As the idea of “free college” gains popularity, Virginia and Iowa are instead focused on career and technical education.
In the midst of record low unemployment, many states are nonetheless struggling with ongoing skills gaps — shortages of workers with the right skills for in-demand jobs.
At the start of 2019, according to the Department of Labor, as many as 7.3 million jobs remained unfilled. These included a substantial number of “middle-skill” jobs requiring some schooling beyond high school but not a four-year degree. They were in fields such as health care, IT, welding and truck driving. The American Trucking Associations, for instance, reported a shortage of 50,000 drivers in 2017.
One reason these gaps exist is underinvestment in career and technical education. Of the more than $139 billion in annual federal student aid spending for higher education, just $19 billion goes to career and tech ed. Students generally can’t use federal Pell Grants to fund short-term, non-college-credit training programs, such as for welding certifications and commercial drivers’ licenses. Federal dollars under programs such as the Workforce Innovation and Opportunity Act are typically limited to the lowest-income workers.
Read Anne Kim’s full opinion piece in Governing by clicking here.
In the movie series “Nightmare on Elm Street” the words “He’s back” indicated that the antagonist – Freddy Krueger – was not dead after all. The tax reform equivalent to Freddy Krueger is the so-called “return-free tax system” that would make the IRS the nation’s tax preparer. As Tax Day came around, Freddy’s ‘Return-Free’ slashed its way back onto the airwaves once again.
When this proposal is described by academics and political figures, it all sounds too good to be true – and it is. Supporters point to examples in California and Great Britain as successful, and yet the truth is quite different.
In California, where millions of taxpayers were sent pre-populated government returns each year, an average of little better than 2-3% of the state’s taxpayers ever accepted it. Eventually, the experiment fell of its own weight and California quietly abandoned it.
Some proponents have also claimed the idea originated with the 1998 IRS Restructuring and Reform Commission, which I co-chaired, and to the subsequent statute enacted that year that implemented the commission reforms. This is simply not true. The 1998 act did instruct the Treasury Department to study the proposal. Their conclusion was that Congress would have to enact radical changes in our tax laws before it could conceivably be feasible. Question asked and answered.
The much-praised “simpler’ system in Great Britain was examined in a recent study by the British Parliament which reports that the efforts by government to implement an EITC-type tax credit in their return-free tax system were initially a disaster. The reason was because the blue collar taxpayer in the UK is not involved in determining their own taxation, and government did not have the information needed to accurately qualify taxpayer eligibility for the credit. After the initial failed effort at an EITC-like welfare-to-work credit, the British no-return tax system moved to Plan B.
Now British workers are required to prepare a pre-return tax submission, reporting extensive personal and family information to the government, in order to claim tax credit eligibility. This lengthy pre-return filing – which looks like an American 1040 tax return – then enables the government to determine the citizen’s tax liability, so the taxpayer doesn’t have to prepare and file a tax return. This circular logic, and layered complexity, is what passes for a “return-free” tax system in practice in the real world.
The UK Parliament’s post-mortem analysis summed up the true myth-buster reality:
“The Right Honourable Alan Milburn, a former Labour Chief Secretary to the Treasury during Prime Minister Blair’s Premiership, described the reason for the inaccurate and significant overpayments as a result of the state not having enough information about people’s lives to accurately determine tax credit eligibility….”
This is the return-free tax system that is most frequently held up as the one we should adopt to replace American voluntary compliance. And yet the conclusion of the UK study states the obvious:
“The only party that has all the relevant information about an individual’s economic and family circumstances pertinent to his taxation is the individual himself, not the government and not the individual’s employer….”
The alternative to taxpayers preparing and filing pre-returns would of course be for the IRS to just independently collect extensive additional personal information about the private, personal lives of our taxpayers and their families, in order to make the false assertion true that the Government has all the information it needs to prepare people’s tax returns for them. However, in American culture, such an expansion of the role of government in our society would trigger a host of civil liberty and individual privacy questions. Some might describe this as a chilling prospect.
The fact is the American system of income taxation has become, over many decades, a central instrument of national economic policy. A significant proportion of the complexity we all rail about in our income tax system emanates from the public policy objectives we have asked the tax system to carry, from Welfare-to-Work (EITC) to Retirement (IRA’s) to Energy Conservation to Education. The implementing regulations alone have added enormous complexity, and require voluminous information.
One more problem with Freddy Krueger’s return-free system: the implications for national security. I have not heard a single expert in cyber security say that we should not worry about the risk of replacing a highly decentralized, diversified tax system with one characterized instead by over-concentration and centralization of systems and data, and the associated risks of attack by cyber criminals and determined nation-state adversaries. We should shiver when Freddy tells us there’s nothing to worry about.
Another basic question would seem a rather straightforward one: What do the people want? The suggestion that the American public is clamoring for Congress to enlarge the role the tax collector plays in their personal lives is nonsensical. And that simple truth has been consistently and overwhelmingly demonstrated in national polling over many years. The idea that the American public would welcome the tax collector as their new best friend is seriously disconnected from reality. And that is compounded by another reality — that the IRS is already understaffed, technologically struggling, and under-funded for its core mission.
It is time for a reality check. True tax reform and simplification is very much needed, and it will be hard work. But it does not begin with getting the taxpayer out of the room where their tax liability is being determined. In fact, the direct involvement of our citizens in their own tax system is much too valuable to lose. Rather than curtailing the role of the taxpayer, we should leverage the annual engagement of our people by helping them develop basic financial literacy, including learning how to save, and the importance of doing so, for their own financial well-being.
