruction, rendering most of us superfluous. On the other side are those who are skeptical about the value of new technologies, and believe that the US and other developed countries are stuck in permanent stagnation.

A key case in point is ecommerce. The “robots are here” believers see the impending end of brick and mortar retail and shopping malls, to be replaced by soulless and totally automated warehouses. From their perspective, the latest employment report, which showed a sharp decline in general merchandise stores since October, was only the first sign of the retail workforce circling the drain.

Meanwhile, the stagnationists argue that ecommerce is no big deal, just another way of distributing the same products.

But here is an interesting fact. First, by PPI’s calculations, the ecommerce industry including fulfillment centers has added 270,000 jobs since March 2014. Over the same three year period, general retail stores have actually added 53,000 jobs, including the latest declines reported by the BLS (by our definition, ‘general retail’ includes those stores which compete most closely with ecommerce–see definition below).

So in fact, the number of ecommerce jobs has increased sharply in recent years. And as we have shown in a recent paper, these jobs pay considerably more than the low-weekly-earning jobs that comprise most of the retail sector.

How could this be? The reality is that ecommerce has evolved. The old ecommerce provided the same physical product, but required a long wait compared to going to a store. The new ecommerce, with next day delivery, provides the same physical product as going to a store, with a much shorter wait and much less hassle.

The new ecommerce places much more emphasis on the speed of moving physical objects and quickly getting them to the right place, rather than simply the ease of ordering. It is the cutting edge of the digitization of the physical industries that has the potential to greatly accelerate overall productivity, as Bret Swanson and I wrote in a recent paper.

In fact, I’d like to propose that we stop using the 1990s term ‘ecommerce’, and start calling the new industry “advanced distribution.” Advanced distribution includes the “electronic shopping and mail order industry,” but it also includes the new fulfillment centers that are currently counted in the warehouse industry.

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

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

The rise of custom manufacturing is speculative at this point, but the advanced distribution jobs are not. As history shows, productivity gains, when used to offer genuinely new products or services, can create good jobs.

Added (4/10/17): Over the week the WSJ wrote a piece entitled “Online Retailers’ New Warehouses Heat Up Local Job Markets” which talked about the rise in wages at fulfillment centers. By our calculations, total payroll for ecommerce workers has risen by $19 billion (in 2016 dollars) since 2007, while payroll for general retail has fallen by $5 billion. On net, advanced distribution is a plus for workers.

Note: By our definition, ecommerce or advanced distribution includes the electronic shopping and mail order industry, and the warehouse industry. General retail includes furniture and home furnishings stores; electronics and appliance stores; clothing and clothing accessory stores;sporting goods, hobby, book, and music stores; and general merchandise stores. This is a slightly broader definition than we used in the recent paper.

Mandel for Forbes: How E-Commerce Is Raising Pay And Creating Jobs Around The Country

Posted on April 4, 2017 by The Progressive Policy Institute

Think back to the first half of the 20th century, when superstar companies of the likes of Ford, General Motors, General Electric, DuPont and Bethlehem Steel literally grew from nothing to employ hundreds of thousands of workers. These innovative market leaders, notably feted by business historians such as Alfred Chandler, pioneered new products and production techniques, achieving and sustaining ever-higher levels of manufacturing productivity. They offered higher wages to workers, lower prices to customers, and a sense of vitality and dynamism to the whole economy. In a very real sense, these superstar companies helped create a new middle class of factory workers.

Skeptics deny that that this virtuous circle is operating today. They fear that today’s tech superstars are not generating enough jobs to make up for the slow growth of jobs in the rest of the economy.

However, these fears of a digital job drought are misplaced. According to analysis of data from the Bureau of Labor Statistics, high-productivity digital companies are expanding—not just on the coasts, but across much of the country. And the gains are going not just to well-educated software developers, but to mid-skilled sales people and office staff.

Continue reading in Forbes.

Flashback Friday: PPI in Hindsight

Posted on March 31, 2017September 18, 2024 by The Progressive Policy Institute

Just over a year ago, PPI unveiled a big ideas blueprint with a prescient subtitle: Unleashing Innovation and Growth: A Progressive Alternative to Populism. We knew that progressives in the United States and Europe needed better answers to the economic and cultural grievances that have fueled the rise of a retrograde populism and nationalism around the world. We did not foresee that Democrats would fail to offer a forward-looking plan for jobs and shared growth, opening the door to Donald Trump’s improbable victory.

