issue: Economy

App Economy Jobs in Europe–Methodology and References

Posted on by The Progressive Policy Institute

Methodology

As noted in Part 1, we have developed a new, standardized methodology for estimating App Economy employment. This methodology can be applied to a wide variety of countries, languages, and economic environments. The methodology uses online job postings for workers with app-related skills as a real-time measure of App Economy employment. We benchmark this data against official government statistics in order to eliminate many of the well-known problems connected with using big data to measure economic variables.

Our new globally uniform methodology is built on a strong base of previous research, starting with the widely cited 2012 paper, “Where the Jobs Are: The App Economy” (see full list of previous studies at end of document). For this study, a worker is in the App Economy if he or she is in:

  • An ICT-related job that uses App Economy skills—the ability to develop, maintain, or support mobile applications. We will call this a “core” App Economy job.
  • A non-ICT job (such as human resources, marketing, or management) that supports app developers in the same enterprise. We will call this an “indirect” App Economy job.
  • A job in the local economy that is supported by core or indirect App Economy jobs. We will call this a “spillover” job.

Continue reading “App Economy Jobs in Europe–Methodology and References” →

App Economy Jobs In Europe (Part 1)

Posted on by The Progressive Policy Institute

Michael Mandel [i]

In this report, we estimate that the European Union, plus Switzerland and Norway, has a surprising 1.64 million App Economy jobs as of January 2016–a sign of a growing and vital tech sector.

This is the second in our series of global App Economy reports. In the first report, released earlier this month, we used the same methodology to estimate that the United States had 1.66 million App Economy jobs, only slightly above Europe.  While Europe still lags by other measures, it’s clear that European companies and workers have been able to take advantage of the global App Economy boom in a very positive way.

Our policy agenda, in doing these reports, is to show how innovation can create jobs globally, a point that is of great interest to both workers and policymakers. Moreover, by developing this data set, we hope to link app-related job growth to government policies in different countries, to understand what can be done to spur innovation-related jobs in the future.

We focus on the App Economy because the introduction of the iPhone in 2007, followed by the opening of the innovative App Store in 2008, created a profound and almost unprecedented economic force.  It was a match made in heaven—handheld powerful computers that were always connected to the Internet, combined with the ability for developers to write and maintain the mobile applications that made smartphones useful.

The App Store was the rare case of an innovation with a clear starting point and immediate global adoption. Moreover,  the innovative design of the App Store lowered the barriers to entry for mobile app developers all around the world.  It created a low-cost mechanism for distributing apps to users that allowed even the smallest of software developers to reap global economies of scale.  In some sense, the App Store was an important step in fostering a global entrepreneurial culture.

At the same time, large companies have realized that mobile apps are the new “front door” to their business, a way of  reaching customers and potential customers. Similarly, we have reached a tipping point where more and more people of all income classes have smartphones,  allowing governments and nonprofits to use mobile apps to deliver social services and as an interface for important citizen interactions. This change, while slow, has reached a tipping point.

Looking forward, the growth of the App Economy is likely to continue, as people increasingly use mobile apps as their interface to their home, cars, schools, and health providers. Indeed, the rise of the Internet of Things will guarantee the need for more and more highly functional and sophisticated apps, serving an essential role in interacting with our environment.

Measuring the App Economy[ii]

 This report on European App Economy employment builds on previous estimates of App Economy jobs around the world,  starting with our February 2012 report “Where the Jobs Are: The App Economy.” Over the past several years, we have documented the enormous number of jobs created by the App Economy in developed countries such as the United States and Australia, and developing countries such as Vietnam and Indonesia (see past work referenced in “App Economy Jobs in Europe–Methodology and References”).  Other researchers have estimated App Economy employment for Europe and elsewhere.

But as the App Economy grows in significance globally, it becomes essential to have a consistent set of App Economy job estimates so that policymakers can compare their country’s performance with that of other countries. For that reason, we have developed a new, standardized methodology for estimating App Economy employment. This methodology can be applied to a wide variety of countries, languages, and economic environments. The methodology uses online job postings for workers with app-related skills as a real-time measure of App Economy employment. We benchmark this data against official government statistics in order to eliminate many of the well-known problems connected with using big data to measure economic variables. [iii]

Our goal is to produce a set of globally-consistent and credible estimates for App Economy employment by individual countries, by broad geographical regions, and by major cities. The ultimate objective is to be able to track the growth of the App Economy globally, and to see which countries are benefitting the most. Ideally we should be able to link App Economy growth to policy measures implemented by governments.

