It discusses the valuable policies contained in President Biden’s recent executive orders and the proposed American Rescue Plan legislation and also identifies additional policies to address hunger, including reducing concentration in the food industry, using modern information technologies to help low-income Americans cut through siloed bureaucratic obstacles, and expanding food aid for low-income children.
Key recommendations from the brief include:
• Extend the Pandemic EBT program through the pandemic and economic recovery to provide low-income children with free or subsidized meals during weekends, holidays, and summer break. To be better prepared for a future crisis, Congress should also leverage the P-EBT program to create a permanent authorization for states to issue replacement benefits, giving them more flexibility to respond in a crisis.
• Study the success of the P-EBT program with an eye to converting it into a Summer EBT program post-Covid to bridge the gap in nutrition during the summer months and reach more low-income children in rural and underserved communities.
• Pass legislation, such as the Pandemic Child Hunger Prevention Act, in future recovery legislation, to allow all children free access to breakfast, lunch, and after school snack programs either in school or through “grab and go” and delivery options, as well as reduce bureaucratic barriers for schools to deliver meals to kids.
• Focus on stricter antitrust enforcement in the food industry to help consumers facing increasing prices for basic nutrition staples, such as meat and eggs.
• Use information technology to modernize social service delivery and reduce the administrative burden on low-income people. For example, Congress should enact the HOPE Act, which would create online accounts that enable low-income families to apply once for all social programs they qualify for, rather than forcing them to run a bureaucratic gauntlet.
• Pass the bipartisan Healthy Food Access for All Americans (HFAAA) Act, put forth by Sens. Mark R. Warner, Jerry Moran, Bob Casey, Shelley Moore Capito, which provides incentives, including tax credits or grants, to food providers who serve low-access, rural communities. Draft legislation that provides grants to states to fund the establishment and operation of grocery stores in rural and underserved communities.
Veronica Goodman, PPI’s Director of Social Policy, and Crystal Swann, Senior Policy Fellow, are co-authors of the brief, and said this:
“The Trump administration’s feeble response to America’s hunger crisis was a national disgrace, one of the many ways in which it thoroughly bungled the nation’s response to the Covid pandemic. The contrast with the Biden administration’s sharp focus on hunger and decisive moves to alleviate it couldn’t be more dramatic.
Nonetheless, it should be just the beginning of a new national commitment to wiping out hunger and malnutrition in America. It’s time for a vigorous public response to growing concentration in the food industry, as well as a new push to use modern information technologies to help low-income Americans cut through burdensome bureaucratic obstacles and take charge of their economic security. We’ve also learned lessons during the pandemic for how to provide meals to families outside of the traditional systems, and we should preserve these going forward in the effort to be better prepared for a future crisis and to curb hunger in America.”
This policy brief highlights recent developments in the federal response to the hunger crisis resulting from the Covid pandemic and recession. It discusses the valuable policies contained in President Biden’s recent executive orders and the proposed American Rescue Plan legislation, and also identifies additional policies to address hunger, including reducing concentration in the food industry, using modern information technologies to help low-income Americans cut through siloed bureaucratic obstacles, and expanding food aid for low-income children.
As the pandemic unfolded across the country last spring, one of the first major disruptions was widespread school closures. When teachers locked up their classrooms last March, few thought that a year later schools would still be shuttered. Among the troubling losses to students, especially for the low-income, have been the social services that schools provide, such as meals. Millions of children around the country rely on school for breakfast, lunch, and daytime snacks. In April 2020, as policymakers scrambled to address spiking food insecurity, 35 percent of households with children under 18 said they didn’t have enough to eat, a dramatic rise from already high rates of hunger pre-pandemic. A recent analysis of food insecurity data found that the number of children not getting enough to eat was ten times higher during the pandemic, comparing December 2019 to December 2020.
Food insecurity doesn’t just affect children; adults and the elderly also don’t have enough to eat. Covid relief has certainly helped, but nearly 1 in 6 adults – or close to 24 million Americans – reported that their households did not have enough to eat sometimes or often in the past seven days, according to the latest Census Household Pulse survey in January. Households experiencing food insecurity include close to 5.3 million senior citizens. America’s ongoing hunger crisis requires a forceful response encompassing several different dimensions of public policy.
The sharp rise of hunger during the pandemic is yet another woeful legacy of the Trump administration’s mishandling of the Covid crisis. Last spring, in response to widespread school closures, Congress launched Pandemic Electronic Benefit Transfer, or P-EBT, a program to replace the free and subsidized meals that children would normally get at school. However, the Trump administration placed unnecessary bureaucratic barriers on states which meant that many households eligible for the P-EBT program never received the benefits, even as Congress re-funded the program in September 2020. The Trump administration went so far as to try to kick nearly 700,000 unemployed people off of food assistance late last year in the midst of this public health crisis, but this move was stopped by a federal judge. The consequence of these actions was that while spending for food assistance went up by nearly 50 percent in 2020, some of that aid never reached families in need.
President Biden’s swift call for legislative and executive action on hunger is a welcome sign that U.S. leaders finally are determined to give this problem the attention it deserves.
During his first week in office, President Biden moved quickly to address the acute hunger crisis afflicting millions of Americans during the Covid pandemic and recession. Unveiling his $1.9 trillion coronavirus relief plan in January, Biden struck an urgent note, decrying a reality in which “…folks are facing eviction or waiting hours in their cars — literally hours in their cars, waiting to be able to feed their children as they drive up to a food bank. It’s the United States of America and they’re waiting to feed their kids… But this is happening today, in America, and this cannot be who we are as a country. These are not the values of our nation. We cannot, will not let people go hungry.”
To meet this emergency, Biden’s American Rescue Plan extends the 15% increase in Supplemental Nutrition Assistance Program (SNAP) benefits and proposes $3 billion in additional funding for the Women, Infant and Children (WIC) program. The plan also includes $350 billion in aid to state and local governments to support their anti-hunger initiatives, including food pantries, senior nutrition, and other nutrition programming.
President Biden is not waiting for Congressional legislation to provide a much-needed increase in food assistance to families. In his first week in office, the President signed an executive order that will alleviate the hunger crisis in three critical ways.
First, Biden’s executive order will increase food benefits for the P-EBT program by 15 percent, which will give a family of three children an additional $100 every two months, according to National Economic Council Director Brian Deese. The P-EBT was created by Congress in 2020 to give benefits to eligible households with children who would have received free and reduced meals under the National School Lunch Act had schools not been closed. Second, the President has directed the USDA to increase the SNAP Emergency Allotments for those at the lowest rung of the income ladder. And lastly, the executive order calls for modernizing the Thrifty Food Plan to better reflect the cost of a market basket of foods upon which SNAP benefits are based. Collectively, these changes should make food assistance more generous and better targeted.
While these are welcome steps, we call on the Administration to go further by addressing the underlying causes and structural barriers to food access and affordability. We focus on three in particular: Growing concentration in the food industry; siloed social service bureaucracies that make it difficult for low-income Americans to get public assistance; and the difficulty in expanding food aid for low-income children in hard-to-reach places. The pandemic has shined a light on the silent nutrition and food insecurity epidemic in our country and our policy brief outlines a comprehensive federal response.
KEY RECOMMENDATIONS:
Extend the Pandemic EBT program through the pandemic and economic recovery to provide low-income children with free or subsidized meals during weekends, holidays, and summer break. To be better prepared for a future crisis, Congress should also leverage the P-EBT program to create a permanent authorization for states to issue replacement benefits, giving them more flexibility to respond in a crisis.
Study the success of the P-EBT program with an eye to converting it into a Summer EBT program post-Covid to bridge the gap in nutrition during the summer months and reach more low-income children in rural and underserved communities.
Pass legislation, such as thePandemic Child Hunger Prevention Act, in future recovery legislation, to allow all children free access to breakfast, lunch, and after school snack programs either in school or through “grab and go” and delivery options, as well as reduce bureaucratic barriers for schools to deliver meals to kids.
Focus on stricter antitrust enforcement in the food industry to help consumers facing increasing prices for basic nutrition staples, such as meat and eggs.
Use information technology to modernize social service delivery and reduce the administrative burden on low-income people. For example, Congress should enact the HOPE Act, which would create online accounts that enable low-income families to apply once for all social programs they qualify for, rather than forcing them to run a bureaucratic gauntlet.
Pass the bipartisan Healthy Food Access for All Americans (HFAAA) Act, put forth by Sens. Mark R. Warner, Jerry Moran, Bob Casey, Shelley Moore Capito, which provides incentives, including tax credits or grants, to food providers who serve low-access, rural communities. Draft legislation that provides grants to states to fund the establishment and operation of grocery stores in rural and underserved communities.
GO BIG ON HUNGER — FAST
Food insecurity is not just a moral issue, it also has economic and social costs. Adults who go hungry are less productive and are more likely to suffer from chronic illness. The nutrition crisis has been called a “slow epidemic” by Dr. Dariush Mozaffarian, dean of the Freidman School of Nutrition Science and Policy at Tufts University.
The rate of households reporting that they do not have enough to eat is much higher than pre-pandemic levels, especially for families with children. Hungry children are more likely to get sick and fall behind in school. One in five Black and Hispanic households report they are unable to afford food. Poor nutrition and soaring rates of metabolic disease are a drag on the economy and contribute to rising healthcare costs and early deaths in minority and low-income families that are disproportionately more likely to experience poor nutrition and health as a result of food insecurity.
Food assistance spending now can also speed economic recovery. A 2019 report from the U.S. Department of Agriculture quantified the economic impact of SNAP spending during the Great Recession and found that this program can serve as an “automatic stabilizer” during a downturn. The authors analyzed program data and observed that low-income SNAP participants quickly spent the benefits after receiving them and the overall effect was a boost in the economy. Every $1 billion in new SNAP benefits led to “an increase of $1.54 billion in GDP – 54 percent above and beyond the new benefits.” SNAP benefits also generated $32 million in income for the agriculture industry and helped create jobs.
BUILDING RESILIENCE INTO OUR ANTI-HUNGER POLICIES
Despite the pandemic’s many tragic aspects, the disruption of our everyday lives has had some silver linings. Many innovations have been born of necessity, such as pioneering new approaches to feeding children who rely on meals at school despite school closures, and these can inform how we tackle food insecurity going forward.
The U.S. has a patchwork of programs to feed children, and the efficiency of this system has been sorely tested during the pandemic. The School Breakfast Program and the National School Lunch Program feeds over 22 million children per year who rely on meals provided by their schools as a significant source of nutrition. During a normal schoolyear, the lack of access during weekends, holidays, and summer break can leave kids hungry. During the summer, only 1 in 6 of these children still receive meals through the USDA Summer Food Service Program. In 2011, in response to this gap in nutrition, the USDA launched a pilot called the Summer EBT to provide meals to children during the summer months. The program is aimed at reaching low-income families in rural and hard-to-reach communities where the Summer Food Service Program has not been as successful. Results from the demonstration are promising and, so far, more than 250,000 children have gained access to nutrition as a result of the program. Despite the early successes of the Summer EBT demonstration projects, the Trump administration took the controversial step of closing sites in some places, such as Connecticut and Oregon.
Some researchers have called for expanding the Pandemic-EBT program through the rest of the pandemic and recovery to allow states to provide free or subsidized meals for children during these breaks in the school calendar. Once schools reopen, the Biden administration should explore preserving the systems set up by schools during the pandemic to provide meals to low-income children outside of the usual school day and year, including potentially by expanding Summer EBT.
Forced to improvise when schools shut down, many school districts have developed more flexible and varied ways to get meals in the hands of hungry families. School meals now are more widely available to children learning at home through “grab and go” distribution centers or meal delivery. School systems should go further to ensure that other family members in low-income households can take away meals during pickup to eat off-site. For example, Rep. Suzanne Bonamici has co-sponsored a bill that would allow schools to distribute meals to students and other community members in need, and to extend meal service for afterschool meals and snack programs. We applaud this bill as temporary and essential pandemic-relief legislation. This flexibility and the waivers aimed at making it easier to serve meals for low-income families in school districts could end up having unintended consequences, such as impacting funding levels as these waivers are used to determine need across districts. Policymakers should remain aware that funding will need to be determined differently during the pandemic as a result of fast-changing policies.
We do not know when the next pandemic or economic crisis may strike, but we can be better prepared. As we’ve learned from Covid, systems that we take for granted, such as schools, can be shut down overnight. In order to stay ahead of a future crisis, researchers at the Center on Budget and Policy Priorities have suggested that Congress “leverage the P-EBT structure to create a permanent authorization for states to issue replacement benefits (similar to P-EBT, and perhaps renamed “emergency-” or E-EBT) in case of lengthy school or child care closures resulting from a future public health emergency or natural disaster.” This will make it easier for states to act quickly and not rely on Congressional action should schools need to close in the future.
Making our food delivery system more resilient against future pandemics or other emergencies should be a national priority. That will require attacking the structural roots of food scarcity in the world’s richest country.
STRUCTURAL BARRIERS TO FOOD ACCESS AND AFFORDABILITY
Of course, America’s hunger problem did not start with the pandemic. Before Covid, as many as 13.7 million households or 10.5 percent experienced food insecurity. In addition to dealing with the present crisis, the White House should develop new strategies for tackling the structural causes of food access and unaffordability. Three stand out today in particular: a decades-long trend of concentration in the food industry; bureaucratic inertia and dysfunction that discourages enrollment in aid programs; and the stubborn blight of rural hunger.
As PPI economist Alec Stapp has documented, market concentration in the food industry is driving up prices for basic sources of protein, such as chicken and eggs. A recent antitrust conference at Yale Law School noted that “the country’s four largest pork producers, beef producers, soybean processors, and wet corn processors control over 70 percent of their respective markets. Four companies control 90 percent of the global grain trade. Agrochemical, seed, and many consumer product industries are likewise now controlled by just a few mega-sized firms.”
Low-income households spend the bulk of their budgets on housing, transportation, and food and, as a share of their household income, these families spend close to a third on food, with meat and eggs being especially pricey. To make food more affordable for all families, the White House should focus on stricter antitrust enforcement in the food industry by appointing leaders to the USDA, the Antitrust Division of the Department of Justice, and the Federal Trade Commission who will make this issue a priority.
Recent evidence from communities hit especially hard by the pandemic also highlights how formidable bureaucratic barriers deter many eligible households from accessing food aid. Policymakers should use information technology to modernize social service delivery and reduce the administrative burden on people to increase take-up in food assistance programs.
PPI has called for modernizing safety net programs to reduce the high “opportunity costs” of being poor in America. Federal and state governments should adopt modern digital technologies that help low-income families apply once for public benefits without having to run a bureaucratic gauntlet of siloed programs for nutrition, housing, unemployment, job training, mental health services, and more.
“While it’s true that government safety net programs help tens of millions of Americans avoid starvation, homelessness, and other outcomes even more dreadful than everyday poverty, it is also true that, even in ‘normal times,’ government aid for non-wealthy people is generally a major hassle to obtain and to keep,” notes Joel Berg, CEO of Hunger Free America.
“Put yourself in the places of aid applicants for a moment,” Berg added. “You will need to go to one government office or web portal to apply for SNAP, a different government office to apply for housing assistance or UI, a separate WIC clinic to obtain WIC benefits, and a variety of other government offices to apply for other types of help—sometimes traveling long distances by public transportation or on foot to get there—and then once you’ve walked through the door, you are often forced to wait for hours at each office to be served. These administrative burdens fall the greatest on the least wealthy Americans.”
In a 2016 PPI report, Berg proposed the creation of online “HOPE” accounts for families to better manage and access their benefits, and into which they could deposit their public assistance.
This idea is at the heart of the Health, Opportunity, and Personal Empowerment (HOPE Act) introduced by Reps. Joe Morelle (D-NY) and Jim McGovern (D-Mass) and Senator Kirsten Gillibrand (D-NY). The HOPE Act would fund state and local pilot projects setting up online HOPE accounts to make it easier for low-income people to apply for multiple benefits programs with their computer or mobile phone. In addition to saving them time, money, and aggravation, HOPE accounts enable people to manage their benefits – effectively becoming their own “case manager” – and easing their dependence on often inefficient and unresponsive social welfare bureaucracies.
WIC (formally the Special Supplemental Nutrition Program for Women, Infants, and Children) is a concrete example of how bureaucratic barriers can impact program enrollment. Despite increases in funding and strong evidence for its boost in outcomes for mothers and children, the share of eligible household participating in the program has fallen over the past ten years. One significant barrier to uptake is the requirement that families take time off of work to apply in person and bring their children to multiple appointments at clinics. HOPE accounts, if implemented well, could help families by creating an online platform where they can complete an initial application and better manage their benefits.