The tax refund, for many families, is the largest paycheck they see all year. The reality is that the “tax time moment”, as many economists call it, is an invaluable national economic policy asset, far too valuable to kick to the curb, regardless of whether the theoretical objective is tax administration expediency, or a strategy to increase revenue collections to pay for public spending.
And so, my sincere advice for what to do as the Freddy Krueger return-free advocates try to slash their way back into our lives this Spring like clockwork: Just wake yourself up, look outside
at the real world, and apply common sense. There is no good reason for this nightmare to ever become a reality.
(To read the full text of Senator Kerrey’s tax policy analysis, click here.)
A newly commissioned poll from PPI by Expedition Strategies shows Social Democrats, progressives need a strong economic and jobs platform to stay competitive moving forward. According to the poll, Social Democrats and progressives:
Have widespread voter anxiety about economic and political conditions. Most believe the economy is working for the wealthy, but many are concerned about how it works for themselves. Other important voter concerns: immigration, climate change.
Say their country and the EU are headed the wrong way. That means: 1) in many cases the status quo will be a bigger risk than change. So the default would be to vote for change; and 2) there will be little tolerance being asked to accept less (fewer benefits, higher taxes) – particularly unless the burden appears to be shared.
Are (not surprisingly) far less concerned about conditions in Europe than in their own conditions – particularly economic.
See the EU as important for addressing a small number of challenges – mostly related to harmonizing policies. But improving economic conditions such as wages is largely viewed as a national responsibility, not EU.
Overwhelmingly agree that small and medium-sized businesses need help to be more successful even though many industries (finance, health, technology, pharmaceuticals) are viewed as areas of concern.
Too many Americans lack access to dental care, especially in underserved areas. Forty-four percent of people below the federal poverty level have untreated dental decay compared to just 9.5 percent of those above 400 percent of the federal poverty level.
The consequences of untreated decay and periodontal disease – slowly destructive gum infections – include increased risk of cancers, cardiovascular diseases, Alzheimer’s disease, and pre-term delivery among pregnant women. Furthermore, poor oral health can change how people eat, work and live their lives. Oral health reflects people’s social determinants of health and can reinforce poverty.
Last week PPI returned to Des Moines for a second “Conversation with Iowans,” this time about progressive alternatives to nationalized health care. The ideas forum featured former Colorado Gov. and presidential aspirant John Hickenlooper, Theresa Greenfield, a Des Moines business owner, PPI President Will Marshall and yours truly.
A strong turnout and often impassioned debate underscored that health care — the fear of losing it or not being able to afford it — is still a burning issue for Americans, just as it was during last year’s midterm election. Many participants told gut wrenching personal stories about their maddening interactions with our complex and costly health delivery system. One woman, for example, relayed how her Type 1 diabetes diagnosis had led to multiple hospital stays, medical debt, and anxiety every month over covering her insulin costs.
The U.S. economy is chugging toward a new record for longest expansion, and middle-class families, finally, are seeing decent wage gains. Yet our political leaders, as if stuck in a time warp, keep peddling a bleak narrative of economic victimhood and defeatism. 2020 is Democrats’ chance to channel and implement radically pragmatic, empowering, and innovative economic ideas.
On the other side, the Demsocs want Democrats to reject free enterprise in favor of a left-wing version of Trump’s splenetic and divisive populism. Instead, Democrats should channel the spirit of FDR and present voters with a hope-inspiring plan for how a reinvigorated private sector and government can work together to restore shared prosperity.
When it comes to health care, Americans could not face a clearer choice. Progressives believe all Americans should have access to affordable, high-quality health coverage. Republicans want to kill the Affordable Care Act – thereby depriving an additional 17 million Americans of insurance – and have no credible plan to replace it. Too often, however, the health care debate focuses on how to pay for health insurance rather than how to deliver better health care.
PPI believes producing better outcomes at lower prices must be the first principle of health care reform, and share a vision for health care reform in Des Moines, Iowa on Friday, April 12th.
The global App Economy started in 2007, when Apple introduced the first iPhone. Apple’s opening of the App Store in 2008 – followed by Android Market (later renamed Google Play), Blackberry App World (later renamed Blackberry World) and other app stores – created a way for developers to write mobile applications (“apps”) that could run on smartphones anywhere. These apps became an essential part of daily life for most people – and an indispensable tool for business.
The rise of the App Economy has unleashed an abundance of “app developers.” These workers create, maintain, and support an ever-expanding range of apps. Mobile games are the most visible part of the App Economy, but certainly not the only component of it. Mobile apps include such key uses as shopping applications, home banking programs, smart automobile interfaces, healthcare apps for monitoring patients, and sophisticated apps for running manufacturing plants.
The extent of the App Economy workforce in a country reflects how quickly that country is embracing the next stage of the Information Revolution, which depends on mobile technology to digitize physical industries such as manufacturing and healthcare.
However, official economics statistics do not provide an easy way to measure the size of the App Economy. In response, PPI developed a methodology based on a systematic analysis of online job postings. In particular, we look for job postings that call for app-related skills such as knowledge of the iOS, Android, or Blackberry operating systems (though support for the Blackberry operating system is currently scheduled to cease at the end of 2019).
Based on this methodology, in this paper we provide an employment analysis of Canada’s App Economy. We provide an estimate of the total number of App Economy jobs; a breakdown of the jobs among iOS, Android, and Blackberry ecosystems; and an estimate of App Economy jobs by province. In particular, we estimate that Canada has 262,000 App Economy workers as of November 2018.
THE DEFINITION OF AN APP ECONOMY JOB
For this study, a worker is in the App Economy if he or she is in:
An IT-related job that uses App Economy skills – the ability to develop, maintain, or support mobile applications. We will call this a “core” App Economy job. Core App Economy jobs include app developers; software engineers whose work requires knowledge of mobile applications; security engineers who help keep mobile apps safe from being hacked; and help desk workers who support use of mobile apps.