This preliminary report on Europe’s App Economy represents the second in a series applying our new universal methodology to countries and regions.  Our analysis includes the 28 countries in the European Union, plus Norway and Switzerland.  Our methodology is described in detail in the accompanying post. A forthcoming blog post, “App Economy Jobs in Europe–Cities (part 2),” not yet available, will estimate App Economy employment in major European cities.

Results

Our analysis shows that the European App Economy includes 1.64 million jobs as of January 2016. Companies employing workers with App Economy skills include large and small app developers; software and media companies; financial and retail companies; industrial companies; health and education enterprises; leading European and non-European tech companies; nonprofits and government suppliers; and large accounting and consulting firms.

 

 

Table 1:  The European App Economy, January 2016

Millions of jobs
EU-28 plus Norway and Switzerland 1.64
EU-28 1.57

Data: Progressive Policy Institute, Indeed, public job postings

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

• An information and communications technology (ICT)-related job that uses App Economy skills—the ability to develop, maintain, or support mobile applications. We will call this a “core” App Economy job. Core app economy jobs include app developers; software engineers whose work requires knowledge of mobile applications; security engineers who help keep mobile apps safe from being hacked; and help desk workers who support use of mobile apps.

• A non-ICT job (such as human resources, marketing, or sales) that supports core app economy jobs in the same enterprise. We will call this an “indirect” App Economy job.

• A job in the local economy that is supported by the income flowing to core and indirect app economy workers. These “spillover”  jobs include local retail and restaurant jobs, construction jobs, and all the other necessary services.

To estimate the number of core App Economy jobs, we use a multi-step procedure based on data from the universe of online job postings. Our first observation is that online job postings typically describe the skills and knowledge being sought by the employer. For example, if a job posting requires that the job candidate have experience developing apps for iOS—the iPhone/iPad operating system—then we can reasonably conclude that the posting refers to a core App Economy job.

In practice, we compiled a short list of key words and phrases that would generally be associated with App Economy-related skills. These include iOS, Android, Blackberry, “Windows Phone,” “Windows Mobile,” and app. We applied these search terms to the real-time database of job postings developed by Indeed, which gave us an unadjusted count of job postings for core App Economy jobs.

However, that’s only the start. Job postings for an occupation are only a fraction of the number of people employed in that occupation, since most positions are not empty. We develop an estimate for the ratio between the number of job postings for ICT jobs and overall ICT employment.  This ratio is applied to the number of app economy job postings to generate a provisional estimate of core app economy employment. Crucially, we use a validation procedure to ensure that we are actually counting job postings that correspond to core app economy jobs. We use a conservative estimate of the indirect and spillover effects.[iv]

App Economy Jobs by European Country

As noted above, one of our goals is to develop a measure of App Economy jobs by country, in order to assess the relationship between government policies and innovation-driven job growth.  Table 2 below provides estimates of App Economy employment for the top European economies. The United Kingdom ranks first, followed by Germany and France.

 

Table 2:  App Economy Jobs by Country,  January 2016

 Country App Economy jobs, thousands
United Kingdom 321.2
Germany 267.9
France 228.9
Netherlands 125.2
Italy 97.5
Poland 84.3
Spain 78.2
Sweden 67.1
Finland 47.4
Norway 41.6
Denmark 33.4
Switzerland 28.5
Portugal 27.4
Belgium 23.2
Czech Republic 19.7
Romania 19.3
Hungary 15.3
Ireland 13.2
Austria 11.9
European Union 1572
30-country total 1642

 

Data: Progressive Policy Institute, Indeed, ILO

 

 

Before Apple opened the App Store in July 2008,  there was no such thing as an App Economy job. No employer was posting want ads looking for iOS or Android developers; no one was talking about the shortage of mobile app coders.  This has been an incredibly rapid transformation of the job market, paralleling the astounding growth of smartphone usage.

What’s more, the explosion of App Economy jobs came during the deepest recession in more than 75 years. Indeed, these 30 countries are now just making it back to the level of employment that existed in the middle of 2007.  The demand for App Economy skills drove companies to hire new ICT workers–and retain the ones they already had–even during the depth of the recession and the sluggish recovery that followed.

How important has the App Economy been for the European labor market?  That is a tough question to answer quantitatively. But we do note that  France has 229,000 App Economy jobs, only slightly less than the 289,000 net new jobs generated in the country between 2007 and 2015.