Policymakers should also make it easier for the elderly and other vulnerable groups to navigate eligibility and participate in SNAP. Researchers recently found that “providing information on eligibility or information plus application assistance” can significantly increase take-up rates among the elderly. Interventions should be designed with the behavioral differences of eligible groups for various social safety net programs, including food assistance.
Earlier this month, Senator Mark Warner, along with several senators from both sides of the aisle, introduced the Healthy Food Access for All Americans (HFAAA) Act which provides incentives, including tax credits or grants, to food providers who serve low-access communities and become designated as a “Special Access Food Provider” certification process through the U.S. Treasury Department. This legislation is a crucial way to incentivize food providers to set up shop in rural and hard-to-reach communities.
CONCLUSION
The Trump administration’s feeble response to America’s hunger crisis was a national disgrace, one of the many ways in which it thoroughly bungled the nation’s response to the Covid pandemic. The contrast with the Biden administration’s sharp focus on hunger and decisive moves to alleviate it couldn’t be more dramatic.
Nonetheless, it should be just the beginning of a new national commitment to wiping out hunger and malnutrition in America. It’s time for a vigorous public response to growing concentration in the food industry, as well as a new push to use modern information technologies to help low-income Americans cut through burdensome bureaucratic obstacles and take charge of their economic security. We’ve also learned lessons during the pandemic for how to provide meals to families outside of the traditional systems, and we should preserve these going forward in the effort to be better prepared for a future crisis and to curb hunger in America.
The Congressional Budget Office has dealt another blow to progressive hopes for swift action to raise the U.S. minimum wage to $15 an hour. It released a new study this week estimating that while the wage hike would lift 900,000 Americans out of poverty, it also would cost 1.4 million workers their jobs.
Liberal economists challenged the job loss figures, calling CBO’s methodology outdated. But the report feeds growing doubts that Senate Democrats will be able to shoehorn the measure into the big relief bill they hope to pass under “reconciliation” rules that allow for a simple majority vote. That means Republicans could filibuster it to death.
These setbacks raise an important tactical question: In a commendable effort to give working Americans a raise, are progressives fixating too narrowly on the minimum wage? After all, there are other policy tools at their disposal that could lift workers’ earnings without sacrificing jobs or harming small businesses. And these policies — essentially rewards for work delivered through the tax system — could be taken up under reconciliation.
It is abundantly clear that progressives, led by Sen. Bernie Sanders, have made several mistakes in their single-minded pursuit of the $15 wage boost. The first was claiming that it could pass through reconciliation. However, CBO had previously found that Sanders’s proposed “Raise the Wage Act” would have a negligible effect on the federal budget.
So Sanders pushed CBO to produce a new score using different methodology that he thought would make a persuasive fiscal case for the increase. Instead, CBO’s new analysis said that raising the minimum wage to $15/hour would kill over one million jobs while adding $70 billion to the federal deficit. As President Biden has noted, it’s unlikely the measure could get around Senate rules that prohibit the inclusion of non-fiscal policies for which the budgetary impacts are “merely incidental” in a reconciliation bill.
Moreover, West Virginia Sen. Joe Manchin already made clear he would oppose a $15 minimum wage because of the impact it would have in his low cost-of-living state, meaning the proposal wouldn’t have the simple majority needed to pass it.
Nonetheless, most Democrats, including Sen. Manchin, are united in their desire to raise the federal minimum wage, now stuck at a paltry $7.25 an hour. And not just Democrats: polls show solid majorities in favor of a $15 wage. Last November, even as Democratic candidates up and down the ticket got shellacked in a reddening Florida, 60 percent of voters backed a referendum to raise the state minimum to $15.
But as with many ideas that are simple and popular in concept, the apparent consensus breaks down when policymakers plunge into the devilish details: How high should the wage go, how quickly, and how uniformly should it be applied? Does it make sense to mandate $15 an hour in all 50 states, or allow for differences in the cost of living? What’s the impact of a big hike on jobs and small businesses in America’s less prosperous places?
Since Democrats evidently lack the votes to pass a $15 minimum wage, they should get what they can from Republicans who favor more modest increases, and look for other ways to make up the difference.
Specifically, they could expand tax credits designed to make work pay. The model here is the federal Earned Income Tax credit, which matches the earnings of low-wage workers dollar for dollar up to a certain threshold, after which it begins to phase out. It’s both an incentive and reward for work that’s become, after Social Security, America’s most successful anti-poverty policy.
What’s needed now is to move this “work bonus” principle up the income scale, with an eye toward raising incomes of non-college educated workers who have seen meager wage gains in recent decades.
For example, Brookings Institution economist Belle Sawhill has proposed giving all U.S. workers a 15 percent raise up to some annual ceiling, phasing out as earnings rise $40,000 a year.
PPI has proposed to absorb the EITC into an expanded Living Wage Credit that reaches deeper into the heart of the working class. The cost of these new credits could be defrayed by taxing the unearned incomes of wealthy Americans.
Such public subsidies for private work would lift wages for lower-skilled workers without pricing them out of labor markets or forcing the small companies that employ them out of business. And, as tax credits, they could be passed under budget reconciliation rules even without Republican support.
The minimum wage is a venerable policy, but progressives don’t need to put all of their eggs in this particular policy basket. Fortunately, there’s more than one road to establishing a genuine living wage in America that honors the dignity of work of all kinds and keeps working families from falling out of the middle class.
Senator Amy Klobuchar, the incoming chair of the U.S. Senate Judiciary Committee’s Antitrust Subcommittee, just released a draft of the Competition and Antitrust Law Enforcement Reform Act of 2021, which includes a slew of antitrust-related initiatives.
In comments on this new legislation, Alec Stapp, director of technology policy at the Progressive Policy Institute, said:
“Senator Klobuchar’s proposed antitrust legislation includes many urgently needed provisions to ensure the federal government is safeguarding competition in every sector of the economy. According to one recent analysis, appropriations for our two federal antitrust agencies have fallen by 18% since 2010. Antitrust enforcers desperately need more resources to police anticompetitive conduct across the economy and bring cases when necessary. Antitrust cases are notoriously expensive and require high-level legal talent — this is not an area the government should be skimping on.”
“The package also includes new transparency and data collection requirements that would be hugely beneficial for better understanding the state of competition and antitrust enforcement in the U.S. Proposed competition studies on institutional investors’ cross-ownership and the role of monopsony power in labor markets are long overdue. Furthermore, a series of Congressional hearings focused on monopoly power in various sectors of the economy, including healthcare and agriculture, would help shed light on the size and scope of the problem we face. Lastly, a requirement for parties to a merger settlement to provide post-merger data is a common-sense idea that would allow enforcers to learn from past decisions and update their analytical methods for future cases.”
“While there is much to like in this batch of proposals, there is also much reason for caution. While certainly not perfect, the current set of antitrust institutions is much improved from what prevailed from the early 20th century until the 1970s, when almost every merger was presumed illegal and most behavior by large firms was inherently suspect. Under the current standard, enforcers need to show evidence of market power, anticompetitive conduct, and consumer harm. The problem with the proposed bill is that it would drastically lower the bar for antitrust liability and might inadvertently criminalize pro-competitive conduct. A prohibition on “conduct that materially disadvantages competitors” would essentially degrade antitrust law to a “know it when you see it” standard for anticompetitive conduct. In reality, lots of corporate conduct is ambiguous at first glance. Enforcers need to do the work of economic analysis and fact-finding to determine whether it’s pro-competitive or anti-competitive. We shouldn’t short circuit that process.”
If you would like to speak to Alec Stapp you can reach him at astapp@ppionline.org or (480) 628-3863.
PPI President Will Marshall welcomes Representative Suzan DelBene of Washington State’s First District to this episode of the PPI Podcast. The two discuss the Republican party’s identity crisis, the issue of Marjorie Taylor Greene, and the need for the GOP to come to the table on a broad relief package.
They also talk about DelBene’s involvement in the New Democrat Coalition, the House’s largest ideological caucus focused on a solutions-oriented approach to bipartisan legislation for economic growth and progress. Will Marshall hits on the importance of purple districts like DelBene’s, and she highlights the necessity of proving governance still works.
For those concerned about nicotine addiction and tobacco consumption, a ban on flavored tobacco might sound like a good idea. But as Nkechi Taifa explains in this week’s PPI Podcast, such bans are going to almost entirely fall onto minority communities.
Several states are considering or have already banned flavored tobacco. Nkechi Taifa agrees with Crystal Swann that in time a time when we are rolling back the war on drugs in favor of a public health approach, we should be doing the same with tobacco.
It’s been less than a week since President Biden took office, but Washington’s tribal gladiators already are arming for mortal combat. Fortunately, pragmatic Democratic lawmakers are working to help Biden avert a relapse into political paralysis.
Senate Republicans are bewailing Biden’s $1.9 trillion American Rescue Plan to end the pandemic and help jobless workers and small businesses tread water until it’s over. Though few complained when his predecessor broke the trillion-dollar deficit barrier – despite a then surging economy – Republicans now profess to be shocked by the “colossal waste” (Sen. Pat Toomey) of Biden’s “massive spending” package (Sen. Rick Scott).
Such hypocrisy is galling, and it has tripped the progressive left’s hair-trigger outrage alarm. Activists who didn’t support him in the first place fret that Biden is too eager to compromise in the name of the national “unity” he movingly invoked during his inauguration. They insist he waste no time in pressuring Senate leadership to kill the filibuster so Democrats can steamroll Republicans, at least for the next two years.
Everyone should take a deep breath. President Biden is anything but a political naif. Having been on the receiving end of Sen. Mitch McConnell’s deeply unpatriotic strategy of total obstruction for eight years, he doesn’t need lectures from sectarians in his own party about how rabidly partisan the other side can be.
But Biden understands he was elected to save our democracy from an unhinged demagogue, not to join Republicans in fomenting intractable enmity between red and blue America. He also knows from bitter experience that one-party rule is inherently unstable and fuels political paranoia and extremism.
WASHINGTON, D.C. — A new brief released today from the Progressive Policy Institute (PPI) commends President Biden’s bold vision to ease student debt burdens. The brief calls on the Administration to help borrowers in more meaningful ways by fixing America’s broken financing model for higher education, and investing in non-college pathways to good jobs.
Key highlights from the brief:
More than 1/5 households hold a student loan, up from 1/10 in 1989.
Millennials, who are already saddled with lower wages and lingering economic pains from the Great Recession, hold $497.6 billion in outstanding loans.
Education debt is a generational/equity crisis. Borrowers are more likely to be lower-income, Black, and less likely to have generational wealth, making them more likely to default, which can lead to further worsening of poverty and the racial wealth gap.
Biden has faced calls to cancel $50,000 in education debt for borrowers but the evidence suggests that this could be regressive and benefit many high-income households who don’t need relief.
Education debt relief should not be a one-time fix. President Biden and Congress need to meaningfully address America’s broken financing model for higher education and invest in non-college pathways to good jobs.
The policy brief calls for the Biden Administration to take important key steps, including:
Auto-enrollment in income-based repayment as opt-out for new and existing loans.
Modernize the Public Service Loan Forgiveness Program to reward national or community service for our public servants and create incentives for public service.
Accelerate attainment of credentials by making the process for earning college credit through Advanced Placement (AP), International Baccalaureate (IB) programs, and college courses taken in high school at community colleges, more transparent and accessible.
Veronica Goodman, PPI’s Director of Social Policy and author of the brief, said this:
“President Biden and Congressional Democrats have a rare opportunity to move fixing America’s broken higher education financing model to the center of the nation’s agenda.
They should follow targeted education debt relief with bold progressive reforms aimed at two critical national goals: Lowering college costs and thereby reduce the need for borrowing, and boosting public investment in the skills and career prospects of the majority of young Americans who do not get college degrees.”
Note: In this brief, I use the term education debt, rather than student debt, since most affected borrowers are no longer students, and this category of debt affects a wide swath of society, not just students.
After his inauguration on January 20, one of President Joe Biden’s first official acts was signing an executive order to extend the pandemic-related pause on student loan payments and interest, as well as to halt collection of student loans in default, through September 30. For millions of young Americans struggling to pay off college loans, the order will be a welcome down payment on Biden’s campaign promise to deliver major debt relief.
While campaigning for the presidency last spring, Bidenunveiled a plan to forgive a minimum of $10,000 per borrower. The President’s advisers say the administration will submit a legislative proposal for debt relief to the new Congress.
The case for relief is strong. Over the past four years, the Trump administration and Republican lawmakers have provided little in the way of help for struggling borrowers beyond the temporary pause on repayments. With young people struggling to keep their heads above water amid the Covid pandemic and recession, it is no surprise that Democratic policymakers are looking for ways to relieve their financial stress.
In May 2020, House Democrats also called for $10,000 worth of education loan relief for “distressed” borrowers as part of their Health and Economic Recovery Omnibus Emergency Solutions (HEROES) bill. This category of borrowers included those with delinquent or defaulted loans, and others considered “financially distressed.” According to the U.S. Department of Education, as many as 20 percent of education loans are in default. This provision got caught up in partisan wrangling over the size and cost of the HEROES act, and was dropped from the compromise stimulus bill Congress passed in late December 2020.
Since his victory last November, Biden has faced persistent calls from progressives to forgive education debt for the45 million Americans who owe close to $1.6 trillion in loans. Sens. Elizabeth Warren and Chuck Schumer dramatically raised the bidding by urging Biden to take executive action to forgive up to $50,000 of federal education debt. Reps. Ayanna Pressley (D-MA), Ilhan Omar (D-MN), Alma Adams (D-NC), and Maxine Waters (D-CA)introduced a companion resolution in the House in December 2020.
Although popular on the left, such calls to “go big” have drawn a skeptical response from many independent analysts. “In sheer magnitude, canceling $50,000 in student debt would rank among the largest transfer programs in U.S. history,” notes theBrookings Institution’s Adam Looney. “At a cost slightly above $1 trillion, it would equal the total amount spent on cash welfare since 1980. And its largest effect would be to improve the finances of college-educated workers, who have already tended to be winners in an economy marked by ever-rising inequality.”
President Biden likewise hasexpressed skepticism about the distributive impact of these proposals. He’s also told Congressional Democrats he would prefer a legislative fix to an easily reversible executive order – something that looks more likely after the January 5 Georgia runoffs flipped control of the Senate to his party.
Digging into the data on the demographics of Americans with education debt, it becomes clear that Biden’s approach isn’t just more affordable, it’s also more progressive and equitable. Approximately48 percent of outstanding student loans are held by those with graduate degrees; that is double the share of those who owe loans and earned an Associate’s degree or less. In fact, slightly over a third of all education debt isconcentrated in the highest income quartile– households making over $97,000 per year.
Without better targeting, debt relief would mostly benefit higher-income households, which hold athird of student loans and have greater ability to pay them back. A2019 analysis by the Urban Institute finds that “forgiving larger amounts of debt would distribute a larger share of benefits to higher-income households, and reducing the amount of debt forgiven should increase the share of benefits going to lower-income households.” Based on this analysis, the $50,000 proposed by Sens. Warren and Schumer would haveregressive effects and distribute relief to households at the top of the income scale.
In contrast, Biden’s plan aims at lower-income borrowers who need debt relief the most. Relief in the amount of $10,000 per borrower would eliminate all debt for 37 percent of borrowers (16.3 million people) andcut in half debts owed by another 9.3 million borrowers at an estimated cost between $250-300 billion. These borrowers are disproportionately young and low-income, and include veterans, single parents, and those in a minority group.Two-thirds of borrowers that default on their paymentsowe a comparatively low average amount of $9,625. These borrowers also are less likely to repay their loans because they never completed their college degrees or earned only a certificate.
However, it’s not clear whether President Biden’s plan will include an income-based eligibility test to ensure that relief is concentrated on needy rather than affluent families. PPI recommends that the administration target its plan by phasing out relief for borrowers making over $125,000. This would address concerns that about the regressive nature of untargeted debt relief and substantially reduce the cost of the proposal.
Perhaps most important, the President’s approach recognizes the limits of debt relief and leaves fiscal space for tackling the fundamental problem: America’s broken financing model for higher education. Over the past two decades, thecost of higher education has approximately doubled and ballooning tuition prices have forced students to borrow more to finance their education.