Which makes the themes and ideas in PPI’s sweeping policy blueprint more important than ever. Populism today thrives in the political vacuum left by center-left parties that offer no clear vision for reviving economic dynamism and hope. “Winning the economic argument will be essential to victory in the 2016 elections and it starts by getting the diagnosis right,” the blueprint noted. Instead, Democrats ran a campaign that leaned heavily on identity politics, wealth redistribution and centralized, small-bore solutions.

Unleashing argued that America (and Europe) are stuck in a slow-growth trap that holds down wages and living standards. And it offered bold prescriptions for building on America’s competitive advantage in technology and entrepreneurship to spread innovation – now concentrated in a vibrant digital sector — to the nation’s physical economy, which continues to suffer from low productivity. In addition, the document proposed creative ways to modernize the nation’s economic infrastructure, improve the regulatory environment for innovation, build middle class wealth and empower poor Americans to work, save and chart their own course to social mobility and inclusion.

Crucially, the blueprint also urged progressives to reject anger and victimhood and offer voters a confident account for how America can build a new, inclusive prosperity:

What America needs is a forward-looking plan to unleash innovation, stimulate productive investment, groom the world’s most talented workers, and put our economy back on a high-growth path, It’s time to banish fear and pessimism and trust instead in the liberal and individualist values and enterprising culture that have always made America great.

That was the road not taken in 2016. Now it’s the road to political relevance and success for progressives here and elsewhere.

How the Startup Economy is Spreading Across the Country – and How It Can Be Accelerated

Posted on March 30, 2017September 18, 2024 by The Progressive Policy Institute

More than that, the startup culture of entrepreneurship, fueled by scalable technology, is spreading as well. Around the country, an increasing number of companies are describing themselves as “startups” when they advertise for workers.

In new research, the Progressive Policy Institute (PPI) and TechNet explore the importance of the startup economy to job growth, not just in traditional technology hubs, but also in metro areas around the nation. Read the paper here.

USA TODAY: Emerging Tech Hubs Are Far From Coasts

Posted on March 30, 2017 by The Progressive Policy Institute

PPI Chief Economic Strategist Michael Mandel was quoted in USA TODAY regarding his recent report, “How the Startup Economy is Spreading Across the Country” on start-ups and entrepreneurial growth across the country:

“I was surprised by cities in the Midwest that made the list,” says Michael Mandel of PPI, who conducted the study. E-commerce contributed to job creation in Ohio, Tennessee, and Kentucky among companies large and small, he said.

Read the piece in its entirety at USA TODAY.

Axios: The Next Start-Up Hubs

Posted on March 30, 2017 by The Progressive Policy Institute

A growing number of startups are being created across the country — and they’re cropping up outside of the top innovation hub cities. That’s according to new data released today by TechNet and the Progressive Policy Institute.

Why it matters: Political and economic dynamics are forcing companies and investors to pay more attention to business activity in middle America, where many workers feel left out of the booming economies of the coastal cities (think San Francisco, San Jose, Seattle, New York and Boston.) Following the recession, start-up formation stalled outside of the big tech hubs like Silicon Valley. But activity has picked up over the past two years, with midwestern cities gaining momentum.

Continue reading at Axios.

How the Startup Economy is Spreading Across the Country- And How It Can Be Accelerated

Posted on March 29, 2017 by The Progressive Policy Institute

It is March 2017. Square, the small business payments startup founded in 2009, is hiring for its customer support operation in St. Louis. Fintech startup Greensky, founded in 2006, is expanding in Atlanta. Seattle-based Zulily, the ecommerce startup founded in 2009 and bought by QVC in 2015, is hiring for its fulfillment center in Bethlehem, Pennsylvania, on the site of Bethlehem Steel’s former main plant. Venture-funded Thread International, based in Pittsburgh, is staffing up its
headquarters to help turn recycled plastics into fiber and yarn. Total Quality Logistics, a freight brokerage founded in Cincinnati in 1997, has 26 positions open in Ohio, 11 in Florida, and more elsewhere.

All across the country, entrepreneurs are founding and building new companies that use technology in innovative ways. The American startup ecosystem — the envy of the world — has spread outside of the coasts and high-profile tech hubs, such as San Francisco, Boston, and New York City, to other parts of the country. Startup activity is happening everywhere in cities and towns across America.
More than that, the startup culture of entrepreneurship, fueled by scalable technology, is spreading as well. Around the country, an increasing number of companies are describing themselves as “startups” when they advertise for workers.

In this paper, the Progressive Policy Institute (PPI) and TechNet explore the importance of the startup economy to job growth, not just in traditional technology hubs, but also in metro areas around the nation.