Comparisons

A globally consistent methodology is makes it easier to do comparisons across countries. Let’s start by comparing the United States with the EU-28 plus Norway and Switzerland. As noted at the beginning of the study, Europe has generated App Economy jobs at roughly the same pace as the United States, 1.64 million vs 1.66 million.

In other ways, however, Europe still lags behind. We define ‘app intensity’ as App Economy jobs as a percentage of all jobs.  The United States has an average app intensity of 1.2%. By comparison, the European app intensity is 0.7% (Table 3)

 

Table 3: App Economy Matchup: Europe vs the US

App Economy Jobs (millions) App Intensity *
Europe** 1.64 0.7%
United States 1.66 1.2%

*App Economy jobs as a share of all jobs.
**EU-28 plus Switzerland and Norway
Data: Progressive Policy Institute, Indeed,  Eurostat

We can do a similar comparison ranking  European countries by app intensity. Table 4 ranks European countries by app intensity. Finland takes top place with a 1.9% app intensity, showing it to be a small country with a big presence in mobile apps, led by world-class companies such as mobile game makers Rovio Entertainment (maker of the mobile game hit Angry Birds) and Supercell. Norway ranks second, followed by the Netherlands. By way of a measuring stick, the top U.S. state by app intensity is California, at 2.4%.

Germany, which ranks highly on total App Economy jobs, is only average when judged by app intensity. Italy, which is fifth in total App Economy jobs, falls to the bottom of the app intensity listings with 0.4%.

 

Table 4: Ranking European Countries By App Intensity

 Country App Intensity*
Finland 1.9%
Norway 1.6%
Netherlands 1.5%
Sweden 1.4%
Denmark 1.2%
United Kingdom 1.0%
France 0.9%
Ireland 0.7%
Germany 0.7%
Luxembourg 0.6%
Switzerland 0.6%
Portugal 0.6%
Poland 0.5%
Belgium 0.5%
Spain 0.5%
Italy 0.4%
Czech Republic 0.4%
Hungary 0.4%
Austria 0.3%
*App Economy jobs as percentage of all jobs

Data: Progressive Policy Institute, Indeed, Eurostat

 

 

Perspective

We estimate that the European Union plus Norway and Switzerland  has 1.64 million App Economy jobs—does this number make sense? This figure corresponds to roughly 547,000 core App Economy jobs. By comparison, we estimate this 30-country area has roughly 5.9 million workers in all ICT occupations.[v] As a result, roughly 9 percent of ICT jobs in Europe are associated with the App Economy.

A similar calculation for the US  shows roughly 11 percent of ICT jobs associated with the App Economy. Based on informal discussions with tech executives, neither of these numbers seem out of line. They suggest that Europe is developing a vibrant App Economy, just at a somewhat slower rate than the United States. Moreover, there is plenty of room for the number of App Economy jobs to continue to rise as apps take a central role in the Internet of Things.

 

Mobile Operating Systems

Many App Economy job postings list a mobile operating system or multiple mobile operating systems that the job candidate is expected to be familiar with. This allows us to assess the distribution of mobile operating systems in the European App Economy.

 

Table 5: European App Economy Jobs by Operating System

App Economy jobs (thousands) share of all App Economy jobs
iOS ecosystem 1227 75%
Android ecosystem 1223 75%
Blackberry ecosystem 105 6%
Windows Phone/Mobile ecosystem 150 9%

Data: Progressive Policy Institute, Indeed

 

Here’s how the App Economy job numbers in EU-28 plus Norway and Switzerland break down by operating systems.  As of January 2016, we estimate that 75% of App Economy workers in Europe (1.2 million jobs) belong to the iOS ecosystem. This includes iOS specific jobs as well as jobs supporting a combination of iOS and other platforms. The Android ecosystem also accounts for 75% of App Economy workers in Europe (also 1.2 million after rounding).  The Blackberry ecosystem accounts for 6%, while the Windows Phone or Windows Mobile ecosystem accounts for 9%.

The numbers sum to more than 100% because some jobs specify more than one operating system—say, both iOS and/or Android skills. From a policy perspective, the iOS ecosystem is likely to have a larger impact on entrepreneurship and the economy in Europe. That’s because iPhone owners in Europe typically have higher incomes, and iOS apps tend to generate higher revenues for developers.