Although federal subsidies – chiefly grants and loans – tilt heavily toward college-going young people, college is not the only pathway to good jobs for young adults and U.S. workers. It’s true that the average college-educated worker reaps a lifetime premium of higher earnings in the labor market. Butmost Americans don’t go to college. As of 2019,70.1 percent of Americans 25 and older had not earned a four-year degree, while just 29.9 percent earned a four-year degree or higher. Given his well-known empathy for the struggles of America’s working-class families, PPI recommends that the President pair debt relief with increased public investment in apprenticeships and work-based “career pathways” training programs that connect workers, including those coming out of high school, to well-paying careers.
Draft legislation to provide $10,000 in immediate education debt forgiveness for those with an annual income of less than $125,000 per year. This will deliver relief for those at greatest risk of defaulting on their student loans, especially students from low-income and minority families. The estimated cost of President Biden’s plan is $250-300 billion, and it would eliminate all education debt for 37 percent of borrowers (16.3 million people) and cut in half debts owed by another 9.3 million borrowers. Our recommendation of an income-based eligibility test is expected to reduce the overall cost.
Continue giving borrowers a break on payments and interest by extending the pause on federal student loan payments for the duration of the pandemic and Covid recession. President Biden has extended the pause through September 30.
Make income-based repayment more accessible and generous for borrowers. Switching to a universal IBR system that is opt-out for new and existing loans, and which automatically re-enrolls borrowers, would make payments more manageable and automatically tied to income, decreasing the likelihood of default and missed payments.
Modernize the Public Service Loan Forgiveness Program to reward national or community service for our public servants by offering $10,000 of education debt relief for every year of service up to five years—after which the loan would be forgiven. This would include individuals with up to five years of prior service and automatically enroll workers in schools, government, and other nonprofit organizations. This would encourage workers to pursue careers in public service.
Education Debt Has Led to a Social Crisis, Which the Pandemic Has Made Worse
Those who have borrowed for degrees are more likely to be lower-income, Black, and less likely to have generational wealth, making them more likely to default, which can lead to further worsening of poverty and the racial wealth gap.To understand why the proposal of $10,000 relief per borrower could have the most impact on lower-income families and those most struggling during the pandemic, it is worth digging into the demographics of who is behind on payments and what groups are holding the most debt:
According to the U.S. Department of Education, 20 percent of borrowers are in default, and a million more go into default each year.Two-thirds of borrowers who default never completed their college degrees or earned only a certificate andowe a comparatively low average amount of $9,625. Those who default includeveterans, parents, and first-generation college students who are more financially vulnerable to default. Without a credential and with limited access to good jobs, borrowers are forced to default and, in doing so, accrue additional interest and fees on the principal loan. These borrowers are in no position to pay back their defaulted loans.
Default can have catastrophic implications forfuture access to credit, and result in garnished wages, seized tax refunds, and harm other measures of financial wealth. Given the age at which most of these borrowers took out loans, many begin their adulthood at an economic disadvantage. At this scale, the education debt crisis is not only hurting those who are struggling the most, but it is holding back an entire generation with negative implications for their children’s generation. The financial strain the pandemic has inflicted on workers will make it more difficult for defaulted borrowers to get back on track with payments.
Debt Relief: Down Payment on Reform
As the pandemic rages, and more Americans lose their jobs and businesses, short-term education debt relief can help our most vulnerable borrowers ride out the storm. But we also need longer-term, structural reforms aimed at driving down the tuition costs for both college and post-secondary skills training.
Short-Term Relief and Considerations
The Trump administration implemented limited short-term relief for education debt by temporarily suspending loan payments through February 2021 on federal educational loans as of March 2020. Further short-term relief is desirable, in line with President Biden’s proposal for $10,000 of forgiveness. As one of his first actions in office, President Biden signed an executive order extending the pause on student loan payments and interest through September 30. Biden should continue to extend the pause as long as the Covid recession continues to place financial strain on borrowers.
Reviewing the data, education debt forgivenesstargeted at borrowers with low incomes and the unemployed would have the greatest impact. However, some concerns remain over how policymakers can target relief to those who need it the most. Some experts have suggested that policymakers couldisolate undergraduate debt from graduate school debt in order to prioritize these more needy borrowers. This would avoid regressive effects that could give a large portion of relief to those with graduate school debt, such as doctors and lawyers, that are in a better financial position to pay back their loans. At the $10,000 level, however, the Biden plan avoids many of the greatest concerns about the potential for regressive outcomes relevant to higher dollar per borrower proposals. Adding an income cap of $125,000 for borrowers will target relief for households who need it the most.
Following dramatic victories in the Jan. 5 Georgia run-off elections, Democrats have taken control of the Senate. This likely clears the way for legislation to provide debt relief, as President Biden prefers. Citing the need for action during the pandemic and recession, some Democrats have been urging him touse a provision in the Higher Education Act to sidestep legislation and cancel the balances of millions of Americans. That would likely trigger legal challenges, and Biden is right to first seek a legislative fix using budget reconciliation.
Advisers of President Biden have suggested that education debt relief could be included in anticipated stimulus legislation aimed at pandemic relief. On the other hand, a legislative path for education debt relief could also take longer if additional relief legislation proves difficult to enact in the near term, a worthy consideration given the present economic crisis.
More difficult to measure are the intangible or second-order benefits that education debt relief would bring to borrowers, especially those who have defaulted. Worries about their debt burdens undoubtedly affect their career choices, such as whether to pursue a public interest job, and their life choices, such as whether and when to buy a house or have a child. Those with significant education debt aremore likely to experience depression and anxiety as a direct result of their debt, which can lead to mental health issues down the road. Mental health experts point to Millennials coming of age withslower economic growth than any other generation in history as part of the reason for why their mortality rates, driven by suicides and drug overdoses, have risen sharply since 2008. It is also difficult to capture the effect that education debt relief would have onrates of entrepreneurship in younger generations or how intergenerational wealth might change if millions were no longer in default and saddled with debt.
Long Term Solutions
Targeted education debt relief is only a temporary fix. There are several other policy solutions that would help address the education debt crisis.
Congress should also adopt Biden’s proposal to modernize income-based repayment (IBR), loans. Such programs calculate a borrower’s monthly paymentbased on their income and other factors, such as family size and location. Currently, borrowers must opt-in to IBR through a lengthy process. Automatically enrolling new borrowers and re-enrolling existing borrowers in IBR and tying their payments to their eligible income would streamline the process, as well as making it easier for existing borrowers to take advantage of the program. By makingenrollment automatic for borrowers and the terms much simpler, it isestimated that on-time payments will rise and default rates should decrease on net.
The Public Service Loan Forgiveness program wasintroduced in 2007 as a way to reward workers who pursue public service by forgiving their federal student loans after 10 years if they make consistent payments and are an employee of a qualifying public service employer. Like IBR, the unnecessary complexity and difficulty of navigating the program has led to low enrollment and success in rewarding public servants. Automatically enrolling employees of qualifying employers would increase take-up and help reduce debt in a way that rewards work and service. The program should offer $10,000 of education debt relief for every year of service up to five years—with full forgiveness after five years. This would include individuals with up to five years of prior service in schools, government, and other nonprofit organizations.
To get at the root of the education debt problem, as President Biden has acknowledged, we need broad higher education reform and more pathways to good jobs beyond college. Periodic education debt relief should not become a band-aid solution for higher education’s broken financing system. Fully addressing these challenges is beyond the scope of this brief, but below are a few points to consider.
Since the 1990s, thecost of higher education has approximately doubled andinstitutions have responded to declining state investment by passing off the cost to students through rising tuition prices. Told repeatedly that a college degree is the best pathway to the middle class, it’s little wonder that young Americans increasingly turned to loans to finance their education. For too many, however, the high price of going to college isn’t leading to jobs with earnings sufficient to propel them into the middle class and allow them to pay off their debts.
When considering how to create lasting reforms to higher education, the Biden administration should develop a plan fora systemic restructuring of higher education consisting of two parts: (a) creative ways to reduce college costs rather than expanding subsidies in an endless game of catchup; and (b) a big public investment in building a robust career ladders infrastructure of work-based learning as an alternative route to middle-income jobs.
Many progressives have been thinking creatively about how to tame the rising price of higher education in the longer term. For example, my PPI colleaguePaul Weinstein proposes a set of imaginative reforms including leveraging direct federal spending on higher education to force institutions to cut tuition and fees by reducing “administrative bloat,” requiring faculty to teach more, thereby opening up additional spots for students, increasing tuition revenue, and, lastly, by moving U.S. colleges toward three-year bachelor’s degrees.
Conclusion
President Biden and Congressional Democrats have a rare opportunity to move fixing America’s broken higher education financing model to the center of the nation’s agenda. They should follow targeted education debt relief with bold progressive reforms aimed at two critical national goals: Lowering college costs and thereby reduce the need for borrowing, and boosting public investment in the skills and career prospects of the majority of young Americans who do not get college degrees.
Twitter permanently banned Trump. Facebook suspended his account for at least two weeks. Apple and Google pulled the Parler app from their app stores. Amazon booted Parler off AWS. Stripe stopped processing payments for the Trump campaign’s website.
These decisions, among others, have sparked a renewed debate over the power that Big Tech companies have in society, and whether we need to revisit Section 230, net neutrality, or the Fairness Doctrine. Currently, the public discussion is dominated by loud voices making extreme, and often incorrect, claims. In my opinion, these voices are only grappling with the surface-level issues related to tech platforms and speech, which I address in the first seven questions. The final three questions are much harder to answer and require thinking on the margin about what our society values and what tradeoffs we are willing to make. If we focus our time and attention on these latter questions, we can hope to make real progress over time.
1. Is Big Tech more powerful than the government?
Austen Allred, the founder and CEO of Lambda School, tweeted, “Twitter, Facebook, Apple and Google, especially when acting in concert, are much more powerful than the government.” This claim doesn’t hold up to any level of scrutiny. The government has the power to tax you, imprison you, and kill you; the tech companies can delete your free account. Some conservatives have even argued the government should “nationalize Facebook and Twitter to preserve free speech,” the mere possibility of which should tell you who’s more powerful.
You cannot create an “alternative” to Google, Apple, Facebook, Amazon, and Twitter at this point, they are collectively more powerful than most if not all nation states
Journalist Michael Tracey said that Big Tech is “more powerful than most if not all nation states”, which seems absurd considering nine nation states have nuclear weapons. He also claimed that you “cannot create an ‘alternative’ … at this point” which is directly contradicted by the fact that TikTok went from zero to nearly a billion users in just the last few years.
2. Has President Trump been silenced by Twitter and Facebook?
Trump has been permanently banned from Twitter and suspended from Facebook for at least two weeks. Obviously, his ability to speak directly to his audiences on those platforms has been greatly diminished. But that doesn’t mean he has been silenced or censored. A recent Reuters article asked “How will Trump get his message out without social media?” In short: The same way that every president did prior to 2008. What communications and media networks existed back then? Newspapers, magazines, broadcast TV, cable TV, radio, podcasts, email, text messages, and the open web.
Twitter is not real life. As economist Adam Ozimek said, “Only 22% of adults use Twitter. In contrast almost every house has a TV. The idea that there is some monopoly over access to the public here is really not compelling. Maybe you spend too much time on Twitter if you think that.” Furthermore, only about 10% of Americans are daily active users of Twitter. So that means if you check Twitter at least once a day, then you’re more “online” than 90% of Americans. Active Twitter users likely overrate its importance in the average person’s life relative to newspapers, talk radio, broadcast TV, and cable TV.
It’s also important to remember that Trump’s words haven’t been banned from the platform, only his personal accounts. If the president gives a public speech, or if the White House issues a press release, thousands of journalists will still cover and broadcast his words, in tweets and Facebook posts of their own. For example, on Wednesday, the White House released a statement from Trump urging “NO violence, NO lawbreaking, and NO vandalism of any kind.” The statement was immediately shared on Twitter by reporters and sent out via text message to the Trump Campaign’s subscribers.
Twitter and Facebook suspending Trump’s account is significant, there is no denying that. But the president of the United States can still communicate with the public.
3. Is deplatforming extremists a civil rights issue?
Some conservatives have tried to argue that if liberals think a baker should be required to bake a cake for a gay wedding, then Amazon should be required to provide cloud hosting for Parler and Twitter shouldn’t be allowed to ban Trump. However, these cases are not similar. The case of the baker and the gay wedding was controversial because it involved the collision of two protected characteristics: religious beliefs (of the baker) and sexual orientation (the gay couple).
The conservative movement is about to face a level of collective discrimination by the institutions of our society not seen since Jim Crow
In the cases of Parler and Trump, they were not deplatformed for belonging to a protected class or because of an immutable characteristic — they were deplatformed for inciting violence and insurrection. Repeated antisocial behavior is a perfectly legitimate basis for a platform to remove a user (or for a company to cease doing business with a counterparty). The question is not “should Amazon be allowed to discriminate against conservatives” but actually “should Amazon be required to do business with groups hell-bent on breaking the law.”
No one believes that every user should be allowed on every platform. Not even Parler allows users to post whatever they want:
[Parler’s] community guidelines warn users to avoid spam, blackmail, bribery, plagiarism, support for terrorist organizations, spreading false rumors, suggesting people should die, describing “sexual organs or activity,” showing “female nipples,” and using language or visuals “that are offensive and offer no literary, artistic, political, or scientific value.” Parler also advises users against “any other speech federally illegal in USA,” which the platform incorrectly claims includes doxing and “content glorifying violence against animals.”
That’s why appeals to slippery slope-type arguments are so unpersuasive in this debate. Every platform draws the line somewhere, and that line might move over time as public opinion shifts and as new information arises about what is and isn’t working under the prevailing content moderation policy. We don’t need to protest Facebook’s decision to ban Paul Joseph Watson, Laura Loomer, Alex Jones, and Milo Yiannopoulos by comparing it to what African Americans experienced in the Deep South during Jim Crow, as Will Chamberlain did in this 2019 article for Human Events. These are not civil rights issues — these are questions about what kinds of behavior particular platforms are willing to allow in their communities.
4. Would repealing Section 230 prevent Big Tech from deplatforming users they disagree with?
There continues to be lots of misinformation regarding Section 230 of the Communications Decency Act. Many Republican elected officials and conservative activists argue that recent events show why we need to repeal Section 230, which provides platforms and other interactive computer services immunity for the content users post. This argument relies on an intentional misrepresentation of the statute and the relevant case law. Here is the key part of Section 230 — “the 26 words that created the internet”, as Jeff Kosseff put it:
No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.
Prior to Section 230, if a platform tried to moderate content (say by taking down hate speech or incitements to violence), then the platform owner became liable for all the content that remained on the platform. This created perverse incentives. Platform owners basically faced two choices: (1) Engage in zero moderation to retain immunity — and watch the platform get overrun by Nazis or (2) Engage in maximum moderation to avoid getting sued for libel or other harmful content. Section 230 fixed this incentive problem by granting immunity to platform providers for users’ speech, thus enabling the platforms to engage in reasonable levels of content moderation.
Twitter may ban me for this but I willingly accept that fate: Your decision to permanently ban President Trump is a serious mistake.
The Ayatollah can tweet, but Trump can’t. Says a lot about the people who run Twitter.
Repealing Section 230 would do nothing to alleviate concerns about bias or censorship. As Senator Ron Wyden, one of the authors of Section 230, said, “I remind my colleagues that it is the First Amendment, not Section 230, that protects hate speech, and misinformation and lies, on- and offline. Pretending that repealing one law will solve our country’s problems is a fantasy.” All repealing Section 230 would do is force platforms back into the “all or nothing” choice on moderation. And because advertisers will not advertise on a platform filled with Nazis and pornography, it wouldn’t really be a choice at all. It’s likely the platforms would become much more aggressive in how they moderate content (if they continue to allow users to post at all). In other words, without Section 230, Trump would have been banned from Twitter years ago.
5. Is Twitter consistently enforcing its terms of service?
Whenever Twitter deplatforms a prominent right-wing figure, conservatives and others concerned with censorship accuse the platform of being biased because it leaves up similarly violent or misleading information from authoritarian rulers in Iran and China. FCC Chairman Ajit Pai called out a few tweets from Ayatollah Khamenei, the Supreme Leader of Iran, last May:
More recently, a tweet from the Chinese Embassy in the US tried to paint the ongoing Uyghur genocide in a positive light by saying it was furthering women’s empowerment: “Study shows that in the process of eradicating extremism, the minds of Uygur women in Xinjiang were emancipated and gender equality and reproductive health were promoted, making them no longer baby-making machines. They are more confident and independent.” Twitter initially refused to take down the tweet after Ars Technica reporter Tim Lee reached out to ask why it didn’t violate Twitter’s policies. Only after many others publicly shamed Twitter for its decision did the company finally relent and remove the tweet.
