Economy Archives - Page 32 of 83 - Progressive Policy Institute

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.

The Coming Productivity Boom- Transforming the Physical Economy with Information

Posted on March 28, 2017 by The Progressive Policy Institute

It is amazing how many of our nation’s biggest challenges can be addressed by a simple formula: faster growth more broadly shared. From infrastructure to healthcare, education to national security, crime to creativity, a bigger pie and a wider winner’s circle go far towards solving them.

A simple comparison of potential growth rates tells the story. At the current expected growth rate of 2% annually, the country will struggle to meet its obligations and invest in the future. But if growth accelerates to 2.7% annually, as this paper’s analysts project, it will add a cumulative $8.6 trillion in wages and salaries over the next 15 years (measured in 2016 dollars).

And while Americans will have more to spend on meeting their needs, the government will have more funding to help out. Federal revenues will go up by an added $3.9 trillion without any increase in federal taxes as a share of GDP. Some of that will go to cutting the debt, while still leaving additional revenue for other needs, such as infrastructure and security. (These figures are based on projections and analysis developed in this paper.)

Embrace of IT in Physical Industries Has U.S. on the Cusp of a Productivity Boom

Posted on March 28, 2017 by The Progressive Policy Institute

WASHINGTON—The Technology CEO Council (TCC) today released a new economic analysis, co-researched and written by PPI Chief Economic Strategist Michael Mandel that shows a coming U.S. productivity boom enabled by the diffusion of information technology (IT) into the physical industries, including manufacturing, agriculture, healthcare, transportation, and energy. Far from a jobless future, Mandel’s co-analysis predicts that increased use of information technology will make the physical economy more productive and American workers more valuable.

“Job and productivity growth has stalled in many industrialized countries, including the U.S.,” says Mandel. “While some economists will put the blame squarely on IT for disrupting industries and destroying jobs, the surprising fact is that 70 percent of companies in the U.S. economy are not taking full advantage of the power of information technology. And that’s the problem.”

By comparison, digital industries have fully embraced information technology, building new products and platforms—the PC, the Web, the smartphone, cloud computing, electronic financial markets—all of which empowered further explosions of entrepreneurial activity and along with it, jobs.

According to the report, this IT-enabled transformation could add $2.7 trillion to U.S. annual economic output by 2031 (in 2016 dollars), and grow federal revenues by a cumulative $3.9 trillion over the next 15 years.

In particular, The Coming Productivity Boom details a manufacturing sector in the midst of major transformation—not just by robotics and 3D printing, but by the emergence of smart manufacturing, a fundamental rethinking of the production and design process that will substantially boost productivity and demand. In turn, smart manufacturing will lead to the creation of a new set of manufacturing-related jobs and allow American factories to compete more effectively against low-wage overseas competition.

Catalyzing this growth requires better tax policy, the free flow of goods, services and data around the world, investments in communications networks and in education and training, as well as an embrace of innovation among regulators.

The complete report is available for download at www.techceocouncil.org/productivityboom.

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Ecommerce Has Added Almost 100K Jobs Over the Past Year

Posted on March 10, 2017September 18, 2024 by The Progressive Policy Institute

In our new paper, we develop a methodology for tracking ecommerce jobs and pay. Applying that methodology to today’s jobs report, we find that the ecommerce sector has added 97,000 jobs over the past year. This figure includes fulfillment centers. Surprisingly, general retail–which includes the retailers competing most directly with ecommerce–has added 27,000 jobs over the same stretch.

The ecommerce jobs pay much better than general retail. For example, production and nonsupervisory workers in the ecommerce sector, including fulfillment centers, earned an average of $17.41 per hour in 2016, compared to $13.83 in general retail—a 26 percent premium.

Based on official data, it looks like the ecommerce sector is adding new, better-paying jobs without actually reducing existing jobs in retail. Moreover, as our paper shows, these jobs are widely distributed around the country, including states such as Kentucky and Indiana.

Background: In our new paper, “The Creation of a New Middle Class?: A Historical and Analytic Perspective on Job and Wage Growth in the Digital Sector, Part I,” we explore the possibility that the job and wage growth generated by the digital boom is creating a new middle class, with gains across the entire country. Our historical benchmark is the first half of the 20th century, when superstar industries companies such as Ford, General Motors, General Electric, and DuPont accomplished what had seemed impossible at the time: create hundreds of thousands of jobs while paying good wages and offering consumers lower prices than their rivals. We provide evidence that

For the purpose of this analysis, we define the ecommerce sector to include what the government calls the “electronic shopping and mail order house” industry (NAICS 4541) and “general warehousing” (NAICS 49311). Based on careful examination of the data, this second industry apparently contains the bulk of fulfillment centers and similar establishments.