We can also estimate the number of jobs associated with major mobile operating systems across different countries in Europe. Table 6 is in alphabetical order.

 

 

 Table 6: App Economy Jobs by Country and Major Operating System

Total App Economy jobs (thousands) Jobs belonging to iOS ecosystem (thousands) Jobs belonging to Android ecosystem (thousands)
Austria 12 9 10
Belgium 23 18 16
Czech Republic 20 12 15
Denmark 33 24 26
Finland 47 36 41
France 229 163 172
Germany 268 209 201
Hungary 15 12 11
Ireland 13 11 9
Italy 97 75 79
Netherlands 125 96 99
Norway 42 32 33
Poland 84 49 60
Portugal 27 22 22
Romania 19 12 14
Spain 78 61 66
Sweden 67 54 52
Switzerland 29 23 23
United Kingdom 321 242 206

Data: Progressive Policy Institute, Indeed

 

 

Conclusion

Our analysis shows Europe’s companies and workers have been able to take advantage of the App Economy boom.  Using our new globally-consistent methodology, we estimate that the 28 countries of the European Union plus Switzerland and Norway have been able to generate nearly as many App Economy jobs as the United States since 2008, when the App Store was introduced.  This suggests a positive role for innovation in producing new jobs and new opportunities around the world.

 

 

Notes

[i] With research assistance from Michelle Di Ionno. Indeed bears no responsibility for the analysis in this report.

[ii] For the sake of clarity, this section repeats much of the material in the post “App Economy Jobs in the United States”

[iii] Steve Lohr, “Google Flu Trends: The Limits of Big Data,” New York Times (March 28, 2014).

[iv] We assume that each core app economy job is associated with two additional jobs (combined indirect and spillover). This assumption is low compared to the typical job multiplier found in the literature, which can go as high as 5 or even higher. See, for example, “Job Multipliers: Silicon Valley vs. The Motor City,“ https://www.economicmodeling.com/2012/08/31/job-multipliers-silicon-valley-vs-the-motor-city/

[v] This figure includes ICT managers, ICT professionals and ICT technicians. We derive it from  Figure 2.8 in OECD Digital Economy Outlook 2015.

 

Dallas Business Journal: Texas finds roughly half of its mobile application-related jobs in DFW

Posted on by The Progressive Policy Institute

The Dallas Business Journal cites data collected by PPI’s chief economic strategist Michael Mandel on the growth of App Economy jobs in Dallas, Texas:

The Progressive Policy Institute based in Washington, D.C., reported that the DFW region comprised 44 percent of the states workforce within the space in the month of December. The data includes development jobs as well as jobs that are indirectly related to the mobile app economy.

‘It was kind of a surprise,’ said Michael Mandel, PPI chief economic strategist, adding that the area is not the first region typically expected to have a high percentage of this specific workforce. ‘We saw a lot of growth in places like Chicago, Dallas and New York – outside the traditional tech areas.’

Read the article in its entirety at Dallas Business Journal.

The Hill: In TPP review, focus on small business and digital trade

Posted on by The Progressive Policy Institute

With the release of the full text of the Trans-Pacific Partnership (TPP) trade agreement last November, the American people and their representatives now have an extensive opportunity to analyze the specific provisions of the proposed deal. In addition, as required by recent trade legislation, the U.S. International Trade Commission (USITC) is conducting a detailed, independent review of the likely economic impact of the TPP on specific industry sectors and the overall U.S. economy.

In recent comments filed in the USITC investigation, the Progressive Policy Institute (PPI) urged the Commission to pay particular attention to the beneficial economic effects of the TPP’s groundbreaking provisions on small business trade, international e-commerce, and the digital economy.

PPI has highlighted in recent reports the transformative role that digital tools—including Internet platforms like eBay—are playing in “democratizing” trade. Increasingly, smaller, digitally enabled American exporters can often sell products and services to customers around the world as easily as their large, established competitors.

But, for the digital economy to continue to transform trade, countries must resist a growing trend toward “digital protectionism.” As PPI’s submission explains, the TPP would support the continued growth of digital trade through groundbreaking rules that would require countries to allow commercial data flows; restrict “data localization” requirements that mandate where data or facilities must be located; and require privacy, consumer protection, and other rules to promote more secure and robust international e-commerce.