Those who say Twitter has enforced its policies inconsistently are right. But that doesn’t mean Twitter should leave Trump and other extremists alone. Arguing “worse people have gotten away with it” is like saying we shouldn’t arrest a murderer because some serial killers are still roaming free. Twitter should also ban dictators from using its platform and more quickly remove content that promotes or condones violence against anyone or any group of people.
6. Does Europe repress speech less than the US now?
There is also renewed debate about whether there should be one unified internet, or whether a splinternet is a better approach, with each nation governing its own internet.
Time to start a debate in Europe on whether we want to stay tightly connected to a US internet where repression of speech will keep growing
While a further splintering of the internet seems almost inevitable at this point, it would be strange if Europe splits apart over concerns about repression of speech in the US, as Bruno Maçães speculated. The EU has many current (or proposed) laws that repress speech much more than in the US, including:
That’s to say nothing of how the US compares to authoritarian countries such as Russia or China. As Garry Kasparov said, censorship in the USSR is “when the state attacks a company for offending an official … not the other way around.” Or as Jameel Jaffer put it, “forcing publishers to publish the government’s speech is what happens in China.”
7. Can private companies violate your First Amendment rights?
Any debate over a high-profile user getting banned from a social media platform quickly devolves into the two sides talking past each other. Those critical of the decision to ban a user say that it’s a violation of that person’s free speech or First Amendment rights. The other side immediately latches on to the First Amendment part of that claim, pointing out (correctly) that the First Amendment restrains the government from infringing on ability to speak, not private companies or individuals. Since it’s so short, let’s just look directly at the text to make sure we’re all on the same page (emphasis added):
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Clearly, the First Amendment was not meant to abridge the rights of private entities and citizens. But “free speech” is a much broader concept than what’s written in the Bill of Rights. That’s one of the harder questions.
8. How much should private companies restrict free speech and free expression?
In everyday use, “freedom of speech” means the ability for someone to express their views or opinions without fear of retaliation (beyond verbal criticism). In other words, it means that people can speak their mind without fear of a disproportionate response. That doesn’t mean those restraints on speech are bad! As a society we make tradeoffs all the time between different values depending on the context. It just means that “free speech” as a concept is not limited to the First Amendment.
Some conservatives and libertarians think that by pointing out that private companies have First Amendment rights too, that’s the end of the conversation, when in reality it’s only the beginning of the conversation. We must admit that these tech platforms are powerful and the decisions they make affect billions of people worldwide. It is legitimate to raise concerns about who gets to be on and off the platform (even while recognizing the companies themselves are under cross-pressures, with conservatives arguing for a more hands-off approach and liberals arguing for more aggressive moderation).
To start answering the tougher questions, we first need to move past the false dichotomy of the individual and the state. As Noah Smith wrote in his own post about Big Tech and free speech, “Between the government and individual citizens lie a variety of mezzanine authorities who have real power, and whose actions can lead to a real loss of liberty.” Noah continued by citing one his previous pieces (emphasis added):
An ideal libertarian society would leave the vast majority of people feeling profoundly constrained in many ways. This is because the freedom of the individual can be curtailed not only by the government, but by a large variety of intermediate powers like work bosses, neighborhood associations, self-organized ethnic movements, organized religions, tough violent men, or social conventions…whom I call “local bullies.”…
In a perfect libertarian world, it is therefore possible for rich people to buy all the beaches and charge admission fees to whomever they want (or simply ban anyone they choose). In a libertarian world, a self-organized cartel of white people can, under certain conditions, get together and effectively prohibit black people from being able to go out to dinner in their own city. In a libertarian world, a corporate boss can use the threat of unemployment to force you into accepting unsafe working conditions. In other words, the local bullies are free to revoke the freedoms of individuals, using methods more subtle than overt violent coercion.
Such a world wouldn’t feel incredibly free to the people in it.
That’s why merely citing the First Amendment rights of private companies in these cases can leave people feeling hollow. And it’s why we need to thoroughly examine the market power in each layer of the tech stack to decide which layers should have both the responsibility and the ability to moderate content.
The answer here is that there is no clear answer: The decision to ban or not ban accounts or types of speech is inherently political and it’s wrapped up in the profit-maximization desires of the relevant companies. There is no clear rule you can write that will cover every case and there will be backlash no matter what decision these companies make. The existence of the public debate is what constrains platforms. On one side, groups concerned with freedom of expression will limit the platforms’ willingness to moderate. On the other side, those concerned with the negative externalities of certain speech will push platforms to be more heavy handed with their moderation. It is in these debates that societies can determine the level of moderation that is appropriate.
9. Which layer of the tech stack should have the responsibility for moderating content?
Here’s a framework for thinking about these issues: How much capital investment and time does it take to construct or find an alternative vendor, especially given government regulation? How close to the end users on social media platforms are these services? You can think of the tech stack in roughly three layers:
The top layer is the social media apps and websites themselves (e.g., Facebook, Twitter, Parler, etc.);
The middle layer is intermediaries or aggregators of apps and websites (e.g., app stores, browsers, search engines, etc.);
The bottom layer is infrastructure providers (e.g., cloud providers, content delivery networks, the Domain Name System, internet service providers, utilities, payments, etc.).
On the top layer, it is relatively easy for a company to create its own app or website. Scaling these platforms to take advantage of network effects can be difficult, but it’s by no means impossible (see TikTok, Discord, Telegram, Signal, Snapchat, etc.).
In the middle layer, Google and Apple have a virtual duopoly (99% market share) in the smartphone operating system market, which makes their decisions regarding the default app stores on Android and iOS devices very important. But while securing distribution in the two major app stores can be hugely beneficial, it’s not necessary for adoption. Users can navigate directly to a website in a browser and Progressive Web Apps are bringing more and more functionality to web apps that was previously limited to only native apps. Companies can also have their users sideload another app store on Android devices, like Epic Games did for Fortnite. Hypothetically, if Chrome were to block users from accessing websites like Parler at the browser level, then that would be worrisome, as Chrome controls 63% of the browser market (while still noting that users can download alternative browsers such as Firefox or Brave).
On the bottom layer, one troubling story is what an internet service provider did in rural Idaho: YourT1Wifi.com, an internet service provider based in Priest River, Idaho, decided to block access to Twitter and Facebook after some of its customers complained about the platforms banning President Trump. That’s why large ISPs have committed themselves to net neutrality principles that would require no blocking, and why we need net neutrality legislation that would require no blocking without going through Title II at the FCC. It’s also why it’s good news that Elon Musk’s Starlink, a satellite broadband service, is already in public beta.
The bottom layer includes services that would be harder for social media platforms to replicate on their own: utilities (e.g., electricity, natural gas, water, sewage, telephone), internet service providers (ISPs), content delivery networks (CDNs), the Domain Name System (DNS), credit card companies (Visa and MasterCard), cloud providers (e.g., AWS, Azure, Google Cloud) and other payment systems (e.g., Stripe, PayPal, etc.). It would be very hard for a business to lay its own internet fiber, build its own electrical grid, or create an alternative to the Domain Name System. Utilities are especially powerful because they have a lot of local market power (often they’re a de facto monopoly in a community). By contrast, payment processors and cloud providers compete in global markets that are highly competitive, giving companies alternative options if they’re banned by one service provider. Generally speaking, we should be more wary of imposing liability on this layer of the tech stack for what users post on social media. Instead, policy should hew towards neutrality (with exceptions for illegal activity).
10. When should we require neutrality?
Following the framework detailed above, Apple and Google banning Parler from their app stores is a bigger deal than Facebook and Twitter banning Trump from their platforms. And what occurred in the infrastructure layer (i.e., AWS banning Parler and Stripe banning the Trump Campaign) is a bigger deal than what the app stores did. That means we should closely examine the AWS and Stripe cases to make sure these are indeed competitive markets.
First, AWS does not have a monopoly on cloud services (it has a 32% market share). Gab, a free speech social media platform with zero censorship and lots of Nazis, and PornHub, a website that needs no explanation, both operate without relying on the Google and Apple app stores or AWS for cloud services. Parler put itself in this situation by relying on a risk-averse mainstream cloud provider when there were numerous other options for hosting (including self-hosting). (The latest news is the Parler is now switching over to Epik, the cloud provider that hosts Gab). The same is true for Stripe, which only has an 18% market share. While the payment processor is part of the infrastructure layer, there are dozens of other competitors in the market that are available to the Trump Campaign. If these companies in the infrastructure layer had been monopolies, policymakers should have stepped in to enforce a neutrality standard.
Twitter & FB ban accounts. “It’s not censorship, you can create your own app.”
Then Google & Apple ban apps. “It’s not censorship, create your own website.”
Then Amazon bans web hosting. “It’s not censorship, create your own…”
David Sacks, an entrepreneur and venture capitalist, expressed a common sentiment among those displeased with the recent bans by Big Tech: If individuals or apps get banned at every layer of the tech stack — from consumer-facing apps down to infrastructure services — then there is no recourse for those who have been deplatformed. But that’s not actually true. If a user gets banned from Facebook or Twitter, there are numerous alt-tech social media platforms they can join. And after Parler was banned from the Google Play Store and the Apple App Store, it could still be accessed directly from a browser on the open web (or downloaded from a sideloaded app store on Android devices).
As David Ulevitch, a venture capitalist at Andreessen Horowitz, pointed out, even AWS doesn’t “hold the keys to the internet.” There are dozens of other cloud providers, and many companies still self-host using their own servers on-premise (traditional on-prem spending exceeded cloud spending until just last year). While it might be preferable for infrastructure companies to remain neutral (and they might welcome a law taking the decision off their hands), in competitive segments of the infrastructure layer we shouldn’t be too worried about companies exercising their right to not do business with reckless social media platforms.
Conclusion
Somewhat overlooked in this whole debate is that it’s not just Big Tech that’s turned on Trump and his supporters. Virtually all of corporate America has decided enough is enough. The Wall Street Journal is collecting an ongoing list of corporations that have paused PAC donations to politicians. It’s up to more than 50 corporations and includes every household name you can think of, from AT&T to Boeing to Walmart. The most common targets of corporate ire are Trump and the Republican members of Congress that objected to the certification of the Electoral College. The House of Representatives just voted to impeach the president for a second time. Maybe this whole debate is missing the forest for the trees — maybe it’s about way more than Big Tech?
It’s also worth caveating that much of the foregoing analysis will look very different depending on whether law enforcement and national security agencies have been in direct contact with the tech companies regarding imminent threats of violence. If that’s the case, then I think many of the tech platforms decisions look different (save for the decisions to ban Trump). In that context, they wouldn’t be exercising their own discretion over what speech should or should not be allowed on their platforms so much as responding to an implicit or explicit government order. Given the lack of publicly available information right now, we can’t know for sure what the government did or did not tell the tech companies.
At the end of the day, these are complicated issues. Here are the bottom-line takeaways:
Social media apps and websites can survive without depending on Big Tech (many alt-tech sites already do).
Trump may be banned from Facebook and Twitter, but he’s still the president of the United States and he has not been silenced.
Banning right-wing extremists or those who incite violence is not a slippery slope toward an Orwellian dystopia, and it’s certainly not a civil rights issue.
No, Big Tech is not more powerful than the government; the government can tax you, imprison you, and kill you.
A private company can’t violate your First Amendment rights, but it can restrict your ability to speak freely.
Repealing Section 230 would not solve any of these issues; nationalizing the companies in question would cause even more problems.
Twitter should ban both Trump and the Supreme Leader of Iran from its platform (and CCP propaganda).
This is not about just Big Tech — most large corporations no longer want to be associated with Trump, Parler, or the Republicans who objected to the certification of the Electoral College.
Despite all this, the US still values free speech more than any other country in the world.
President-Elect Biden ran on a commitment to be a President for all Americans, not just those who voted for him. To make good on that promise, he and his team will need to find opportunities for common ground and constructive compromise as they build their agenda for the first 100 days. One issue they would be smart to prioritize: Getting every American connected to broadband.
The COVID-19 pandemic, and the failed experiment in distance learning it forced upon our nations’ schools, have underscored the urgent need to close our digital divide. Unlike many other issues, broadband policy offers real promise for bipartisan consensus because it cuts across traditional red-blue and urban-rural lines. Infrastructure deployment gaps are found primarily in rural and tribal areas. Broadband adoption rates are lowest among low-income households and in communities of color. Plus, common sense consumer protections like net neutrality rules and consumer privacy safeguards enjoy overwhelming bipartisan support.
In a comprehensive broadband bill, there would be something for everyone to get behind.
The Biden administration has an opportunity to make historic progress expanding broadband access and accelerating adoption. And Biden will find bipartisan partners in these goals, so long as the Administration resists activist demands for the dead-end path of government micromanagement and instead focuses on targeted spending, smart reforms, and dynamic public-private partnerships.
The incoming Administration needs a radically pragmatic agenda that builds on the progress already being made, while accelerating efforts to close the most difficult and persistent gaps that remain.
Here are some ideas for where they should start:
Protect Consumers Online
Pass a Permanent Net Neutrality Law. To pass a broadband agenda that prepares us for the future, we first need to stop getting bogged down in dead-end fights from the past. For the last two decades, different versions of net neutrality have bounced between Congress, the Federal Communications Commission, the courts, and most recently the states, but the issue remains unresolved. While alarmist predictions about the imminent demise of “the internet as we know it” have proven unfounded, consumers and innovators all deserve the clarity and certainty of permanent net neutrality protections. The core principles – no blocking, no throttling, no paid prioritization – enjoy almost universal bipartisan support. President Biden and Congress should come together to pass clear, permanent net neutrality protections – while steering clear of the entirely unrelated (and much more controversial) idea of regulating the internet as a public utility under 1930s “common carrier” rules.
Protect Consumer Privacy. American voters overwhelmingly prefer a federal privacy law to a patchwork of inconsistent, contradictory state laws. The new Administration should work with Congress to pass a comprehensive new set of privacy protections that apply consistently to every company that collects or uses consumer data. Sensitive data – such as health, financial, or location information – demands a higher level of protection, and the Federal Trade Commission and state Attorneys General need clear authority to police and punish data privacy violations.
Connect Rural America
Make Historic Investments in Broadband Infrastructure. Joe Biden’s campaign platform called for investing $20 billion in rural broadband. This funding is urgently needed. While nearly $2 trillion in private investment over the past 25 years have built networks that reach 95% of American communities, market forces alone won’t be sufficient to attract private investment to get last-mile network infrastructure to every home in some remaining unserved pockets where low populations and difficult terrain make for much higher per-home deployment costs. A smart strategy won’t look to replace private funding, but will instead leverage even greater private investment by matching capable providers with project-based assistance on a transparent, competitive basis. Republicans will fight Biden on any number of spending priorities, but rural broadband programs may be an exception, since much of the funding would flow toward rural, Republican-held districts and states.
Set Clear Priorities. The Biden Administration will be keen to avoid the mis-steps of earlier federal broadband initiatives, such as the Commerce Department’s Broadband Technology Opportunities Program, which squandered millions in 2009 Recovery Act funding building duplicative broadband networks in communities that already had high-speed fiber infrastructure. This time around, federal funding must be targeted to truly unserved areas – those where high-speed broadband isn’t yet available. We can’t ask Americans living in broadband deserts to wait even longer while taxpayer funds get diverted to subsidize networks in areas that already have high-speed service.
Let Every Technology – and Every Capable Provider – Compete for Funds. Many federal broadband programs are hamstrung by outdated, dial-up era eligibility rules that actively discourage many capable providers from participating. With less competition for federal funds, progress is slowed and taxpayer dollars don’t stretch as far. Bipartisan bills introduced earlier this year in both the House and Senate proposed to scrap these obsolete, anti-competitive Eligible Telecommunication Carrier restrictions; the incoming Administration should embrace these bipartisan reforms. Federal broadband programs should set clear thresholds for speed and latency – and then allow every capable provider and every kind of broadband technology (fiber, cable, fixed wireless, etc.) that can meet these standards to apply and compete for funding.
Demand Real Accountability. Government watchdogs have documented how mismanagement and poor oversight undermined earlier federal rural broadband programs. For example, the USDA’s Rural Utility Service promised in 2011 that its $3.5 billion in stimulus funding would connect 7 million homes – but ended up connecting only a few hundred thousand. “We are left with a program that spent $3 billion, and we really don’t know what became of it,” concluded the GAO. We need much stronger oversight this time: every provider applying for federal funding must commit to connecting a specific number of homes by a certain date – and should be forced to return the funding if they fail to meet these commitments.