A non-IT job (such as human resources, marketing, or sales) that supports core App Economy jobs in the same enterprise. We will call this an “indirect” App Economy job.
A job in the local economy that is supported by the income flowing to core and indirect App Economy workers. These “spillover” jobs include local retail and restaurant jobs, construction jobs, and all the other necessary services.
To estimate the number of core App Economy jobs, we use a multi-step procedure based on data from the universe of online job postings. Then the number of indirect and spillover jobs is estimated using a conservative job multiplier. The methodology is described in detail in previous research (2).
CANADA’S APP ECONOMY
Table 1 presents two pieces of information. First, we estimate Canada has 262,000 App Economy jobs as of November 2018. We also break down the total by ecosystem, finding the iOS ecosystem includes 200,000 jobs, the Android ecosystem includes 199,000 jobs, and the Blackberry ecosystem includes 27,000 jobs. The three sum to more than the total because many App Economy jobs belong to multiple ecosystems.
Using a different methodology, the Information and Communications Technology Council (ICTC) estimated total App Economy and related employment in Canada at 51,700 in its 2012 report, “Employment, Investment, and Revenue in the Canadian App Economy” (3). We infer from this that Canadian App Economy jobs roughly quintupled from 2012 to today. That’s consistent with what we have seen for the United States over the same time period.
Now we compare Canada to some of its industrialized peers. In absolute numbers, Canada’s App Economy is relatively small. But, when we adjust for country size, Canada is doing very well. App intensity represents the number of App Economy jobs divided by total employment, where the latter figure is drawn from the International Labor Organization for standardization.
Canada’s app intensity of 1.4 percent ranks ahead of the United States, the United Kingdom, Germany, and Japan – and only slightly behind Korea.
Canada’s relative success can be attributed in part to its prioritization of digital connectivity and skills. Digital Canada 150 aimed to create jobs and economic growth by, among other things, connecting rural areas to high-speed Internet and investing in Canadian businesses and consumers through technology integration and skills development (4). Accomplishments include extending high-speed Internet to an additional 356,000 households, completing multiple spectrum auctions to improve wireless service, investing an additional $200 million to help entrepreneurs learn about IT technologies, and supporting up to 3,000 internships in high-demand fields. These types of policies help increase access to and employment in the App Economy.
GEOGRAPHIC DISTRIBUTION
Our methodology also allows us to look at the geographic distribution of App Economy jobs by province – breaking out the different ecosystems. If we estimate fewer than 500 jobs in a region, we don’t report the number. Not surprisingly, Ontario leads in App Economy jobs, followed by Quebec and British Columbia. Also not surprisingly, the Blackberry ecosystem jobs are concentrated in the company’s home province of Ontario.
EXAMPLES OF APP ECONOMY JOBS
The Canadian App Economy is vibrant across a wide range of industries and geographies. As of October 2018, digital studio Adfab was searching for a front-end developer in Montréal with App Economy skills. Mobile device solutions firm Asset Science was seeking a mobile application developer with iOS and Android experience. Mango Software Inc. was looking for an Android developer in Montréal. IT firm CORE Resources was hiring a senior software engineer with Android experience in Mississauga.
Looking at Ontario in particular, as of October 2018, mapping software company Avenza Systems Inc. was searching for a full stack developer with experience in iOS and Android app development in Toronto. Life insurance company Manulife was seeking a senior Android developer in Kitchener. Digital billing company Sensibill was looking for a software developer with Android and iOS experience in Toronto. Household labor marketplace AskforTask was hiring a senior Android developer in Toronto.
As of October 2018, commercial contractor Flynn Group of Companies was hiring a mobile iOS developer in Mississauga, Ontario. Airline software firm NAVBLUE was seeking a software developer in Waterloo, Ontario. Fintech company Borrowell was looking for a React Native developer with experience building iOS and Android apps in Toronto. Consulting firm Neel-Tech Inc. was searching for an iOS developer in Mississauga.
In Quebec, as of October 2018, drone company Microdrones was hiring a senior Android developer in Vaudreuil-Dorion. Event app company Greencopper was seeking a mobile developer with iOS and Android experience in Montréal. Mobile payment company Mobeewave was searching for a mobile Android developer in Montréal. IT firm SolidByte was looking for a programmer with knowledge of iOS and Android programming in Montréal.
British Columbia has plenty of App Economy activity as well. As of October 2018, payment technology firm Alpha Pay was looking for an iOS or Android mobile developer in Richmond, British Columbia. Financial cloud company Global Relay was hiring a senior Android developer in Vancouver. Shopping app company StylePixi was seeking an iOS developer in Vancouver. Digital development firm Atimi was searching for a senior native mobile developer with iOS experience in Vancouver.
Considering Alberta, as of October 2018, GPS company Trimble Inc. was hiring a software engineer with iOS and Android experience in Calgary. Digital production firm Division [1] Media Corp was looking for a mobile app developer in Edmonton. The University of Alberta was searching for a lead software engineer with experience in Android and iOS in Edmonton. Aviation company Air Trail was seeking an intermediate iOS developer in Edmonton.
And the App Economy has spread even further. In Winnipeg, Manitoba, Pollard Banknote Limited – a leading supplier of instant lottery tickets – was hiring a senior applications developer with experience in mobile app development. In Saskatoon, Saskatchewan, Affinity Credit Union was searching for an iOS developer. In Fredericton, New Brunswick, Welltrack – a company that provides a suite of interactive self-help tools – was looking for a mobile developer. And in Bedford, Nova Scotia, IBM’s Client Innovation Centre was hiring a mobile application developer for iOS and Android.