PPI’s comments also underscore the importance of the TPP’s many pioneering provisions to help small and medium-sized enterprises (SMEs) to export. These include the creation of a special committee to assure that the agreement works for SME traders; a requirement that countries create user-friendly digital information portals to assist SME traders; and eliminating or significantly reducing high duties, regulatory barriers, and customs delays that the studies by the Commission and others show can place disproportionate burdens on smaller traders.

PPI’s submission emphasizes that these and other TPP provisions have significant potential to support substantial expansion of American SME exports and economic growth that is shared more widely by more Americans. Studies by the Commission and others have found that smaller firms that export are more productive, hire more employees, and pay higher wages than non-exporting SMEs. And PPI’s own analysis shows that woman- and minority-owned firms that export employ three to five times more workers—and pay salaries some 60 percent higher—than their non-exporting counterparts.

In short, TPP points toward the next frontier in international trade—new opportunities to promote digital trade and engage more small firms and entrepreneurs in global commerce. The International Trade Commission should assess the potential of such new forms of trade to reinvigorate U.S. economic growth and competitiveness.

This is cross-posted from The Hill‘s Congress Blog.

Why Telecom Rate Regulation is a Bad Idea

Posted on by The Progressive Policy Institute

In 2000, Americans devoted 2.7% of total personal consumption expenditures to telephone, internet, and cable service. Back then, no one had a smartphone, and almost everyone used dial-up to access the Internet.

Today, after 15 years of the greatest communications revolution in history and more than $1 trillion in investment by the telecom and broadcasting industry, many Americans practically live on their devices. And do you know how much we are spending on telephone, internet, and cable service?  A stunning (sarcastic!) 2.9% of consumer spending.

Against this backdrop, the House Subcommittee On Communications and Technology held a hearing on H.R. 2666, the “No Rate Regulation of Broadband Internet Access Act.”  The bill would bar the FCC from imposing rate regulation on the broadband industry. Without taking a position on the legislation itself, we note two points. First, there is literally no evidence that rate regulation is needed. Americans are getting far more telecom services than 15 years ago, while laying out roughly the same share of consumer spending. Second, in the rapidly-changing world of the tech-telecom-content sector, rate regulation is like putting a ball and chain on an Olympic runner.  Economic growth depends on the creation of new markets, products, and services. The need to get rate approval will slow some innovations, and deter others.

In the end, rate regulation is solving a problem that doesn’t exist, while creating new ones.

 

 

 

 

The Wall Street Journal: Marshall on Anger with Wall Street

Posted on by The Progressive Policy Institute

In his analysis of how the two parties still do not agree what caused the 2008 financial crisis, Nick Timiraos of The Wall Street Journal quotes PPI president Will Marshall:

Anger at Wall Street among primary voters in both parties illustrates how “extreme antibusiness populism on the left is intersecting with extreme antigovernment populism on the right,” said Will Marshall, president of the Progressive Policy Institute, a centrist Democratic think tank.

Read the article in its entirety at The Wall Street Journal.

App Economy–methodology and references (Part 3)

Posted on by The Progressive Policy Institute

Part 3: App Economy methodology and references: As noted in Part 1, we have developed a new, standardized methodology for estimating App Economy employment. This methodology can be applied to a wide variety of countries, languages, and economic environments. The methodology uses online job postings for workers with app-related skills as a real-time measure of App Economy employment. We benchmark this data against official government statistics in order to eliminate many of the well-known problems connected with using big data to measure economic variables.

Our new globally uniform methodology is built on a strong base of previous research, starting with the widely cited 2012 paper, “Where the Jobs Are: The App Economy” (see full list at end of document). For this study, a worker is in the App Economy if he or she is in:

  • An IT-related job that uses App Economy skills—the ability to develop, maintain, or support mobile applications. We will call this a “core” app economy job.
  • A non-IT job (such as human resources, marketing, or management) that supports app developers in the same enterprise. We will call this an “indirect” app economy job.
  • A job in the local economy that is supported by core or indirect app economy jobs. We will call this a “spillover” job.

Continue reading “App Economy–methodology and references (Part 3)” →

Wall Street Journal: The App Economy and Apple

Posted on by The Progressive Policy Institute

Daisuke Wakabayashi of The Wall Street Journal mentions data collected by PPI’s Michael Mandel, that analyzes America’s app economy, in his analysis of Apple:

Apple said the business of creating apps for its products has created and supported—directly and indirectly—1.9 million jobs in the U.S., nearly three-quarters of them for app creators, software engineers and entrepreneurs. Those estimates are based on research, partly sponsored by Apple, by the Progressive Policy Institute.