Accelerate Broadband Adoption
Understand the Challenge. While broadband service is available in 95% of U.S. neighborhoods, only 73% of American households subscribe to home broadband. This “adoption gap” is rooted in a complex set of underlying factors, exacerbated by digital literacy gaps and a lack of understanding in some quarters of the opportunities opened up by home broadband service. In fact, 60% of Americans who don’t have home broadband cite a lack of interest or need as their primary reason for not signing up, while fewer than 20% cite affordability as the main obstacle. Sen. Ed Markey (D-MA) introduced legislation earlier this year aimed at helping us better understand the barriers to broadband adoption, by authorizing new experiments and pilot programs and gathering more data on the challenge. The Biden Administration should embrace that proposal as a starting point, and recognize that broadband adoption is a complex and nuanced challenge.
Build on Models that Work. Most major broadband providers have offered low-cost broadband programs for years to eligible low-income customers. For example, the largest of these programs (Comcast’s Internet Essentials) has connected roughly 8 million low-income Americans since 2011, offering home broadband for just under $10 per month. These initiatives offer important lessons that need to be internalized into federal broadband adoption efforts – most critically, the importance of wrapping discounts or subsidies with comprehensive digital literacy training and comprehensive community outreach programs. The shortest path toward boosting broadband adoption is to build on top of models that are working – not tearing them down and starting from scratch.
Subsidize Low-Income Broadband Adoption.Broadband providers’ low-income adoption initiatives have brought home broadband service to millions of low-income families nationwide. Modernizing low-income FCC programs to support standalone fixed broadband service – and ensuring the program is open to every capable provider meeting defined speed thresholds – would further help vulnerable families, ensuring that every American can afford home broadband service. Democrats in Congress fought to include a $3 billion Emergency Broadband Benefit in the COVID-19 relief package passed in December, which will offer a subsidy of up to $50 per month help low-income and unemployed Americans stay connected during this pandemic. This is a welcome short-term solution, but Congress must remember that broadband adoption challenges will persist long after the COVID-19 emergency has subsided.
Colin Mortimer, the Director of the Center for New Liberalism, is joined by two special guests. First is Adam Hartke, the co-owner of a music venue in Wichita, Kansas, and the co-chair of the advocacy committee at the National Independent Venues Association. We talk about what it has been like to be a music venue owner during this pandemic, suffering the brunt of the economic fallout. Second, PPI’s Chief Economic Strategist Michael Mandel comes on to talk about how an obscure tax cut that expires in December might make the recovery for music venues, bars, restaurants, brewers, and others even more difficult than it was already expected to be.
Regulation is much in the news these days. But even as we look towards the future, the 40th anniversary of the Staggers Rail Act of 1980 on October 14 gives us an opportunity to consider how light touch regulation can benefit industry, customers, and the economy as a whole. That law, enacted under President Jimmy Carter, took a heavily regulated freight rail industry and moved it into the modern era.
Prior to the passage of the Staggers Act, freight railroads were regulated by the Interstate Commerce Commission, which exercised strict authority over minimum and maximum rates, firm entry, and firm exit. Carriers were required to maintain networks, even if they were redundant or unprofitable. The lack of flexibility of the nearly-century old regime had left the industry in poor shape. Nine carriers were bankrupt, including Pennsylvania Railroad which had been in business since 1846. Return on investment had fallen from a 4.1 percent average in the 1940s to just 2 percent by the 1970s. Railroad market share had also declined by 33 percent from 1950 to 1980 as trucks and airlines became common shipping options. As a result, freight railroads were unable to raise capital to invest in their networks and compete.
By contrast, the Staggers Act:
Permitted freight railroads to establish rates for service while allowing regulators to intervene if there was no competition;
Phased out industry-wide rate adjustments;
Permitted freight rail shippers and carriers to enter into contracts without regulatory review; and
Affirmed the prohibition of collective rate making.
This light touch regulation helped the freight railroad industry become far more financially healthy and competitive. Return on net investment has increased more than 170 percent since the 1980s. Freight carriers have invested more than $710 billion since Staggers on capital expenditures and maintenance including locomotives and tracks. Importantly, this capital investment was privately funded by the industry, unlike airports and highways which receive major financing from taxpayers. Due to capital investment and technological advancements, accident rates among major rail carriers plummeted 73 percent between 1981 and 2019, good news for workers. All the while, shipping rates have risen at roughly the rate of inflation since 1981.
Now, freight rail is not the same as tech or broadband, but there are important historical lessons to learn. In particular, finding the right balance with light touch regulation isn’t always the easiest thing, but it can generate new investment and growth and pay off big for the whole economy.
5G, because of its low latency and high throughput, won’t just be an evolution in technology, but a revolution. It will open the door to incredible innovation in both the private sector and the government – including augmented and virtual reality, precision agriculture, smart ports, transportation and logistics, autonomous vehicles, connected construction and so much more.
In the United States, it is critically important to understand how this fundamental shift in technology will impact the broader economy, especially at a moment when COVID-19 has caused significant economic disruption and massive job losses nearing Great Depression levels. Key questions include:
How many jobs will be created by the 5G Economy? Will they be focused around traditional technology centers like San Francisco, New York, and Boston, or create new opportunities across the nation? What kinds of jobs will be created?
And for policymakers, what does the U.S. need to do to support efficient allocation of radio spectrum to support this technology development? And should we provide job training to ensure that workers in America can meet the opportunity?
Already the 5G job revolution has begun. Large mobile providers such as AT&T and Verizon are building out new networks across the country. Network companies such as Cisco, CommScope, Mavenir, and L3Harris are hiring 5G system architects, Radio Access Network (RAN) engineers, 5G solution architects, and technical managers in the 5G space.
Technicians and tower climbers are putting up 5G small cells at a rapid pace. This is not the first time that fundamental shifts in networking technologies have created sudden shifts in the economy and job opportunities.
This paper identifies and outlines three waves of wireless-driven job growth (Summary Table 1) in the U.S., and answers major questions about how many jobs will be created, which industries will be affected, where they will be located, and what we can do as a nation to accelerate efforts to meet this challenge.
Wave 1, The Rise of Wireless, covers the period from 1990-2007, as mobile carriers were building out the original wireless networks and cell phones went from a rarity to a necessity. Wave 1 generated roughly 200,000 jobs in the wireless industry.
Wave 2, “The App Economy,” covers the period from 2007 to 2019, which was rooted in the application of wireless to mobile apps via smartphones, rather than in the wireless industry.
Conventional BLS statistics contained no categories for app developers. But a widely cited study by this report’s author, released in early 2012, analyzed detailed data on job postings and estimated that the U.S. App Economy included 466,000 jobs, including workers developing and maintaining mobile apps and the workers supporting them. (1) Follow-up studies showed continued growth in the U.S. App Economy, with the latest figures from September 2019 reporting more than 2.2 million App Economy jobs. (2) This reflects an average growth rate of more than 20 percent annually. The main locus of Wave 2 job growth has been in industries such as entertainment, finance, communications and social networks, whose output can be easily delivered in a digital form (hence “digital industries”).
Wave 3, “The 5G Revolution,” began in 2019 as mobile carriers expanded their initial 5G networks. Wave 3 is generated by the applications of wireless to challenges in physical industries, such as agriculture, energy, construction, manufacturing, transportation, education, healthcare, and government including defense.
In recent years, most of these physical industries have experienced low or negative productivity growth, as well as low spending on telecommunications services.
5G is reversing both of these trends. Faster, more versatile wireless communications are an essential factor in driving productivity gains and creating jobs. Research shows that industries like manufacturing, construction, and healthcare have lagged in digitization, helping explain why productivity growth has been so slow. To increase productivity, physical industries need the ability to gather information from widely dispersed sensors and to use that data to control activities in real time. That’s not possible without faster and more versatile wireless commnications supplied by 5G. And the COVID-19 pandemic is accelerating the shift to many of these use cases.
How many jobs in the US will The 5G Revolution generate?
Unlike Wave 2, which mostly generated “cognitive” tech jobs which required a college education, Wave 3 is rooted in the physical world.
As a result, Wave 3 will also create mixed ‘cognitive-physical” skilled jobs, many of which fall into the category of installers and maintainers. So while App Economy jobs were focused on software development, Wave 3 jobs will drive job growth in dozens of sectors, across the economy in what we would traditionally consider both white collar and blue collar positions. Simply put, the third wave will benefit a wider set of Americans and regions than the second wave did.
For example, healthcare providers already monitor medical equipment like pacemakers remotely. But with 5G, the set of possible athome diagnostics or even interventions will expand greatly, and telehealth installers and maintainers will be a highly valued occupation. Similarly, precision agriculture will require “field sensor technicians,” autonomous vehicles will need a cadre of mechanics, and ecommerce will need people skilled in robotics maintenance.
Using the latest BLS projections as a baseline jumping off point, we estimate that 5G and related technologies will create 4.6 million jobs relative to the baseline in 2034, 15 years after the introduction of 5G in 2019 (which is also, not coincidentally, the peak of the most recent business cycle). These are higher paying jobs that will replace jobs that are lost in a wide range of industries and use cases (Summary Table 2).
In an important sense, 5G job creation is a countervailing force to job destruction from automation and globalization, and critically important in the post-COVID world.
During these tough economic times, we also need to be concerned about the short-term job impact and opportunities that 5G is creating as well. This paper also shows that current 5G build-out and engineering activities are creating 106,000 jobs as of April/May 2020. We estimate the location of these jobs by state. To get this estimate, we use a combination of data from real-time job postings and BLS figures.
What Do Policymakers Need to Do?
Finally, this paper identifies four areas where policymakers should focus to harness the full potential of 5G.
First, more spectrum – mmWave, sub-6, and unlicensed – will be needed for broadband and related applications. The U.S. would benefit greatly from a long-range spectrum plan. While the Trump Administration has directed the Department of Commerce to create a National Spectrum Strategy, it has not yet been released.
A long-range spectrum plan would ensure the resource is allocated wisely, provide certainty to 5G stakeholders, and encourage long-term investment in networks for 5G and beyond.
In addition to spectrum, the U.S. also needs a plan for the adoption of 5G across the government, both defense and civilian. The public sector should be a leader, not a follower.
Third, Congress should be willing to invest heavily in the development of 5G and successor technologies. That’s essential if the U.S. is to keep up with global competition.
And finally, the U.S. should make a significant investment in job training. The U.S. needs to double down on traditional STEM fields and encourage more people in America to go into engineering and math. Beyond that, we need a national skills initiative and mentoring programs to ensure that this new generation of workers will have the training needed to support the cognitive-physical jobs that the 5G Revolution is already beginning to create.
I. THE FIRST TWO WAVES OF WIRELESS JOB CREATION
Wireless technologies are generally divided into generations, each one corresponding to higher speed and increased capabilities. 5G is the current technology being rolled out, with 6G on the horizon, promising even faster speeds and satellite-terrestrial integration.
However, for the purposes of this paper we use a different taxonomy, based on the labor market impact of wireless technologies.
Wave 1: The Rise of Wireless
Commercial mobile radio telephony—what is sometimes called “0G”—was available as a niche service since the late 1940s. (3) It had very little economic impact. The first true commercial portable cellphone, the Motorola DynaTAC 8000X, was introduced in 1983, but there were only 5 million cellphone subscribers as of 1990.
But the use of cellular wireless technology rapidly gathered speed after 1990, giving rise to 109 million subscribers as of 2000 and 233 million subscribers as of 2006. Not surprisingly, the need to build out networks, and handle a soaring customer base generated a large number of jobs. The number of people working in the wireless industry went from 36,000 in 1990 to 200,000 in 2000. (4) Wireless employment remained at roughly that level until 2007 (Fig 1).
The first wave of wireless job growth encompasses 2G in the 1990s and 3G and 3G+ in the first half of the 2000s. With 2G data speeds measured in the kilobits, only low-bandwidth applications such as voice, text messages, and email were viable. Running other applications on top of a slow network was almost impossible.
Mobile internet became possible with 3G and 3G+, but it was still not fast enough to make a significant difference.
Wave 1, The Rise of Wireless, was not anticipated in any of the long-run employment projections issued by the BLS in the late 1980s and early 1990s. That’s important, because the BLS projections, issued regularly since the 1960s, are the most widely quoted comprehensive long-run occupational and industry forecasts available. The BLS also maintains the most detailed occupation industry matrix available for the United States.
Yet, the BLS projection methodology typically misses the impact of new technologies. For example, the employment projections issued in 1993 anticipated that telecommunications employment would drop from 912,000 in 1992 to 791,000 in 2000. (5) In reality, telecommunications jobs rose to 1,185,000 in 2000, 50 percent above the projected value (Table 1). (6)
Wave 2: The App Economy
The second wave of wireless jobs, The App Economy, began in 2007 with Apple’s introduction of the iPhone, coupled tightly with the opening of the App Store and Android Market (later renamed Google Play) in 2008. Suddenly mobile phone users had a powerful computer in their pockets that could handle a myriad of applications. The demand for mobile broadband soared. Mobile wireless networks moved from faster versions of 3G to 4G and LTE, as the number of broadband subscriptions soared.
But the second wave of wireless jobs also started with a paradox. Despite the central role of mobile, employment in the wireless industry peaked in 2007 and fell by half by 2019. In 2011, the Wall Street Journal ran a piece with the stark title: “Wireless Jobs Vanish.” (7)
In fact, wireless was creating jobs, but not in the wireless industry. (8) More and more IT professionals were involved in either developing mobile apps, maintaining them after they were on the market, or supporting them with users. For banks and other financial institutions, mobile apps became an important way of supplying their services without having expensive real estate or branch workers. Moreover, mobile apps could use the camera on smartphones to provide services like depositing checks at homes.
Beyond utilitarian tasks like banking, shopping, and travel reservations, apps became the major way that people interacted with their smartphones. We watched videos, listened to music or podcasts, messaged friends, played games, and spent time on social networks. One survey found that adult Americans spent almost three hours per day on their smartphones, and 90 percent of that time was spent on apps. (9)
Conventional BLS statistics contained no categories for app developers. But a widely cited study by this report’s author, released in early 2012, analyzed detailed data on job postings and estimated that the U.S. App Economy included 466,000 jobs, including workers developing and maintaining mobile apps and the workers supporting them. (10) Follow-up studies confirmed continued growth in the U.S. App Economy, with the figures from April 2019 reporting more than 2.2 million App Economy jobs. (11) This reflects an average growth rate of more than 20 percent annually (Table 2).
Other studies have found similar or even higher estimates. For example, a 2018 study from Deloitte estimated 5.7 million App Economy jobs in the U.S., using a different methodology and a much bigger assumption of spillover effects. (12)
The job impact of mobile broadband and the App Economy did show up in the official numbers in a different way: the unexpectedly rapid growth of people working in “computer and mathematical occupations.” “Computer and mathematical occupations” is a broad category that includes data scientists, software developers and engineers, information security specialists, computer support specialists, and database and network administrators.
By contrast, skilled workers who maintain the telecom networks—the people who lay and fix the fiber-optic lines and put up the cellphone towers—are in the “installation, maintenance, and repair” occupations.
The BLS projections in 2007 and 2009 underestimated the expected size of the computer and mathematical workforce in 2019 by roughly 20 percent, or over 1 million workers. But the relevant categories of skilled installers and maintainers were overestimated in the projections. This tilt towards tech jobs is very important for understanding the third wave (Table 3).
II. WAVE 3: THE 5G REVOLUTION
Wave 3 of wireless-driven job growth, The 5G Revolution, began in 2019 as mobile carriers expanded their initial 5G networks, and then continued into 2020. All major carriers in the U.S. — AT&T, Verizon, and T-Mobile — are heading towards nationwide 5G networks by the end of 2020, according to analysts. (13) The pandemic has made the case for 5G more compelling as many of the use cases for 5G services have been pulled into the present.
Telehealth has become not just optional but a requirement in many medical situations.