Canadians are developing apps for the rest of the world, not only Canada. One well-known Canadian app that has spread globally is the messaging mobile app Kik, which was created in 2009 by University of Waterloo students and has 300 million users today around the world. Another example: Public transit app Transit was developed in Montréal in 2012. Today, Transit provides real-time crowdsourced data to users in 175 cities across the United States, Canada, and Europe. And well-regarded password manager 1Password, which was developed by Toronto-based AgileBits, has a global user base.
POLICY DEVELOPMENTS
As shown in this report, the Canadian App Economy has fared better in terms of scale than some of its industrial peers. Its growth since the introduction of the iPhone over a decade ago (and app intensity today) demonstrate the country is embracing the digital age and is well positioned to be a global leader. A few reforms could catalyze the next round of growth.
Unlike in the United States, where a patchwork of laws govern privacy, one law applies at the federal level in Canada – the Personal Information Protection and Electronic Documents Act (PIPEDA). But, while PIPEDA covers all health data, personal information, and employee information in one comprehensive structure, if a province has passed legislation deemed “substantially similar,” the province’s law prevails. For example, Alberta, British Columbia, and Quebec have laws in place that have been deemed substantially similar, thus serving as the prevailing law. But, as PPI has previously recognized, cross-border data flows means multiple regulatory regimes can be burdensome, unclear, and even contradictory for app developers – slowing the digitization of physical industries and economic growth.
The Canadian government began a review of its Broadcasting and Telecommunications Acts in 2018, with the intent of modernizing its legislative framework after the invention of new technology – particularly streaming services otherwise known as “over-the-top” (OTT) providers (5). OTT providers are those companies delivering video streaming, voice calls, or messaging via the Internet, without requiring users to subscribe to a traditional cable, satellite, or phone service. Policymakers should be cautious of taking a heavy-handed regulatory approach that would slow growth and, instead, should opt for a balanced approach that both promotes competition without jeopardizing the cost savings this technology has afforded consumers.
Lastly, according to the Information and Communications Technology Council’s latest ICT Labor Outlook, Canada will need an additional 216,000 ICT professionals by 2021 (6). Programs designed to incorporate and lower the cost of ICT skills development could help close this shortage. To that end, in their recent report on innovation and competitiveness, Canada’s Economic Strategy Tables recommend expanding on existing work-integrated learning opportunities, adopting portable competency-based credentials, and consolidating and streamlining skills and talent programming (7).
CONCLUSION
Canada has a vibrant App Economy that spans the iOS, Android, and Blackberry ecosystems. Compared to most of its industrialized peers, Canada’s app intensity is high, and represents a wide diversity of locations and jobs. Policy reforms such as streamlining privacy laws, taking a balanced regulatory approach when it comes to OTT providers, and closing the skills gap could help catalyze future growth.
1) PPI has issued App Economy reports on the United States, Japan, Vietnam, Indonesia, Korea, Thailand, Mexico, Brazil, Colombia, Argentina, Chile, and most of the countries of the European Union, including the United Kingdom, Germany, and France. Most notably, we have not yet issued reports on China and India.
2) A description of the methodology can be found in the appendix to Michael Mandel and Elliott Long, “The App Economy in Europe: Leading Countries and Cities, 2017,” Progressive Policy Institute, October 2017. https://www.progressivepolicy.org/wp-content/uploads/2017/10/PPI_EuropeAppEconomy_17.pdf
3) “Employment, Investment, and Revenue in the Canadian App Economy,” October 2012, Information and Communications Technology Council. https://www.ictc-ctic.ca/wp-content/uploads/2012/10/ICTC_AppsEconomy_Oct_2012.pdf
4) “Digital Canada 150,” Industry Canada. https://www.ic.gc.ca/eic/site/028.nsf/eng/home#item5
5) Canadian Heritage, “Government of Canada launches review of Telecommunications and Broadcasting Acts,” June 5, 2018. https://www.newswire.ca/news-releases/government-of-canada-launches-review-of-telecommunications-and-broadcasting-acts-684595661.html
6) “The Next Talent Wave: Navigating the Digital Shift – Outlook 2021,” Information and Communications Technology Council. https://www.ictc-ctic.ca/wp-content/uploads/2017/07/ICTC_Outlook-2021-ENG-Final.pdf
7) “The Innovation and Competitiveness Imperative Seizing Opportunities for Growth,” Canada’s Economic Strategy Tables. https://www.ic.gc.ca/eic/site/098.nsf/vwapj/ISEDC_SeizingOpportunites.pdf/$file/ISEDC_SeizingOpportunites.pdf
Apple introduced the first iPhone in 2007 just as the Global Recession was about to begin. While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones and the wave of smartphones that followed provided a rare force for growth.
The smartphone also triggered a new era for job creation around the world. Apple opened the App Store in 2008, followed by Android Market (now Google Play) and other app stores. This unexpected “side-effect” of the smartphone quickly took on a life of its own, creating a whole new class of iOS and Android developers who were writing mobile applications that could run on smartphones anywhere.
It’s not an exaggeration to speak of a global App Economy, with an army of app developers writing mobile applications for billions of users. For businesses, apps have become the essential front door for their customers, providing access to everything from shopping to customer service to banking services to entertainment to information to essential health knowledge.
What’s more, the App Economy still has room to grow. Internet of Things (IoT) mobile connections are estimated to reach 4.1 billion by 2024, increasing at an annual growth rate of 27 percent.2 Consumers and businesses are increasingly interfacing with physical objects and processes through their smartphones and tablets via the IoT. Companies and individuals are utilizing apps to control everyday items and processes such as smart homes, e-commerce shopping, manufacturing analytics, smart. This report updates our 2017 paper, “The Rise of the Australian App Economy”.