Read the article in its entirety at the Wall Street Journal.

 

PPI to Congress: Scrub the SCRUB Act

Posted on by The Progressive Policy Institute

House Republicans this week are expected to take up the ponderously titled Searching for and Cutting Regulations that are Unnecessarily Burdensome Act (SCRUB) of 2015 (H.R. 1155). The Progressive Policy Institute, a strong advocate for regulatory improvement, urges progressives to oppose this highly partisan bill.

Over the last three years, PPI has worked with reform-minded Democrats and Republicans in Congress, as well as Independent Senator Angus King, to develop a more effective way of dealing with the problem of “regulatory accumulation,” the relentless buildup of rules over time. Sadly, House Republicans have chosen to ignore a bipartisan bill—the Regulatory Improvement Act of 2015 (H.R. 1407)—in favor of the SCRUB Act, a conservative favorite that stands little chance of winning Democratic support.

Both bills have in common the creation of an independent commission charged with winnowing outdated, duplicative or overly burdensome federal regulations. There, the similarities mostly end. And while the House’s latest version of the SCRUB Act clearly has been tweaked in response to criticism from regulatory experts, it still fails on three grounds:

First, the bill caters to conservative demands to roll back existing regulations and make it harder to issue new ones. Rather than mandate careful consideration of rules widely thought to be in need of elimination or improvement, it requires the commission to cut regulatory costs by 15 percent—an arbitrary goal with no clear policy rationale. And while SCRUB’s vague, nonbinding language gives priority to examining “older major rules,” it could open the door to fresh assaults on favorite conservative targets: rules implementing Obamacare, the Dodd-Frank financial reforms, and the Environmental Protection Agency’s Clean Power Plan. The Regulatory Improvement Act, on the other hand, explicitly prohibits consideration of rules less than ten years old by its commission.

Second, the SCRUB Act enshrines a foolishly impractical “Regulatory Cut-Go” mandate. Under this procedure, no federal agency could issue a new rule unless it cut old ones that impose equal “costs” on the economy. The idea is to offset the cost of new regulations by killing old ones. This attempt to make regulation a zero-sum game would create pressures to target cost-effective rules for elimination based on highly imprecise estimates of what a new rule might cost—and with no consideration of the many public benefits of regulation.

Third, the SCRUB Act has zero support among House and Senate Democratic leaders or within the Obama administration. As a conservative “message” vehicle, rather than a serious legislative proposal, the bill will likely die in the Senate before it can be vetoed. In contrast, the House version of the Regulatory Improvement Act introduced by Congressmen Patrick Murphy (D-FL) and Mick Mulvaney (R-SC), has an equal number of Democratic and Republican co-sponsors. Defying the logic of polarization, it builds political support for smarter regulation from the center out.

At the core of this legislation is the Regulatory Improvement Commission—an independent, bipartisan commission under Congressional authority ensuring there is no hidden regulatory agenda. Consisting of nine members appointed by the president and Congress, the commission, after a formal regulatory review, would submit a list of regulatory changes to Congress for an up-or-down vote without amendment. This approach would build political trust and lay the groundwork for further rounds of regulatory review and revision.

Most important of all, the Regulatory Improvement Commission would lift the burden of regulation accumulation from the backs of U.S. workers, businesses, and taxpayers. It would reduce compliance costs and—most crucially—the opportunity costs that accrue when entrepreneurs and business managers spend their energies on complying with unnecessary rules rather than creating value.

PPI urges progressives to support a more politically viable mechanism for improving the regulatory environment for economic innovation and growth—the Regulatory Improvement Act.

The Hill: Gerwin On the TPP and Small-Business

Posted on by The Progressive Policy Institute

PPI Senior Fellow for Trade and Global Opportunity Ed Gerwin was quoted by The Hill‘s Vicki Needham commenting on the positive effect Obama’s proposed Trans-Pacific Partnership would have on American small-businesses:

“Ed Gerwin, a senior fellow for trade and global opportunity at the Progressive Policy Institute (PPI), said that the business groups must help to convince lawmakers that the deal will benefit their home states and districts.

Gerwin, who argues that small business will gain a significant benefit from the TPP, said that ‘this trade agreement is really more about what’s going to happen in Washington state than what’s going to happen in Washington, D.C.'”

Read the article in its entirety at The Hill.