Students from kindergarten to graduate school have been forcibly introduced to distance learning. Businesses and governments have been learning how to use virtual meetings, at a much lower cost than flying around the world. Companies have started using robots to help disinfect their stores. (14)
The U.S. military faces its own challenges, as the virus has forced changes in routines to minimize infectiousness and to protect its suppliers. “We believe the COVID-19 pandemic has accelerated society’s transition to broadband and digitization by at least a decade,” said one market analyst in March 2020. (15)
Indeed, in the early days of the pandemic, Verizon announced that it was expecting to allocate $17.5- $18.5 billion on capital expenses in 2020, up from its previous guidance of $17-$18 billion. “This effort will accelerate Verizon’s transition to 5G and help support the economy during this period of disruption,” Verizon said in a press release. So far, the pandemic has caused spectrum auctions in Europe to be pushed back. (16) Meanwhile the FCC has not changed its spectrum auction plans for 2020. (17)
Spending on 5G networks is what is known by economists as “autonomous investment”—that is, investment that is not linked to the immediate ups and downs of GDP. (18)
The Extension of Wireless to Physical Industries
Wave 2 was focused on “digital industries,” where the output can be reduced to bits and bytes. This includes games, music, communications, social networks, news, advertising, financial services, and ecommerce purchases of digital goods such as hotel and plane reservations. These digital industries, while important, make up less than 20 percent of the economy. (19) (Formally defined, the digital sector includes computer and electronics manufacturing; ecommerce; software and other publishing; video and audio content; broadcasting; telecommunications; data processing; internet publishing and search; and computer systems design and programming. Slight changes to the boundary of the digital sector does not affect the analysis here).
Wave 3, by contrast, is based on the applications of wireless to the challenges and opportunities in physical industries, such as agriculture, energy, construction, manufacturing, transportation, education, healthcare, and government (including defense).
Physical industry use cases include low-power wireless sensors that must operate for long periods in a field, say, without a battery replacement, or a low-latency connection to a drone or autonomous vehicle.
Table 4 shows the key physical sectors had slow or negative productivity growth during the second wave (in general 1 percent annual productivity growth is adequate and 2 percent is good, so none of these industries made the grade). Slow or negative productivity growth means less competitive industries, weaker wage gains, and lesser quality jobs.
Surprisingly, most of these industries had low and falling spending on telecommunications services, as a share of total output (for most industries, total output can be interpreted as revenues. For defense, total output can be interpreted as spending including accounting for depreciation). (20) For example, in agriculture, the amount spent on telecom services went from a very low 0.16 percent in 2007 to an even lower 0.13 percent. (To provide some context, in 2018 the average telecom share for digital industries was 3.5 percent, and the average telecom share for physical industries was 0.7 percent).
5G is likely to reverse both of these trends. Faster, more versatile wireless communications are an essential factor in driving productivity gains. Research shows that industries like manufacturing, construction, and healthcare have lagged in digitization, helping explain why productivity growth has been so slow. To increase productivity, physical industries need the ability to gather information from widely dispersed sensors and to use that data to control activities in real-time. That’s not possible without faster and more versatile wireless communications supplied by 5G.
The ability to rapidly communicate data and information using 5G will increase productivity gains in both the public and private sectors. And these productivity gains, in turn, will lead to higher revenue, faster wage gains, advances in job quality, and increased international competitiveness.
In 2017, a study from the Technology CEO Council examined the impact 5G will have on productivity growth in the “physical industries” and tax revenues over the next 15 years.21 The report estimated that the physical industries will boost annual economic growth by 0.7 percentage points over the next 15 years, generating an additional $2.7 trillion in annual economic output, $8.6 trillion in wage and salary payments, and $3.9 trillion in federal tax revenue.
The 5G Revolution and Job Growth
The impact of 5G on jobs can be summarized as “network meets the cloud.” That means we can push more capabilities out to the edge, including real-time and near-real-time applications of machine learning and artificial intelligence to the physical world. In many cases, new technologies create new tasks and markets that didn’t exist before. (22) For example, healthcare providers already monitor medical equipment like pacemakers remotely. But with 5G, the set of possible at-home diagnostics or interventions will expand greatly, and telehealth installers and maintainers will be a highly valued occupation.
5G will greatly expand the capabilities of drones in a range of applications from agriculture to military to logistics, especially in conjunction with artificial intelligence. That will expand the market for skilled drone operators, sometimes called “remote-pilots-in-command,” earning as much as $100,000 per year.
The other alternative is that productivity gains will lower costs enough to expand the market, which ends up creating new jobs. (23) That’s what happened in ecommerce. The use of robots in ecommerce fulfillment centers, combined with effective use of data, helped drive down costs low enough to offer consumers fast delivery and easy returns. And the combination of fast delivery and easy returns, in turn, made the ecommerce proposition irresistible to many consumers, because now they could avoid the time and trouble of going to the store, getting the product quickly and simply returning it for free if it didn’t work. The result was a massive shift from unpaid household shopping hours to paid ecommerce fulfillment and delivery hours. (24)
Or consider manufacturing. The pandemic has called into question the wisdom of depending on global supply chains for important medical supplies, and by extension, any parts that one might need in a crisis.
The low-latency high-bandwidth services delivered by 5G can help spur the digitization of the factory floor, boosting productivity and increasing flexibility. (25, 26) The result could be a shift to distributed local manufacturing in the U.S. in the post-COVID era, creating jobs and shortening supply chains.
Table 5 identifies examples of Wave 3 jobs. Unlike Wave 2, which mostly generated “cognitive” tech jobs which required a college education, Wave 3 is rooted in the physical world. As a result, Wave 3 will also create mixed ‘cognitive-physical” skilled jobs, many of which fall into the category of installers and maintainers. In addition, people will continue to play an essential role in the supervision loop of advanced robots.
The types of cognitive jobs listed in Table 5 mainly fall into the broad occupational class of “computer and mathematical occupations.” Relative to the median wage for all occupations, these jobs pay a wage premium of 122 percent.
But Wave 3 will also generate blue-collar jobs that use a combination of manual and problem-solving skills—what we call “cognitive-physical” jobs— which are likely to pay a wage premium as well.
Today, the median wage for telecommunications equipment installers and repairers is 45 percent higher than the overall median wage, according to figures from the BLS. As 5G becomes an integral part of business operations, we would expect such jobs to become more valuable rather than less.
III. QUANTIFYING LONG-TERM 5G-RELATED JOBS
Estimates of job growth spurred by a new technology have to be measured against some baseline. As we noted earlier, the BLS projection methodology typically looks backward, not forward, and has a difficult time dealing with ongoing technological changes. BLS projections have consistently understated the job impact of wireless innovation. In the first wireless wave, jobs in the wireless industry came in 50 percent above projections. In the second wireless wave, the rise of the App Economy drove up demand for computer and mathematical jobs 21 percent above BLS projections as of 2019.
Our fundamental assumption is that unlike the second wave—which was mostly focused on digital industries—the third wave will drive demand for both cognitive and cognitivephysical jobs across the whole range of physical and digital industries. The third wave will therefore benefit a wider set of Americans and regions than the second wave did. We therefore adopt a simple and straightforward approach to estimating the impact of 5G on jobs. We start with the latest BLS industry and occupation projections, issued in September 2019, for the 2018-2028 period. We rebase them to 2019 and extend them to 2034 to get a 15-year projection.
Then we assume that the additional jobs produced by 5G in the third wave, relative to the baseline, are the same magnitude as the additional jobs produced by wireless innovation in the second wave. We then allocate these jobs across industries according to their size, rather than focused on only tech. Finally, we then apply a conservative job multiplier.
Based on these assumptions, we estimate that 5G and related technologies will produce an additional 4.6 million jobs in 2034 relative to the baseline original projected growth of 12.8 million.
When we say ‘additional’ we mean that 5G-driven job growth is an additional factor that the conventional projections do not take into account. In an important sense, 5G job creation is a countervailing force to job destruction from automation and globalization. These are higher paying jobs that will replace jobs that are lost.
Past Reports Projecting 5G impact On Jobs
In 2017, Accenture released a report estimating wireless operators will directly invest $275 billion between 2017 and 2024 in 5G infrastructure, creating up to 3 million jobs and boosting GDP by $500 billion.27 Of the $275 billion investment, $93 billion was estimated to be spent on construction, with the remainder being allocated to network equipment, engineering, and planning. Importantly, the report recognized this growth will be spread across communities of all sizes. “Small to medium-sized cities with a population of 30,000 to 100,000 could see 300 to 1,000 jobs created. In larger cities like Chicago, we could see as many as 90,000 jobs created,” the authors wrote.
More recently, a report on the global economic impact of 5G was released in November 2019 by IHS Markit, updating a 2017 study. (28) This report looked at several measures of 5G impact. First, the report forecast that between 2020 and 2035, global real GDP would grow at an average annual rate of 2.5 percent, with 5G contributing almost 0.2 percent of that growth. Second, the report looked at the seven leading countries for 5G—the United States, China, Japan, Germany, South Korea, the United Kingdom, and France—and found that the collective investment in R&D and capital expenditures by firms that are part of the 5G “value chain” within these countries will average over $235 billion annually, measured in 2016 dollars. The U.S. and China each accounted for about one-quarter of global spending on 5G R&D and capital expenditures. Third, the IHS Markit report estimated that 22 million jobs would be supported by the 5G value chain globally in 2035, with 2.8 million of those jobs in the United States.
Most recently, two economists at NERA Economic Consulting, Jeffrey A. Eisenach and Robert Kulick, estimated the potential job impact of 5G. (29) They found that if 5G adoption followed the path of 4G adoption, then, “at its peak, 5G will contribute approximately 3 million jobs and $635 billion in GDP to the U.S. economy in the fifth year following its introduction.” This employment effect is smaller but faster than the one reported here.
IV. KEY 5G USE CASES
As previously noted, The 5G Revolution will create job opportunities across many sectors and regions in the U.S. In this next section, we identify eight of the most likely use cases that have significant potential for job growth.
1. AGRICULTURE
Agriculture is an industry ripe for transformation. In many areas of the country, it is still heavily dependent on low-cost labor, which may be discouraged because of the pandemic. And as of 2018, only 0.1 percent of agriculture revenues were being spent on telecommunications, a percentage that had dropped slightly since 2007.
Faced with an evolving environment with increasing temperatures and diverging precipitation levels in wet and dry areas, precision agriculture will rely on an interconnected system of low power sensors, integrated equipment, and data—all powered by 5G—to monitor field conditions and maximize yields while efficiently allocating scarce resources such as water. (30)
To best utilize the new technologies, agriculture will have to build and maintain a new tech and telecom infrastructure and the workforce is only now starting to come into existence. This requires both software developers and people to install and maintain the equipment.
For example, as of March 2020, agriculture technology company Farmers Edge was looking for a precision technology specialist to install equipment and software at its growers’ farms in Madison, Wisconsin.
2. CONSTRUCTION
5G plays an essential role in digitizing construction, a key sector which has been plagued by high costs and low productivity in recent decades, especially in public infrastructure. (31) Perhaps not coincidentally, construction is one of the least digitized sectors of the economy. (32)
Since 2000, the cost of construction has risen 118 percent according to the Bureau of Economic Analysis. (33) Highways and streets have become 126 percent more expensive for state and local governments to invest in. (34) By comparison, overall prices in the economy have only risen 41 percent over the same time span. (35)
This increase in the relative price of construction helps explain why U.S. infrastructure seems shoddier and worn-out these days.
A 5G communication grid will allow the seamless and flexible integration of automated equipment and skilled workers on a construction site. Structures will go up faster with fewer dangerous errors, and worksites will be safer. Meanwhile, as 5G helps bring down the cost of construction, demand will rise. Both renovation and new building will be cheaper and faster.
3. UTILITIES
Energy use management is an essential use case for 5G. Utilities are already extensive users of information technology within their own operations to monitor power production and distribution. But 5G makes it much easier to connect up smart meters to the grid to give people and businesses better incentives to control their electric use.
This is one sector where our projection methodology may underestimate the number of new 5G-related jobs. If the energy infrastructure shifts over the next 15 years from fossil fuels to low-carbon energy sources, the opportunities for 5G-enabled workers may be very strong.
4. MANUFACTURING
In manufacturing, 5G and digitization will help reduce costs, making domestic manufacturing more competitive. Many manufacturing industries have weak or even negative multifactor productivity growth over the past 20 years. (36) Multifactor productivity growth takes into account the usage of purchased services, energy, capital, and intermediate inputs and is a key measurement of competitiveness. Investment in information technology such as 5G, which manufacturing has lagged in since the early 1990s, will enable new business models that expand markets and enhance domestic competitiveness.
New markets and reinvigorated domestic competitiveness means more jobs in the U.S. Through a combination of digitized distribution, digitized production, and new manufacturing platforms – coined by PPI as the Internet of Goods – a new network of smallbatch and custom goods factories will likely arise. Importantly, these industrial startups will fuel job creation in low-density areas and former industrial hubs like the Midwest and upstate New York, as physical industries like manufacturing dominate these economies. That means more domestic production and less imports. (37)
5. TRANSPORTATION AND WAREHOUSING
5G will transform how people and goods move from point to point and how cities manage traffic. This has major implications for industries ranging from defense and transportation to logistics and delivery.
Low-latency 5G connections will accelerate the roll-out of fully autonomous trucks and cars. But the flip side is that these vehicles will have to be maintained to a very high standard to keep them safe, creating more jobs for skilled technicians, and compensating for the loss of truck driver jobs.
These capabilities depend on the speed of 5G to rapidly relay data. In trucking, a report by McKinsey recognizes, “sixty-five percent of the nation’s consumable goods are trucked to market. With full autonomy, operating costs would decline by about 45 percent, saving the US for-hire trucking industry between $85 billion and $125 billion.” (38) This savings from automated trucking could be passed onto consumers in the form of lower prices. Delivery drones stand to further disrupt how goods are delivered.
And in traffic management, traffic signals will be based on real-time traffic flow rather than timed stoplights. Pittsburgh recently introduced smart traffic lights and saw travel times cut by 25 percent. (39) These innovations reduce the need for drivers and increase the need for maintenance and road workers as driving and delivery become less physically intensive and goods can be moved around the clock.
The creation of new types of jobs is already starting. As of March 2020, transportation services company Transdev Services was hiring a self-driving vehicle operator in San Francisco, California. Technology platform Argo AI was seeking an autonomous vehicle system test specialist responsible for operating its autonomous test platforms in Miami, Florida. And transportation services firm MV Transportation was searching for an autonomous vehicle attendant tasked with ensuring the safe operation of the Autonomous Vehicle in Corpus Christi, Texas.
6. EDUCATION (PUBLIC AND PRIVATE)
Students and teachers at all levels were forced to adopt virtual learning in 2020 because of the pandemic. Reports from the field have been mixed. The technology in many cases was not up to the task, and many students, especially in low-income neighborhoods, were caught on the wrong side of the digital divide. If schools want to engage in virtual learning, they will need a technology like 5G with the bandwidth for students and teachers to fully engage.
A related issue is training of workers on new equipment and processes. As 5G moves into the workplace, it will transform the way that physical industries such as manufacturing and healthcare do business. In order for workers to stay relevant, the training technology has to become 5G-enabled as well.
7. HEALTHCARE
As with education, the pandemic forced healthcare providers to adopt ad hoc telehealth practices without the proper technology. 5G will provide the framework in which providers can truly practice healthcare at a distance. Moreover, 5G is essential to unlocking quality healthcare for rural, low-density areas because of its ability to support real-time high-quality video, transmit large medical images, and enable real-time remote monitoring.
Maintaining the telehealth infrastructure will be a core function at hospitals, which will employ skilled telehealth technicians, just like they have lab technicians and nurses. Clinical information will flow wirelessly into electronic health records, requiring specialized database specialists who are trained in the medical and privacy requirements of these types of data. As of late April, Beth Israel Lahey Health of Beverly, Massachusetts was looking for a “telehealth installer.”
8. GOVERNMENT (EXCEPT EDUCATION)
We can divide the impact of 5G on government into military and civilian uses. On the military side, a March 2020 report from the Congressional Research Service noted: “5G technologies could have a number of potential military applications, particularly for autonomous vehicles, command and control (C2), logistics, maintenance, augmented and virtual reality, and intelligence, surveillance, and reconnaissance (ISR) systems—all of which would benefit from improved data rates and lower latency (time delay).” (40)
In fact, the USDOD has already released several Requests for Prototype Proposals for test beds focusing on AR/VR for training, smart warehouses and dynamic spectrum sharing. All of these potential applications generate new human resource demands as well. As the capabilities of 5G evolve, it becomes more important than ever to best make use of resources, both in terms of equipment and people. For example, as of summer 2020, The Aerospace Corporation was looking for a “5G and Internet of Space Things Wireless Network Engineer” with the ability to obtain a U.S. security clearance.
On the civilian side, “smart cities” development will mean that state and local governments will have to transform all of their services to 5G, from waste collection to police to property tax assessment. And that will, in turn, mean a workforce much more heavily oriented towards maintaining and repairing the necessary telecom equipment.
Where Will Wave 3 Jobs be Located?
Both the first and second wave of wireless jobs were concentrated in dense digital cities like San Francisco, New York and Boston.