Despite growth in gross domestic product, corporate profits, and the stock market over the past several years, American workers today capture a historically low share of those economic benefits. The labor share of income today is several percentage points lower than the postwar average and, after adjusting for inflation, median compensation today is only about 10 percent higher than in the mid-1970s.
More American workers would benefit directly from economic growth if they had an ownership stake in the companies where they work. To help achieve this goal, Congress should encourage more companies to adopt employee stock ownership plans (ESOPs), which provide opportunities for workers to participate in a company’s profits and share in its growth. Firms with ESOPs enjoy higher productivity growth and stronger resilience during downturns, and employees enjoy a direct stake in that growth. ESOP firms also generate higher levels of retirement savings for workers, thereby addressing another crucial priority for American workers.
While the tax code encourages employee ownership through certain policy incentives, not all businesses benefit equally from these measures. Expanding ESOP tax incentives for S corporations, a large and growing share of U.S. companies, can help ensure that more Americans have access to the economic benefits that ESOPs provide.
THE CHALLENGE: AMERICAN WORKERS AREN’T FULLY BENEFITING FROM ECONOMIC GROWTH
In the last two months of 2018, average hourly earnings for American workers rose by three percent (year-over-year). This was the first time that nominal wage growth had broken the three percent mark in nearly 10 years (1). Yet on an inflation-adjusted basis, the real hourly wages of American have been more or less flat for 40 years. Today, they’re only about 10 percent higher than in the 1970’s (2).
Wage stagnation fuels economic anxiety, as workers and their families find it difficult to pay bills and cover the basic costs of living. Partly as a result, Americans take on debt: aggregate household debt reached a new peak in September 2018, surpassing the previous high (in 2008), of $12.68 trillion (3). More and more people feel like they’re running faster but not getting ahead, and loading up on debt just to stay in place. This exacerbates political anger, as Americans get frustrated with government’s apparent inability to help them escape this vicious cycle.
Workers’ share of economic growth is historically low
From the late 1940s through the 1980s, the share of economic output accruing to workers as compensation was fairly constant at between 61 and 64 percent but has since fallen to between 56 and 58 percent (4). That translates into billions of dollars of economic value that would have formerly gone to workers. Meanwhile, GDP and corporate profits have grown strongly in recent years–thanks in part to corporate tax cuts–with the latter even setting new records in 2018 (5).
Wage stagnation has worsened workers’ retirement security
One especially worrisome consequence of the lack of wage growth is that workers have less capacity to save. In particular, Americans face a crisis in retirement security: nearly two-thirds of working-age Americans have no retirement assets of any kind (6).
The median amount saved for retirement is, in fact, $0; if only workers with retirement savings are counted, the median is only $40,000 (7). Just 51 percent of workers have access to an employer-provided savings plan, such as a 401(k) (8). Small business employees have the least access: according to some estimates, less than 20 percent of businesses with fewer than 50 employees offer retirement plans (9).
THE GOAL: PROVIDE MORE AMERICAN WORKERS WITH A CHANCE TO SHARE IN THE PROFITS AND GROWTH OF THEIR EMPLOYERS
How can workers get a bigger share of the economic growth they help create, along with stronger financial security? One way to achieve this goal could be to impose rigid top-down mandates on companies requiring higher wages or benefits, but this approach invites resistance, potentially stifles growth, and may not achieve the intended aims of improving workers’ economic security. A better approach is to encourage more companies to provide workers with an ownership stake in their employers, such as through an employee stock ownership plan (ESOP).
ESOPs are a proven way to help workers participate in business growth while generating a host of social and economic benefits, including greater opportunities for economic security. Research has consistently found that companies with ESOPs enjoy stronger growth in productivity and profits than other firms, so employees get a larger share of a faster-growing pie (10). The wage distribution at employee-owned firms is tighter than in non-ESOP companies, meaning that greater employee ownership can help put at least a small dent in income inequality (11). ESOP companies have also demonstrated stronger economic resilience and job stability than other firms, particularly during economic downturns (12).
Employee-owned companies also offer greater retirement security. Critics of ESOPs have raised the possibility of a lack of diversification in employees’ retirement holdings if a large share is concentrated in their company’s shares. Yet research has established that ESOP companies are actually more likely to also set up diversified 401(k) accounts as secondary retirement plans (13). And, ESOPs are legally required to help plan participants diversify their investments.
While ESOPs might have more public visibility in the context of large employers, more and more small businesses are discovering the benefits of employee ownership as well. Today, roughly 10 percent of private-sector employees in the United States work in ESOP companies (14). The fastest growth in ESOP adoption has been among S corporations, which are also a fast-growing form of business organization (15). The ESOP model is promising for employers of all sizes, boosting the ability of their employees to save for retirement. As the Chief Financial Officer of the engineering and construction firm MMC Contractors in Kansas City told PPI: “There’s no way [our employees] would have accrued the type of retirement benefits they have but for the ESOP. Some of them will have a nicer standard of living when they retire than they do today” (16).
THE PLAN: EQUALIZE TAX TREATMENT FOR EMPLOYEE-OWNED BUSINESSES TO ENCOURAGE WIDER SPREAD OF THIS MODEL
Originally authorized in 1974, policy incentives have expanded to encourage ESOP adoption by more companies (17). Just last year, the 115th Congress passed the Main Street Employee Ownership Act which, among other things, made employee-owned businesses eligible for Small Business Administration loan guarantees (18). States have also taken action to encourage more employee ownership: in 2017, bipartisan legislation passed in Colorado establishing a new office and revolving loan fund to support transitions to ESOPs (19).