PPI Urges Congress to Support Internet Tax Freedom Act

Posted on by The Progressive Policy Institute

WASHINGTON—The Progressive Policy Institute today released the following statement urging Congress to pass the Internet Tax Freedom Act:

“The development of the Internet has been the single biggest driver of growth in the United States over the last two decades, disrupting and transforming industries in every corner of our economy. Not only has it been the most valuable resource for America’s entrepreneurs and innovators, but along with its advancement has come innumerable positive externalities that have spread broadly across the rest of the economy benefitting us all. That’s why, for nearly twenty years, PPI has opposed the taxation on Internet access by states and localities that threatens to stunt the future growth and dynamism of the Internet ecosystem.

“PPI is pleased to see the Internet Tax Freedom Act (ITFA), which would permanently block these taxes on access, included in the Trade Facilitation and Trade Enforcement Act currently being considered in Congress, and we urge pro-growth Democrats to support its passage. We would also like to thank Senator Ron Wyden for championing this issue since he first introduced the original ITFA in 1998 on behalf of millions of Americans whose livelihoods rely on a healthy, open and viable Internet.”

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WSJ: The Folly of Targeting Big Pharma

Posted on by The Progressive Policy Institute

An unfortunate refrain among Democratic presidential hopefuls is that rapacious pharmaceutical and biotech companies are driving up the cost of essential medications, bankrupting the health-care system, and depriving sick Americans of treatment. Hillary Clinton has honed her message to a nice sound bite: Drug companies that charge excessively high prices “are making a fortune off of people’s misfortune.”

A report released Dec. 2 by the Centers for Medicare and Medicaid Services shows a 12.2% increase in spending on prescription drugs in 2014 after an average 2% increase for the previous six years. As the CMS report clearly states, “the rapid growth in 2014 was due to increased spending for new medications (particularly for specialty drugs such as hepatitis C).” Yet the increase, combined with reports of drug companies attempting to jack up prices on existing drugs, has some calling for full-blown government price controls.

The way we pay for innovative drugs can certainly be improved. But the anger directed at the pharmaceutical and biotech industries overall is misdirected. The single biggest driving force for increased health-care spending in the U.S. is the rising cost of labor, not drugs. According to data from the Bureau of Economic Analysis and estimates by the Progressive Policy Institute, total labor compensation at hospitals, doctors’ offices, ambulatory care facilities and nursing homes has risen by roughly $270 billion since 2007, including the amount paid to doctors and dentists who own their own practices.

Continue reading at the Wall Street Journal.

The 2015 PPI Tech/Info Job Ranking

Posted on by The Progressive Policy Institute

This policy brief reports the top 25 tech counties in the country, based on the 2015 PPI Tech/Info Job Index.

The top three counties are in the Bay Area—first is San Francisco Country, followed by Santa Clara County (Silicon Valley), and San Mateo County. Travis County, home of Austin, Texas, takes fourth place, with Utah County (Provo, Utah) ranking fifth.

The top 25 list also includes well-known tech hubs such as King County (Seattle), New York County (New York City), Middlesex County (Cambridge, Mass.) and Suffolk County (Boston). However, the PPI Tech/Info Job Index also identifies some unexpectedly strong performers, including East Baton Rouge Parish (Baton Rouge, La.) and St. Charles County (St. Louis, Mo. Metro Area).

This is the third year that we have ranked counties by the PPI Tech/Info Job Index, which is based on the number of jobs added in their tech/info industries from 2011 to 2014, relative to the size of the local economy. PPI defines the tech/info sector as including telecom, tech, and content industries, including wired and wireless telecom, Internet search and publishing, and movie production (see complete list of included industries in the methodology section).

As in previous years, we find that the local economies with the highest PPI Tech/Info Job Index tend to have a faster growth rate of non-tech jobs. This result supports the proposition that benefits from a strong tech/info sector spill over to the rest of the local economy.

Download “2015.12-Mandel-Di-Ionno_The-2015-PPI-Tech-Info-Job-Ranking”

Innovation in a Rules-Bound World: How Regulatory Improvement Can Spur Growth

Posted on by The Progressive Policy Institute

Economists and policymakers are always lauding innovation. In its purest form, innovation is like a free lunch: it boosts growth and incomes, creates good jobs, and opens up new possibilities for social reform and social mobility.