Table 7 shows examples of top “digital” areas, as ranked by the share of local GDP coming from the information sector, the financial services sector, and the professional services sector (which includes law, engineering, and accounting, as well as computer programming).
Not surprisingly, the list of the top digital metro areas is headed by New York and San Francisco. There’s one important caveat: for confidentiality reasons, the Bureau of Economic Analysis suppresses some data, so we can’t calculate the digital share for all metro areas.
EXAMPLES OF TOP DIGITAL METRO AREAS
1. Boston-Cambridge-Newton, MA-NH
2. Boulder, CO
3. New York-Newark-Jersey City, NY-NJ-PA
4. San Francisco-Oakland-Berkeley, CA
5. Seattle-Tacoma-Bellevue, WA
*Listed alphabetically. Inclusion based on digital share, which measures the share of the information, financial services, and professional services sectors in overall metro GDP Data: BEA
By contrast, Wave 3 will benefit those areas which are more balanced in terms of digital and physical industries. Table 9 shows some examples of such areas. These areas are not tech deserts, for sure, but they are well-positioned to take advantage of the opportunities offered by 5G.
EXAMPLES OF BALANCED DIGITAL/PHYSICAL METRO AREAS
1. Albany-Schenectady-Troy, NY
2. Ann Arbor, MI
3. Baltimore-Columbia-Towson, MD
4. Buffalo-Cheektowaga, NY
5. Cleveland-Elyria, OH
6. Colorado Springs, CO
7. Detroit-Warren-Dearborn, MI
8. Harrisburg-Carlisle, PA
9. Huntsville, AL
10. Jacksonville, FL
11. Kansas City, MO-KS
12. Lincoln, NE
13. Pittsburgh, PA
14. San Antonio-New Braunfels, TX
*Listed alphabetically. Inclusion based on digital share, which measures the share of the information, financial services, and professional services sectors in overall metro GDP Data: BEA
V. SHORT-TERM SNAPSHOT: THE IMMEDIATE IMPACT OF 5G
So far, we have been discussing the longterm job impact of 5G. But in the wake of the COVID-19 pandemic, we need to be concerned about the short-term job impact as well. In this section, we show that current 5G build-out and engineering activities has already created 106,000 jobs as of April/May 2020 (Table 9).
Estimating 5G Network Build-out Jobs
Network build-out activities, of course, consist of installing 5G small cells around the country, including their backhaul connections. In some cases, the technicians and installers are employed directly by the carriers, while in other cases they are contractors. These are cognitive physical jobs, in the sense that we discussed earlier in the rep
ort. We get data on this employment from two different sources. First, the BLS track
s the number of “Radio, Cellular, and Tower Equipment Installers and Repairers” in its Occupational Employment Statistics (OES). (41) As the name suggests, this category includes the workers who install 5G access points. As of May 2019, the last data available, there were 14,370 workers in this occupational category, with a relative standard error of 5.8 percent. Factoring in a conservative job multiplier, that gives us a net job impact of 43,000.
How are those jobs distributed? The top state according to the BLS data is Texas, followed by New Jersey, California, and Florida. These figures were as of May 2019 and based on several years of rolling surveys (Table 9).
Of course, the location of build-out activity changes over time as providers finish with one area for now and shift their construction activities to other area. To understand current 5G construction activity, we turn to another data source: publicly available job postings. These job postings contain information on the location of jobs and also the skills needed. For example, one company is advertising for a “Tower Top Hand” with 5G experience in the Baltimore area.
The database of job postings that we use comes from Indeed.com, which identifies itself as “the #1 job site in the world.”(42) Indeed’s real-time database of job postings is full-text Booleansearchable, including by title, location and by age of job posting.
We searched for job postings with the terms “tower” or “technician” in the title, and 5G in the body of the posting. This allowed us to identify “hot spots”—metro areas where there was current hiring activity for workers installing 5G networks (Table 11).
As of early May, companies are hiring for tower technicians in areas such as Allentown, Pennsylvania and the Baltimore metro area, as telecom providers extend their 5G networks outside of the densest high-income urban areas. Indeed, local news publications in these areas show evidence of discussions about ongoing deployments. (43)
Current 5G Engineering and Software Jobs
Making 5G a reality will also require hiring in engineering and software development. But unlike cell and tower installers and repairers, there is no obvious BLS occupational category that matches up well to 5G engineers and software developers.
To understand the prevalence and location of 5G engineers and developers, we further analyze the universe of online job postings, using a methodology that was developed to estimate the number and distribution of App Economy jobs.
These job postings contain information on the location of jobs and also the skills needed. For example, in late April and early May 2020, Commscope was advertising for an “Engineer, Principal 5G Systems” in Richardson, Texas. Epsilon Solutions was advertising for a contract “Wireless Core Engineer” to “test, deploy and debug DISH’S standalone 5G network” in Denver, Colorado. And KaRDS Cyber Solutions in Annapolis Junction, Maryland was advertising for a “5G Wireless SME / Senior Systems Engineer Level 6.” This position required a “TS/ SCI clearance with polygraph.
We started by searching for job postings with the words “engineer” or “developer” in the title, with postings aged 30 days or less. This gave us our initial pool of roughly 50,000 postings nationally as of the end of April. Generally speaking, our past research has suggested that searches with no age limit work better, but because of the pandemic-related shutdowns, we decided to focus on the more recent job posts.
Within that pool, roughly 0.6 percent contain the term 5G. By contrast, job postings containing the terms IoT, Android or iOS, or mobile are far more common (Table 12). We then use this share of job postings to estimate the share of jobs (see Appendix). There are roughly 1.75 million engineers, and an equal number of software developers, according to BLS. Taking 0.6 percent of that total comes to roughly 21,000 jobs, and then accounting for the multiplier gives us 63,000 5G-related engineering related jobs.
A First Look at China
We gain some insights into the Chinese 5G labor market through analysis of online job postings in both English and Chinese, as collected by Indeed.com. This approach is limited because of the lack of visibility into hiring by key 5G companies such as Huawei, China Telecom, and Tencent, so we cannot arrive at an overall number. Nevertheless, even a preliminary analysis may be useful.
We consider job postings which include ‘5G’ in the title and were released 30 or fewer days ago. For example, in the U.S., CommScope posted an opening for a 5G Systems Architect. As of August 17, 2020, the U.S. had 85 such new postings, compared with 125 for China. As noted, the China sample is significantly incomplete.
To put these numbers into some context, over the same period, the U.S. had 14370 new postings with ‘software’ in the title, while China had 4137 new postings with ‘software’ in the title (in either Chinese or English). That suggests the intensity of Chinese hiring of 5G personnel, relative to hiring of software personnel overall, is higher than in the U.S.
These jobs are very heavily concentrated in a relatively small number of states. California and Texas by themselves account for almost 50 percent of 5G engineering job postings. This makes sense given the location of the leading companies in the 5G space.
VI. THE KEY INPUT TO 5G JOBS: CAPITAL INVESTMENT AND SPECTRUM ACCESS
5G is a capital-intensive investment by its nature. To realize its benefits, wireless operators must invest in R&D and capital expenditures in engineering and network buildout. In a 2017 study, Accenture estimated wireless operators will invest $275 billion from 2017 to 2024, $93 billion of which will be spent on construction. (44) Indeed, via its Investment Heroes series, PPI estimates the major wireless operators have invested more than $150 billion in the United States since 2016, much of which has gone towards 5G R&D and deployment. (45, 46)
The portion of spectrum to be most used for 5G is divided into two categories: millimeter wave (above 24 GHz) and sub-6 (6 GHz and below). (47, 48) Each of these spectrum ranges will play a vital role in bringing 5G products and services online. While mmWave has the fastest speeds, it has limited range and is not able to tolerate much interference like walls or rain. (49) In the sub-6 spectrum, the range is better than that of the mmWave, but speeds are reduced. While mmWave will be utilized in dense population areas such as downtown areas and stadiums to transmit data, sub-6 will be critical to providing access to IoT products in suburban and rural areas.
Spectrum for commercial use is controlled by the Federal Communications Commission (FCC). One of the ways the FCC distributes spectrum is by auctioning licenses, with the proceeds going to the Treasury Department. Since 1994, the U.S. government has raised over $100 billion in revenue from wireless companies participating in FCC spectrum auctions. (50) The FCC’s first 5G spectrum auction, the mmWave of 28 GHz, was conducted in November 2018.51 The FCC followed by auctioning the 24 GHz band in March 2019, and the 37, 39, and 47 GHz bands in December 2019. (52, 53)
Much of the spectrum used by mobile networks to date have been concentrated in the sub-6 bands of 600 MHz to 2.6 GHz. These mid- to low-bands are likely to be used for 5G as well to achieve wider geographical coverage. As of April 2019, the FCC had awarded 716 MHz of spectrum below 3 GHz. (54) Additionally, the FCC has designated the 2.5 GHz band to “be available for commercial use via competitive bidding”. (55) The FCC ran an auction the 3.5 GHz band in July and August 2020. (56) And in February, the FCC ordered satellite operators in the 3.7- 4 GHz range to relocate, freeing the space for reallocation by December 2023. (57)
The other mechanism by which the FCC distributes spectrum is by allowing unlicensed use of certain spectrum – for purposes such as Wi-Fi. Under this regime, operators can use designated airwaves to transmit data without getting permission from the FCC. (58) However, the lack of exclusivity in unlicensed bands means an increased risk of interference. In March 2019, the FCC freed up the 116-123 GHz, 174.8-182 GHz, 185-190 GHz, and the 244-246 GHz bands for unlicensed use. (59) And in April 2020, the FCC proposed rules to make the entire 6 GHz band available for unlicensed use. (60)
International Comparisons of Spectrum Allocations
In April 2019, Analyses Mason released a report summarizing certain countries’ spectrum allocations. (61) The countries had comparable amounts of spectrum below 3 GHz awarded, with the U.S. coming in first at 716 MHz, Australia in second at 690 MHz, Germany at third with 689 MHz, Canada fourth with 648 MHz, and the United Kingdom rounding out the top five with 647 MHz. Asian countries have allocated similar amounts of spectrum below 3 GHz, with Japan at 601 MHz, Hong Kong at 583 MHz, China at 582 MHz, and South Korea at 477 MHz.
Awarded spectrum from 3-24 GHz had greater variation among countries. “Whilst many countries have now awarded over 100MHz of (exclusive nationwide) spectrum to mobile, several countries (China, Italy, and Spain) have awarded 300MHz or more,” the authors write. Following those three countries were South Korea, the U.K., Australia, Japan and Qatar – all with 200 MHz or more allocated. Notably, the U.S., Canada, France, Germany, and Hong Kong had not awarded any of this spectrum as of April 2019. As previously mentioned, sub-6 spectrum is a critical component to delivering new 5G products and services outside of high population density areas because of its ability to travel long distances while still providing 5G speed.
In the mmWave range, only the U.S., South Korea, and Italy had awarded spectrum. The U.S. had awarded 2,500 MHz, South Korea 2,400 MHz, and Italy 1,000 MHz as of April 2019. Other countries in the analysis had mmWave allocations planned, ranging from the second half of 2019 to 2021. The U.S. leads in the total amount auctioned or planned to be auctioned at about 7 GHz, followed closely by China at 6 GHz, and Canada at nearly 5 GHz. Australia, France, Germany, Spain, Sweden and the U.K. all planned to assign around 3 GHz.
A broader February 2020 analysis of countries conducted by Global Mobile Suppliers Association found 40 countries have completed allocations of 5G suitable spectrum since 2015. (62) “A total of 54 countries have announced plans and approximate dates for allocating 5G-suitable frequencies with timelines for completion between now and end-2022,” the authors note.
The economic and national security implications of 5G are why the U.S. needs a long-run spectrum plan. In September 2018, the FCC unveiled its ‘5G FAST’ plan, detailing the previously discussed spectrum that it intends to make available for 5G services. (63) In October 2018, the Trump Administration issued a presidential memorandum directing the Department of Commerce to create a National Spectrum Strategy, but the strategy has not yet been released.
VII. POLICY IMPLICATIONS AND CONCLUSION
There are four important policy issues when it comes to 5G. First, as we have been discussing, is spectrum. As 5G opens up the physical industries to joining the digital economy, it becomes ever more imperative to have a longterm spectrum plan. Unlicensed spectrum, sub-6 spectrum, and mmWave spectrum all serve different purposes in the 5G ecosystem but are critical to realizing the full economic benefits of 5G.
The amount of spectrum suitable for 5G use is limited and thus needs to be allocated efficiently. Policymakers should prioritize a long-term spectrum plan that frees up more licensed and unlicensed spectrum, provides certainty for auctions in terms of cost and scheduling, streamlines government licensing and renewals, and encourages long-term investment in 5G networks.
5G is also critical to national competitiveness and security. As an April 2019 report from the Defense Innovation Board recognizes, leadership in 5G carries economic and national security advantages such as rapid communication systems, enhanced decision-making and strategic capabilities, better technology, standard setting, and job creation. (64) But, as the report notes, the physics of mmWave are challenging. Additionally, the sub-6 band is crowded with incumbent systems and uses, large portions of the spectrum are government owned and commercially limited, and there are concerns the Defense Department could experience reduced capability if it is required to share its sub-6 spectrum. While the Trump Administration has directed the Department of Commerce to create such a National Spectrum Strategy, it has not yet been released. For the U.S. to meet the challenges ahead, a national spectrum plan must carefully balance the government’s needs and what 5G will require in the long-term.
The second policy issue is increased government usage of 5G across both military and civilian activities. The public sector should be a leader in exploring cutting edge uses of 5G in areas like the delivery of government services and battlefield control-and-communications.
Third, Congress should be willing to invest heavily in the development of 5G and successor technologies. That’s essential if the U.S. is to keep up with foreign competitors, who are already focused on the military uses of so called 6G. (65) The federal government must start investing heavily in telecom research and development. The money should be split between nonprofits and for-profit companies, and the goal should be to create a new set of standards that American companies can build on.
And finally, the U.S. should make a significant investment in job training. The U.S. needs to double down on traditional STEM fields and encourage more people in America to go into engineering and math. Beyond that, we need a national skills initiative and mentoring programs to ensure that this new generation of workers will have the training needed to support the cognitive-physical jobs that the 5G Revolution is already beginning to create.
Methodology Appendix
In this paper we estimate both the long-term and short-term job impacts of the 5G Revolution, using different methodologies. Our 15-year estimates build on BLS employment projections, and assume a scenario where the employment impact of 5G is of the same percentage magnitude as the employment impact of Wave 2. The short run current job impact of the 5G build-out is estimated by a combination of BLS data and real-time job postings.
Context There are three main approaches for modeling the occupational impact of new technologies:
1. Consensus-based extrapolation of existing occupation-industry matrix, subject to industry employment constraints
2. Analysis of substitution effects of new technology on existing occupations
3. Modelling of new job creation by new technologies based on analysis of job impact of existing technologies. We call this the “bootstrap” approach.
Occupation-industry matrix In the United States (Bureau of Labor Statistics 2019), Canada (Canada Employment and Social Development Canada,2020), and other OECD countries, the main approach to modeling future occupational growth uses a detailed occupationindustry matrix. Industry growth is projected based on a macroeconomic model and an assumption of full employment, and “small changes” are made in the future coefficients of the occupation-industry matrix.
Because of their size and comprehensiveness, these models tend to be unique for their country. The BLS notes that “there are no comparable projections which are not in some way derived from BLS projections.”
However, such models in practice are not designed to pick up the occupational impact of disruptive technologies or the creation of new occupations. Indeed, the BLS explicitly benchmarks its model against what it calls the “occupational–share naïve model,” where the occupational share doesn’t change over time (BLS 2020).
Substitution effects of new technology
Frey and Osborne (2017) is the best-known example of projecting the potential substitution effects of new technology. By examining the tasks associated with particular occupations, they estimated that about 47 percent of total US employment is at risk of computerization.
However, the authors stress that their models only focus on the substitution effect of new technology, and provide no information at all about the job creation aspects of technology.
However, we make no attempt to forecast future changes in the occupational composition of the labour market. While the 2010-2020 BLS occupational employment projections predict US net employment growth across major occupations, based on historical staffing patterns, we speculate about technology that is in only the early stages of development. This means that historical data on the impact of the technological developments we observe is unavailable. We therefore focus on the impact of computerisation on the mix of jobs that existed in 2010. Our analysis is thus limited to the substitution effect of future computerisation.
For this reason, the substitution effect approach is inappropriate for this project.