Yet more can and should be done to incentivize the use of ESOPs–in particular, pass-through S corporations should have access to all the ESOP tax benefits that accrue to traditional C corporations. While they now represent a small fraction of U.S. companies, C corporations employ nearly half the workforce because they are typically the entity of choice for large companies and are subject to the corporate income tax.
An S corporation, on the other hand, does not pay the corporate income tax; rather, income is “passed through” to shareholders and taxed as ordinary income. S corporations are now the second-most common form of business organization in the United States (after sole proprietorships) (20). There are two-thirds more S corporations than C corporations, and S corporations have grown more rapidly in number and income over the past two decades. In fact, they have been the fastest-growing business entity since the 1980s (21).
Both types of corporations may sponsor an ESOP, but C corporations enjoy an ESOP tax benefit not currently available to S corporations. When a company transitions to an ESOP, its current shareholders sell their shares to the ESOP, which in turn distributes shares to employees. The difference is in the tax treatment of the profits from the sale of those shares to the ESOP. Under section 1042 of the Internal Revenue Code, the owners of a C corporation who choose to sell stock to an ESOP can put off the tax liability on the gains for that sale (22). But, when owners of an S corporation sell stock (or the entire company) to an ESOP, gains from the sale are taxed immediately.
This erects a barrier to ESOP adoption by S corporations and matters especially for business owners nearing retirement. In the United States, 57.5 percent of the owners of employer firms (that is, those with employees) are between the ages of 45 and 64 (23). Another 19.6 percent are over age 65, and more than half of the youngest companies are owned by individuals over 45 (24). When asked about their exit strategy, selling to employees is low in the list–14 percent say they will simply walk away, and nearly one-third have no exit strategy. Alarmingly, the businesses whose owners have no exit strategy employ the largest number of people (25). Facilitating the sale of S corporations to ESOPs will give business owners a stronger exit strategy option, and help businesses stay in their communities.
Extending to S corporations the same tax benefit that C corporations receive when adopting an ESOP will create broader awareness of this option for businesses, spreading the benefits of ESOPs to more people.
Congress should extend IRC 1042 to S corporations. This will continue to expand the benefits of ESOPs, not least because S corporations are much more numerous than C corporations. Additionally, S corporations with ESOPs (known as S-ESOPs) have been shown to have high resilience in recessions, higher wages than other firms, and stronger retirement holdings for employees (26). S-ESOPs are also more likely to offer additional retirement plans than other businesses are to offer any retirement plan. Uneven tax treatment potentially denies these benefits to millions of American workers and business owners.
Such a change was proposed in bipartisan legislation introduced in the Senate in January 2019 at the beginning of the 116th Congress: the Promotion and Expansion of Private Employee Ownership Act would allow S corporations to defer tax upon transition to an ESOP. Sponsored by Sens. Pat Robers (R-KS) and Ben Cardin (D-MD), the bill has attracted 24 co-sponsors from both sides of the aisle. In the House, in 2017, similar legislation was introduced by Reps. Dave Reichert (R-WA) and Ron Kind (D-WI).
American workers have endured wage stagnation for too long. They deserve a large share of the growth they help create. ESOPs help deliver that, and they help drive greater business productivity in the process. At the same time, ESOPs increase retirement security, and making their adoption easier will be good for business owners, too.
ENDNOTES
Economic Policy Institute, Nominal Wage Tracker (based on data from Bureau of Labor Statistics) https://www.epi.org/nominal-wage-tracker/
Drew Desilver, “For most U.S. workers, real wages have barely budged in decades,” Pew Research Center, August 7, 2018 https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/
Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, 2018:Q3, November 2018 https://www.newyorkfed.org/microeconomics/hhdc.html.
Michael D. Glandrea and Shawn A. Sprague, “Estimating the U.S. labor share,” Monthly Labor Review, February 2017 https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-labor-share.htm.
Robert Hughes, “Corporate Profits Hit a New Record as GDP Growth is Revised Higher,” American Institute for Economic Research, August 29, 2018 https://aier.org/article/corporate-profits-hit-new-record-gdp-growth-revised-higher.