Today, innovation is needed more than ever. Productivity growth has been slowing in recent years. The 10-year growth rate of nonfarm business labor productivity is only 1.3 percent in 2015, compared to 3 percent as recently as 2005. A full one percentage point of that 1.7 percentage point decline, or more than half, is due to a slowdown in the growth rate of multifactor productivity, an indicator of innovation. In other words, the economic evidence suggests that this is an era of relatively weak innovation, outside of information technology.

Indeed, encouraging innovation is more essential than ever before. Fortunately, industries such as health care, education, finance, and tech are attempting to adopt new technologies that offer the chance of faster growth and higher wages, desperately needed to overcome years of stagnation.

But regulators, both in Washington, and at the state and local level, struggle with a rapid pace of innovation. Innovation, especially disruptive innovation, embodies unpredictability, change, and the creation of new products and markets. By contrast, regulators thrive on rules and predictability. They maintain a process of identifying an existing market failure and then issuing regulations that aims to make consumers and society better off by correcting that failure. The regulation process is far more straightforward when markets change slowly and predictably.

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WSJ: Small Businesses With a Big Stake in the Pacific Trade Deal

Posted on by The Progressive Policy Institute

During the seven years that the Trans-Pacific Partnership was being negotiated, critics repeatedly claimed that the trade agreement wouldn’t be about trade or cutting tariffs but, instead, would primarily advance the special interests of large multinationals. Economist Joseph Stiglitz, for example, warned that the TPP could “benefit the wealthiest sliver of the American and global elite at the expense of everyone else.”

The negotiations are now over, and the full text of the agreement, released on Nov. 5, tells a different story. Notably, the agreement includes groundbreaking provisions that better enable smaller businesses to prosper by exporting to the 12 countries that are in the partnership. The growing markets in these countries account for some 40% of the global economy.

Ninety-eight percent of America’s 300,000 exporters are small or medium-size enterprises (SMEs)—firms with fewer than 500 employees. Together they account for about a third of the $1.6 trillion in annual goods exports. And because only 5% of SMEs currently export, there’s a significant potential for growth.

Small businesses account for almost two-thirds of America’s net new jobs and—according to economists—are essential building blocks for economic mobility. Smaller firms that export are especially prolific creators of good jobs for diverse groups. Census Bureau data show that the average American women-owned exporter, for example, employs five times more workers and pays an average salary almost $17,000 more than women-owned non-exporters. Similarly, minority-owned exporters employ three times more workers and pay nearly $16,000 more.

Continue reading at the Wall Street Journal.

The Trans-Pacific Partnership and Small Business: Boosting Exports and Inclusive Growth

Posted on by The Progressive Policy Institute

With the release of the full text of the Trans-Pacific Partnership (TPP), America now has an important—and extensive—opportunity to review the agreement’s actual terms. Critics are certain to reprise old arguments, including those that blame trade for economic disruptions whose origins often lie elsewhere. And they’ll offer newer criticisms, including the claim that TPP isn’t really about trade or cutting tariffs but, rather, is a scheme to advance the agenda of large multinational corporations.

This latest charge will likely be news to the hundreds of thousands of small and mid-sized American firms that currently export—and the growing numbers of small entrepreneurs who are seeking greater opportunity through trade. America’s smaller exporters will note that the TPP has made small business trade a key point of emphasis, and that it includes groundbreaking provisions to boost their ability to export to key TPP markets.

Increasing exports by U.S. small business can also be a vital opportunity to promote stronger—and more inclusive—economic growth. Small and medium-sized enterprises (SMEs) that export have higher sales, hire more employees, and pay higher wages than non-exporting SMEs. And because exporters account for only about one percent of all U.S. SMEs, America has significant untapped potential to support growth, good jobs, and economic mobility through increased small business trade.

But to meet this potential, it’s vital for the United States to reduce the extensive and often onerous foreign trade barriers that often keep SME traders on the sidelines. High duties and costs, customs red tape, unnecessarily complex regulations, and other barriers negatively impact American exporters of all sizes, but they can loom particularly large for small entrepreneurs that lack the resources, personnel, contacts, and extensive support networks of bigger competitors.

In this policy brief, we first review the TPP agreement and explain how it would eliminate significant trade barriers to U.S. small business and enable more American SMEs to prosper by exporting to fast-growing Asia-Pacific markets. We then highlight how the TPP’s support for small business trade can play a vital, broader role, helping to boost the overall economy and “democratizing” trade by assuring that trade’s significant benefits are shared more widely by more Americans.

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