Bootstrap approach
What we call the “bootstrap approach” uses the employment effects of previous technological advances to project the impact of future technologies. Shapiro and Hassett (2012) estimated the employment impact of 3G, and used that to project the impact of 4G. Accenture (2017) used the Shapiro-Hassett results for 3G to project the impact of 5G. Eisenbach and Kulik (2020) estimated the employment impact of 4G, and used that to project the impact of 5G.
In this project, we use the bootstrap approach, taking into account the new characteristics of 5G compared to 4G. We model the employment impact of 5G as a deviation from the BLS baseline forecast, based on the observed magnitude of the 4G deviation.
But whereas the employment impact of 4G was completely concentrated in white collar jobs and digital industries, we model the employment impact of 5G as extending to blue-collar jobs that use a combination of manual and problem-solving skills—what we call “cognitivephysical” jobs. Moreover, we model the industry impact of 5G as extending over the entire economy, including physical industries such as manufacturing, agriculture, and defense.
Here’s where the genuinely disruptive nature of 5G comes into play. We expect 5G to enormously increase telecom usage by physical industries, as 5G becomes an integral part of operations. However, as of the 2018 input-output data from the Bureau of Economic Analysis, telecom usage is still an extremely low share of intermediate inputs for many industries (see Table 4). As a result, current telecom usage is not a useful guide as to what industries will add workers with 5G.
In addition, to the degree that 5G usage is integrated into operations in physical industries, we would expect that the number of telecom installers and maintainers would increase. That has not yet happened under 4G. Indeed, the number of telecom installers and maintainers fell in 2019, according to BLS data (346K in 2018, versus 315K in 2019).
When dealing with technological trends that have not yet appeared in the official data, it is preferable to adopt the smallest number possible of conservative assumptions. In this case the model uses the employment category of “telecom installers and maintainers” as a proxy for skilled blue-collar, or “cognitive physical” jobs generated by 5G, as described on page 40 of the report. The model uses the employment category of “computer and mathematical occupations” as a proxy for cognitive jobs generated by 5G. And the model distributes the number of 5G jobs across all industries in proportion to their total employment. The model generates a conservative projection of 5G jobs by industry, based on the employment performance of 4G plus a small number of additional assumptions about the difference between 4G and 5G.
We recognize that totally new occupations generated by 5G might fall outside those categories 15 years from now. But given that 5G is just rolling out right now, we don’t have the data necessary, for example, to produce a credible forecast of the number of precision sensor installers that the agriculture sector will need to hire in 2033.
We also note that both the short term and long term models are completely agnostic about whether the 5G networks are built by the current cellular operators or by private enterprise. In fact, that is a strength of the methodology that we use. Industry-specific data was used to analyze Wave 1. But Wave 2 and Wave 3 are modeled based on occupational data which does not reference the cellular operators at all.
Long-term Estimate
The BLS regularly lists projections of employment trends by occupation and industry. As we showed in Tables 1 and 3, these projections underestimated the employment impact of the Wave 1 telecom boom by 50 percent after 10 years. The employment impact of the Wave 2 telecom boom on tech jobs was underestimated by 21 percent after 12 years.
To calculate this underestimate, we applied the projected growth rate of computer and mathematical occupations, derived from the 2007 and 2009 vintage projections, and applied it to the 2007 figure for computer and mathematical occupations from the Current Population Survey (CPS). Then we compared the result to the 2019 figure for computer and mathematical occupations from the CPS. We use the CPS data as the benchmark for the underestimate calculation because it gives the best available measure of the actual growth of tech jobs over time.
The analysis in this paper is based on the employment projections released in September 2019 for the time period 2018-2028. As in the past, these projections clearly do not have a telecom boom built into them. (A new set of projections were released in September 2020, after the analysis of this paper was completed. The new projections do not significantly change the results).
We will use a scenario for 5G jobs which is similar in one major respect to the Wave 2 boom, and different in two other aspects which reflect the particular characteristics of 5G.
As in Wave 2, we estimate that actual computer and mathematical employment (tech jobs) is 20 percent above the baseline BLS projection after 12 years (extending the projections an extra two years). These jobs are a proxy for cognitive jobs. (To be conservative, we use the occupational estimates from the BLS projection report as our 2018 starting point, rather than the somewhat higher CPS figures).
Unlike Wave 2, we estimate that actual number of telecommunications installers and repairers also come in 20 percent above projections after 12 years. These occupations are a proxy for skilled blue-collar, or “cognitive-physical,” jobs.
We allocate the additional jobs proportionally across all industries. By contrast, in Wave 2 the gains mainly came in digital industries.
We also use a conservative job multiplier of 3—that is, two additional indirect jobs for each direct job created by 5G (Bartik and Sotherland, 2019). By contrast, tech jobs are often assumed to create as many as five indirect jobs (MIT Sloane Review, 2012).
Short-term Estimate
We derive the number of “Radio, Cellular, and Tower Equipment Installers and Repairers” from the May 2019 Occupational Employment Statistics (OES). (68) As the name suggests, this category includes the workers who install 5G access points. However, by the nature of network build-out, where tower technicians were working last year may not be where they are working today. So we used the real-time database of job postings maintained by Indeed.com, which identifies itself as “the #1 job site in the world.” (69) Job postings are regularly used by economists as a rich data source. (70) Indeed’s real-time database of job postings is full-text Boolean-searchable, including by title, location and by age of job posting. We searched for job postings with the terms “tower” or “technician” in the title, and “5G” in the body of the posting.
For example, as of early July 2020, a staffing firm was looking for a “Tower Climber Technician” to work on maintaining and repairing 5G networks and based in the Detroit area. That gives us an indication of where mobile carriers or their contractors are hiring.
We also used job posting data to estimate the number of engineers nationally working on 5G projects. We started by searching for job postings with the words “engineer” or “developer” in the title, with postings aged 30 days or less. This gave us our initial pool of roughly 50,000 postings nationally as of the end of April.
Within that pool, roughly 0.6 percent contain the term 5G. The key assumption is the percentage of job postings for engineers and developers that include the term “5G” is a reasonable estimate of the percentage of engineers or developers that are involved in 5G development. Past research has supported this assumption.
Additional References
Accenture. 2017. “Smart Cities: How 5G Can Help Municipalities Become Vibrant Smart Cities.”
Timothy Bartik and Nathan Sotherland. 2019. “Realistic Local Job Multipliers,” WE Upjohn Institute, April 1, 2019.
Bureau of Labor Statistics. 2019. “Projections overview and highlights, 2018–28,” Monthly Labor Review, October 2019.
Bureau of Labor Statistics. 2020a. “Occupational Projections Evaluation: 2008–2018”
Bureau of Labor Statistics. 2020b. “Occupational Employment Statistics,” https://www.bls.gov/oes/
Jeffrey A. Eisenach and Robert Kulick. 2020. “Economic Impacts of Mobile Broadband Innovation: Evidence from the Transition to 4G,” American Enterprise Institute, May 2020.
Employment and Social Development Canada. 2020. “Canadian Occupational Projection System (COPS) – 2019 to 2028 projections.”
Carl B. Frey and Michael A. Osborne. 2017. “The Future Of Employment: How Susceptible Are Jobs To Computerisation?” Technological Forecasting and Social Change, 2017, vol. 114, issue C, 254-280.
AnnElizabeth Konkel. 2020. “Healthcare and Medical Research Postings Decline,” Indeed, July 9, 2020. https://www.hiringlab. org/2020/07/09/healthcare-postings-decline/
MIT Sloan Review. 2012. “The Multiplier Effect of Innovation Jobs,” MIT Sloan Reiew, June 6, 2012. https://sloanreview.mit.edu/article/themultiplier-effect-of-innovation-jobs/
Robert J. Shapiro and Kevin A. Hassett. 2012. “The Employment Effects of Advances in Internet and Wireless Technology:Evaluating the Transitions from 2G to 3G and from 3G to 4G.”
Over the last few months, millions of Americans have used telehealth services — the remote delivery of care and health monitoring using digital telecommunications tools — to get health care. Federal and state policymakers have made it easier to access telehealth during the pandemic to keep people home and safe but there is no reason to slow the momentum after so much progress has been made.
Due to policy changes at the state and federal levels, the use of telehealth has grown faster in the past five months than in the preceding 25 years. During the COVID-19 pandemic:
The Veterans Administration provided 1.1 million telehealth visits for veterans
Most of the current telehealth expansions are temporary and will expire with the end of the current public health emergency declaration. But they don’t need to. In fact, 39 senators from both sides of the aisle have introduced legislation that would make some of those changes permanent.
Summer is normally a time when Americans look forward to taking a vacation. In the pandemic summer of 2020, however, many of us probably would like nothing better than to get back to work.
Since the coronavirus reached our shores, tens of millions of Americans have been laid off or furloughed. Many others have had their hours reduced or their pay cut; have been prevented from plying their trade by stay-at-home orders; and, have stood by helplessly as businesses they built went under. Schools closings have compounded parents’ ordeal, since it’s hard to work or look for a job when you are taking care of kids at home.
More than 51 million Americans – almost one third of the nation’s workforce — have filed for unemployment since the pandemic began. In June, the official unemployment rate was 11.1 percent, which translates into nearly 18 million people out of work.
These figures don’t take into account the summer surge that has pushed Covid-19 infection rates to record heights in 39 states across the South, West and Midwest. Sunbelt Governors who heeded President Trump’s premature calls to “reopen” have closed bars, gyms and beaches to stem the spike in infections and prevent hospitals from being overwhelmed.
The longer the pandemic rages, the deeper the damage to a U.S. economy that remains largely locked down. So far, about three million small businesses have shut their doors for good. Many large companies also have announced sharp workforce reductions.
It’s estimated that at least 3.7 million Americans no longer have jobs to go back to. “It’s clear that the pandemic is doing some fundamental damage to the job market,” said Mark Zandi of Moody’s Analytics. “A lot of the jobs lost aren’t coming back any time soon.”
The economic pain inflicted by Covid-19 has not been distributed evenly. Hit hardest have been workers in retail, personal services, restaurants and hotels, entertainment and sports and manufacturing. Job losses are disproportionately high among low-income, black and Latinx workers.
Working Americans have made tremendous sacrifices to help the country contain an unusually infectious and deadly virus. Our country owes them an all-hands-on deck push to get everyone back to work as soon as conditions allow – and at a decent living wage.
What’s needed is a robustly funded national reemployment drive in which the federal, state and local governments work in tandem with the private sector to match displaced workers to openings in fast-growing sectors; acquire the skills they need to switch careers; and, lower obstacles to starting new businesses to replace those we’ve lost.
This initiative also should take aim at the low-wage trap in which many less educated U.S. workers are caught. Raising the minimum wage is necessary but insufficient to reverse decades of growing wage inequality. The reemployment campaign must also include new ways to lift the pay and career prospects of blue collar workers who have fallen out of the middle class.
Ideas for stimulating entrepreneurship appear elsewhere in this report. This section proposes three big initiatives for connecting displaced workers to new jobs and careers, and for making work play.
First, increase apprenticeship in America ten-fold.
The United States lags other advanced countries when it comes to apprenticeship and other “active labor market” policies to facilitate the rapid reemployment of laid-off workers. Yet research shows that workers reap significant financial gains from apprenticeship, which usually combines on-the-job training and classroom instruction. In fact, the gains surpass those from other alternatives, including completing a degree at a community college.
Employers also benefit too. Their recruitment and training costs decline and their ability to add skilled workers rapidly improves. They also report higher worker productivity and morale.
Since apprenticeship clearly is a “win-win,” it’s puzzling that there are only about 440,000 registered apprentices in the United States. The Urban Institute’s Robert Lerman, the nation’s leading scholar of apprenticeship, notes that if we aimed at creating as many apprenticeships as a share of our labor force as Britain, Australia or Canada, that number would climb to around four million, or nearly 10 times higher.
Facing the challenge of getting millions of displaced workers into new jobs as quickly as possible, as well as finding slots for first-time workers whose entry into the labor markets has been delayed by the shutdown, America should go big on apprenticeship. This will also make U.S. labor markets more resilient against future economic downturns.
U.S. lawmakers should create strong incentives for intermediaries (private or public) to organize apprenticeship training and placement and market them to employers. Lerman estimates the cost of stimulating 900,000 new participants in rigorous apprenticeship at $3.15 billion a year. Since most of the occupational training would happen at worksites, at no public cost, the government would pay only for off-site classroom instruction and training in “soft skills.” From the taxpayers’ perspective, apprenticeship is a bargain compared to the cost of subsidizing full-time attendance at community colleges.
Another way to scale up is to tap the growing number of private intermediaries that compete to supply employers with skilled and reliable workers.
There are thousands of private firms and non-profits that are well positioned to supply purpose-trained talent to their clients. Many are already providing services to dozens or hundreds of clients in sectors facing talent shortages, notably technology or healthcare. Ryan Craig, an investor and writer, notes that these business services companies can become a vector for new talent by bridging the crucial “last mile” between educational institutions and employers. In what Craig calls an “outsourced apprenticeship,” they hire laid-off and entry level workers and train them with an eye toward the occupational and soft skills required by specific companies. The intermediaries incur the training expense and get paid only when they succeed in placing their apprentices in full-time jobs. In so doing, they can create frictionless pathways to good first jobs.
The federal government can stimulate the growth of this competitive market with “pay for performance” awards financed by shifting funding from higher education (especially community colleges). Private intermediaries would get paid for each placement when they hire candidates who meet certain criteria (such as eligibility for Pell grants), provide them with an apprenticeship that pays minimum wage, train them and place them in permanent positions.
Even with a quite low unemployment rate before the virus struck, the U.S. economy suffered from a dearth of skilled workers. This “skills gap” left more than seven million jobs unfilled. When you add to that the millions of workers whose previous jobs vanished in the pandemic, it’s clear that our country faces an enormous reskilling and upskilling challenge.
A national reemployment initiative therefore must expand access to high-quality career education and training. Yet federal policy tilts heavily in favor of aid for college-bound youth, while providing far less support for the majority of young Americans (69 percent) who don’t get college degrees.
Many of the jobs that define the skills gap are positions that require specialized occupational training or education but not a four-year degree. More than half of U.S. jobs, in fact, are “middle skill” jobs in such fields as cybersecurity, welding and machining, truck driving and home health. They often require a certificate, license or other industry recognized credential.
Yet federal financial aid for career education and training is a pittance. In 2016, Washington spent more than $139 billion on post-secondary education, including loans, grants and other financial aid for students. Of that, just $19 billion went toward occupational education and training.
Demands from Sen. Bernie Sanders and others for “free college” would compound this inequity, showering new benefits on college-bound youth at the expense of working families whose children don’t go to college. Instead, as a simple matter of equity, Washington should invest a roughly equal amount to expand access to high-quality career education and training for young workers who need post-secondary credentials but not a four-year degree.
Third, create a new “Living Wage Credit” to make work pay.
A national reemployment drive should also aim at reversing the decades-long trend toward wage stagnation and diminished job prospects for working Americans without college degrees. This dynamic is shrinking America’s middle class and creating a new class divide along educational lines.
Our economy’s seeming inability to generate decent family wages for non-college workers – along with unfounded fears that robots
are making many workers superfluous — has triggered calls on the left for guaranteed government jobs or income.
Pragmatic progressives ought to avoid statist solutions and instead offer direct support for low-wage workers. By raising the minimum wage and instituting a new “Living Wage Credit,” our country can ensure that all full-time workers earn enough to support a middle class lifestyle.
Inspired by the success of the Earned Income Tax Credit (EITC), the Living Wage Credit would function as both an incentive and reward for work. It builds upon similar proposals by Tax Policy Center’s Elaine Maag, and the Brooking Institute’s Belle Sawhill.
Sawhill’s version, for example, would give all U.S. workers a 15 percent raise up to some annual ceiling ($1,500). The tax credit, essentially an offset to the payroll tax cut, would phase out as earnings rise past $40,000 a year. Unlike the EITC, the Living Wage Credit would be based on an individual workers’ income, not household income.
PPI’s more ambitious Living Wage Credit absorbs the EITC, provides more generous tax relief and offsets the cost with a new national tax on consumption or value-added tax (VAT). In the absence of a VAT, however, the costs of a stand-alone credit for workers above the EITC cutoff could be defrayed by taxing the unearned incomes of wealthy Americans.
For example, a “tax wealth, not work” package could include higher rates on top earners; equalizing capital gains and personal tax rates; and, replacing the current estate tax, which the 2017 Trump-GOP tax bill cut dramatically for the wealthiest heirs, with a progressive inheritance tax (as proposed last year by PPI).
ort. We get data on this employment from two different sources. First, the BLS track
Current 5G Engineering and Software Jobs