Jennifer Erin Brown, Joelle Saad-Lessler and Diane Oakley, “Retirement in America: Out of Reach for Working Americans?” National Institute on Retirement Security, September 2018, https://www.nirsonline.org/wp-content/uploads/2018/09/FINAL-Report-.pdf
Jennifer Erin Brown, Joelle Saad-Lessler and Diane Oakley, “Retirement in America: Out of Reach for Working Americans?” National Institute on Retirement Security, September 2018, https://www.nirsonline.org/wp-content/uploads/2018/09/FINAL-Report-.pdf
Jennifer Erin Brown, Joelle Saad-Lessler and Diane Oakley, “Retirement in America: Out of Reach for Working Americans?” National Institute on Retirement Security, September 2018, https://www.nirsonline.org/wp-content/uploads/2018/09/FINAL-Report-.pdf
John Rekenthaler, Jake Spiegel, and Aron Szapiro, “Small Employers, Big Responsibilities: How Policymakers Can Address the Small Retirement Plan Problem,” Morningstar, November 2017
Steven F. Freeman and Michael Knoll, “S Corp ESOP Legislation Benefits and Costs: Public Policy and Tax Analysis,” University of Pennsylvania, Center for Organizational Dynamics, July 2008
Jared Bernstein, “Employee Ownership, ESOPs, Wealth, and Wages,” Employee-Owned S Corporations of America (ESCA), January 2016
Phillip Swagel and Rober Carroll, “Resilience and Retirement Security: Performance of S-ESOP Firms in the Recession,” McDonough School of Business, Georgetown University, March 2010; Steven F Freeman and Michael Knoll, “S Corp ESOP Legislation Benefits and Costs: Public Policy and Tax Analysis,” University of Pennsylvania, Center for Organizational Dynamics, July 2008
Jared Bernstein, “Employee Ownership, ESOPs, Wealth, and Wages,” Employee-Owned S Corporations of America (ESCA), January 2016
Alex Brill, “An Analysis of the Benefits S ESOPs Provide the U.S. Economy and Workforce,” Matrix Global Advisors, July 2012
Interview with Dave Cimpl, Chief Financial Officer at MMC Contractors. Cimpl is also the chairman of ESCA
Steven F. Freeman and Michael Knoll, “S Corp ESOP Legislation Benefits and Costs: Public Policy and Tax Analysis,” University of Pennsylvania, Center for Organizational Dynamics, July 2008
Steve Dubb, “Historic Federal Law Gives Employee-Owned Businesses Access to SBA Loans,” Nonprofit Quarterly, August 14, 2018 https://nonprofitquarterly.org/2018/08/14/employee-owned-businesses-sba-loans/
HB17-1214, “Encourage Employee Ownership of Existing Small Business,” https://leg.colorado.gov/bills/hb17-1214
Scott Greenberg, “Pass-Through Businesses: Data and Policy,” Tax Foundation, January 17, 2017, at https://taxfoundation.org/pass-through-business-data-and-policy/; Aaron Krupkin and Adam Looney, “9 facts about pass-through businesses,” Brookings Institution, May 15, 2017, https://www.broookings.edu/research /9-facts-about-pass-through-businesses/#fact4
Richard Prisinzano, Jason DeBAcker, John Kitchen, Matthew Knittel, Susan Nelson, and James Pearce, “Methodology to Identify Small Businesses,” Technical Paper 4 (Update), Office of Tax Analysis, Department of Treasury, November 2016, https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/TP4-Update.pdf
To qualify for deferral, the proceeds of a section 1042 sale must be reinvested in “qualified replacement property” (QRP) defined as stock in another business. Once the QRP is sold, capital gains taxes apply
Census Bureau, Annual Survey of Entrepreneurs, 2016, at https://www.census.gov/programs-surveys/ase.html (This is the latest year for which data are available)
Census Bureau, Annual Survey of Entrepreneurs, 2016, at https://www.census.gov/programs-surveys/ase.html (This is the latest year for which data are available)
Census Bureau, Annual Survey of Entrepreneurs, 2016, at https://www.census.gov/programs-surveys/ase.html (This is the latest year for which data are available)
Phillip Swagel and Rober Carroll, “Resilience and Retirement Security: Performance of S-ESOP Firms in the Recession,” McDonough School of Business, Georgetown University, March 2010
EY, “Contributions of S ESOPs to participants’ retirement security,” Paper prepared for the Employee-Owned S Corporations of America, March 2015
On Donald Trump’s watch, America is losing what is probably the most important new manufacturing opportunity in the world–the global race to produce affordable electric vehicles that people want to drive. The United States currently accounts for just 20 percent of global electric vehicle production, far behind China.
Jumpstarting U.S. production and purchase of Electric Vehicles (EVs) would produce an unprecedented set of benefits, including cleaner air and a reduction in greenhouse gas emissions; a resurgence of the U.S. auto industry and American manufacturing; the creation of millions of new, good, middle class manufacturing jobs; lower consumer costs for owning and operating vehicles; and the elimination of U.S. dependence on foreign oil. U.S. automakers are already moving toward EVs, but the pace of this transition is lagging behind our foreign competitors. A dramatic expansion of tax credits for EV purchases could go a long way toward boosting the U.S. EV industry as part of a broader agenda to promote the evolution of the transportation industry away from carbon-intensive fuels.
THE CHALLENGE: THE US ELECTRIC VEHICLE INDUSTRY IS FALLING BEHIND ITS GLOBAL COMPETITORS
Leading experts predict (1) that electric vehicles will be the key to global auto industry growth over the next years and decade—from about 1.1 million EVs last year to 30 million by 2030. Ominously, however, China is already dominating (2) the emerging EV market, with about 40 percent of global production, and plans to expand even more rapidly over the next few years. The United States, on the other hand, currently produces only about 20 percent of the world’s EVs and is moving too slowly on the EV transition.
Electric vehicles account for just 0.3 percent of the total U.S. fleet
U.S. EV production is small – fewer than 200,000 were manufactured (3) here last year, accounting for less than 0.3 percent of the total U.S. fleet. Production is also not growing nearly fast enough. Out of the roughly 350 million vehicles on the road today, a little more than 1 million are electric.
Electric vehicles are too pricey for most consumers or are not offered in models consumers want
Most Americans cannot afford more expensive EVs—like the high-end Tesla models—that have dominated (4) the market so far. For example, two of the top three selling models in 2017 cost well over $80,000 a vehicle. The second selling model, the more affordable Chevy Bolt (still more than $36,000), sold only about 25,000 units in 2017. And the EVs that are affordable are not available in the models—especially SUVs, minivans and light trucks—that most consumers prefer, and that provide higher profit margins for automakers. As a consequence, fewer than 2 percent of the more than 17.3 million new American car purchases in 2017 were of plug-in hybrid electric vehicles or battery-electric vehicles.
THE GOAL: MAKE AMERICA THE GLOBAL LEADER IN EV MANUFACTURING, PRODUCTION, AND DEPLOYMENT
The aim of America’s EV policy should be to quickly gain by far the largest part of the global EV market penetration by reaching the mass market of average domestic and international consumers of high volume models. Doing this can rapidly help lower consumer costs, cut emissions, end oil imports, reduce pollution, and prompt a resurgence of domestic auto manufacturing. Specifically, the United States should set a goal of producing more than 50 percent of the global EV production—or 15 million vehicles a year–by 2030.