We define the general retail sector to include those retailers that compete most directly with ecommerce, including electronic and appliance stores (NAICS 443); clothing, shoes, and jewelry stores (NAICS 448); sporting goods, hobby, musical instrument, and book stores (NAICS 451); and general merchandise stores, including department stores and supercenters (NAICS 452).

Because of the way that the BLS collects data, it is possible that the general retail sector includes some workers involved in ecommerce. That would mean we are underestimating ecommerce jobs and overestimating brick-and-mortar general retail jobs by the same amount.

For the results reported in this blog post, we use 12-month averages.

Comparing Today’s Tech/Telecom Employment with Yesterday’s Industrial Employment

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

We’re grateful to have our new report mentioned in Neil Irwin’s piece today in the New York Times about tech employment. The report, An Analysis of Job and Wage Growth in the Tech/Telecom Sector, to be presented at the TPRC conference later this week, directly compares employment at today’s leading tech/telecom firms with employment at the industrial leaders of the past. Here’s what we found:

• Today’s 10 most valuable tech/telecom companies employ roughly 1.5 million people, up 63 percent over the past 10 years.

• In 1979, at the peak of US manufacturing employment, the 10 most valuable industrial companies employed 2.2 million workers, 48 percent more than employment at 2017 tech/telecom leaders.

• The average employment of the vintage-2017 tech/telecom leaders is 149,000, compared to a 222,000 average for the vintage-1979 industrial leaders. However, the industrial average is heavily influenced by General Motors, which is an outlier. If we omit General Motors, the employment average of the other industrial companies is 152,000, very close to today’s tech/telecom average.

• For example, Apple (mentioned in Irwin’s story) reported 116,000 fulltime equivalent employees as of its last annual report. Kodak in 1979 had 126,300 employees worldwide, and 80,800 in the United States. That makes them roughly the same size in terms of employment.

• Kodak employed 24,500 workers in 1929. So Kodak needed 50 years to add roughly 100,000 workers. Apple employed 17,787 workers in 2006, so Apple needed 10 years to add roughly 100,000 workers.

• The revenue of the top 10 tech/telecom companies in 2016 was 5.5 percent of U.S. GDP, compared to 5.7 percent of GDP for the top 10 industrial companies in 1979.

• Real wages for production and nonsupervisory workers in tech/telecom, digital nontech, and health have been steadily rising since 1990. By comparison, real wages for production and nonsupervisory workers in the physical nonhealth sector have been flat since 1990.

• Workers in mid-skill occupations such as office and administrative support; sales; and installation, maintenance, and repair get paid significantly more in the tech/telecom sector.

Read the paper.

Is Economic Growth Becoming Less Concentrated ?

Posted on March 8, 2017September 18, 2024 by The Progressive Policy Institute

It’s been well-documented that economic dynamism for many years has been concentrated geographically–in a few tech hubs like SF and NY, in the largest urban areas where young people flock, in coastal states. This geographical concentration appears to have been a major force underlying the 2016 election, where areas left behind by economic prosperity were willing to vote for Donald Trump.

However, the latest release from the BLS shows that nonfarm payroll employment increased over the year in 342 out of 388 metropolitan areas over the last year, suggesting economic gains are spreading across the country. Moreover, Amazon and other ecommerce leaders seem to be creating hundreds of thousands of jobs in outlying areas with cheaper real estate and good access to roads.

So we did a deep dive into the numbers. Using QCEW from 2007 to 2016, we compared the economic performance of big metro areas (employment over a million) with the rest of the country. Our measures were growth of private sector jobs and establishments. A new establishment reflects either a new business opening up, or an existing business expanding.

From 2007 to 2015, the big metro areas far outperformed the rest of the country. Indeed, the rest of the country experienced shrinkage in both jobs and establishments. Economic growth was very concentrated.

But 2016 was different. In 2016, the rest of the country actually created establishments faster than the big metro areas, reflecting growth of new businesses and expansions of existing businesses. This is great news. The big metro areas still did somewhat better when it came to job growth, but the gap has narrowed enormously.

We get the similar results when we look at large and small counties (with 400K employment as the dividing line), or major tech hubs versus the rest of the country.

These results suggest that the economic pendulum may be starting to swing back, away from the biggest cities towards more evenly balanced growth, with some very interesting policy and political implications. More to come.

Brazil’s App Economy

Posted on February 22, 2017 by The Progressive Policy Institute

Apple’s introduction of the iPhone in 2007 initiated a profound and transformative new economic innovation.

While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones, and the wave of smartphones that followed, was a rare force for growth. Today, use of mobile data is rising at 50% per year globally, a stunning number that shows the revolutionary impact of the smartphone.1

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

em português: PPI_BrazilAppEconomy_PT

Yarrow for SF Chronicle: “Fathers’ unemployment taking huge toll on children”

issue: Economy