Fifteen years ago, the U.S. allowed Chinese subsidies to displace U.S manufacturers and dominate the global race for solar panel manufacturing—and today China owns more than (5) 60 percent of the global market. America cannot allow that to happen with EVs, which under any scenario will be an essential part of the next generation of global clean energy technology and auto manufacturing.
Electric Vehicles at scale will bring America remarkable, one of a kind benefits. For instance, EVs can dramatically reduce air pollution, which is among the leading causes of lung disease, lower life expectancy and asthma among Americans. Transitioning to EVs will also reduce America’s largest source of greenhouse gas emissions—transportation. EVs have less than half the GHG emissions of gasoline-powered cars, and are getting even cleaner every year (6). An average U.S. EV today has greenhouse gas emissions equivalent to a gasoline car getting 80 MPG (7). EVs will only get higher gasoline equivalent mileage over time.
At the same time, EVs will save U.S. consumers money because of much lower fuel and vehicle operating costs (8). The total cost of owning and operating an EV is already cheaper than oil-fueled cars (9). The U.S. average price per gallon of gasoline is $2.50 while it costs less than half that–$1.10 per eGallon–to charge an electric car, according to the U.S. Department of Energy (10).
Finally, widescale deployment of EVs will also help end America’s reliance on imported oil. Today, the US imports about 20 percent of its oil, including from non-Democratic petro-states like Saudi Arabia and Venezuela.
Gaining American global leadership in one of the world’s the fastest growing major manufacturing sectors will provide the United States a huge economic boost and create an export market for U.S. EVs around the world. Boosting the American EV industry will also bring ancillary benefits to the nation’s overall efforts for a clean-energy transition. For example, large scale EV deployment will enable the creation of a huge distributed network of electricity storage units—that is, car batteries themselves plugged into the electricity grid, especially at night. This network will allow greater electricity storage at scale that in turn will allow major electric grids around the country to integrate higher percentages of clean solar and wind energy. In essence, electrifying transport will therefore help reduce emissions from both the transport and electricity sectors, the two highest emitters in the U.S. economy.
THE SOLUTION: DRAMATICALLY EXPAND AND IMPROVE TAX CREDITS FOR CONSUMER PURCHASES OF ELECTRIC VEHICLES
There is no doubt America has the capacity to lead the EV revolution. America has unrivaled technical expertise, a skilled work force, and innovative entrepreneurs and investors (11). But current half-hearted U.S. tax policies on EVs are not coming anywhere near immediately seizing this massive opportunity as other countries threaten to pull so far ahead that we cannot catch up.
One powerful way to speed the revolution is through more robust tax incentives that can boost the pace of technological evolution of U.S. companies and adoption of EVs by the transportation sector as a whole.
For example, existing federal tax credits are not nearly enough to drive the change and scale of EVs that are needed to gain full benefits. The current federal tax credit system, while well intended, has so far been ineffective. It offers $7,500 for the purchase of any all-electric vehicle, but caps the credit at 200,000 vehicles per manufacture, with rapidly reduced credit amounts after that threshold. Several Members of Congress have proposed (12) extending the existing $7,500 credit with no cap per manufacturer, but do not propose changing the overall structure of the credit. These changes are highly unlikely to drive large rapid electrification of the US fleet.
What Congress should do instead is provide American consumers with much more generous tax credits for the purchase of more affordable EV models that Americans actually want and can afford, including minivans, SUVs, and light trucks.
In particular, Congress should provide a consumer tax credit that is the more generous for cheaper vehicles than for expensive ones, thereby encouraging the sale of more affordable electric vehicles. For instance, this credit could be structured on a graduated scale as follows: $7,500 for vehicles priced under $35,000; $5,000 for those under $50,000; $2,500 for those under $75,000; $1,500 under $100,000.
Opinion polls find that nearly three quarters of consumers say a tax credit would affect their decision to buy an EV, and 63 percent say a credit is an important measure to support EV adoption. However, the tax credit must be applicable to cars Americans want to buy to achieve volume and scale (13).
In addition to the graduated tax credit described above, Congress should also provide an extra consumer tax incentives for “trading-in” low mileage “gas guzzlers” for the purchase of an EV to quickly turn over fleet and eliminate the most inefficient, polluting vehicles. Moreover, Congress should provide manufacturer tax credits within each class of vehicle, including SUVs, minivans and light trucks, to drive rapid production and demand for popular models. Finally, to encourage rapid growth and large-scale production, the manufacturer tax credit should become greater for production over a certain high total threshold of vehicles produced.
The tax credits described above can go a long way toward speeding the nation’s transition to EVs while boosting U.S. EV leadership. Nevertheless, these tax credits cannot be effective if offered alone. Rather, they must be offered in concert with a robust, comprehensive agenda to accelerate electric vehicle adoption.
Crucially, the federal government and the states will need to invest in public and private incentives for building out a network of electric charging stations through much needed infrastructure modernizing legislation. Congress should also require that the federal government purchase US-made EVs for most purposes (and other alternative vehicles like Compressed Natural Gas or Fuel Cells as needed for other uses like buses and heavy-duty trucks);
The federal government could also raise Corporate Average Fuel Economy (CAFÉ) standards for an added push toward EVs. And in order to gain the full reductions in air pollution and greenhouse gas emissions, Congress will need to make sure that the electricity sector relies on increasingly clean energy sources.
America cannot afford to lose the EV race, the most important manufacturing opportunity of our time. By creating a comprehensive program to jumpstart the production and purchase of the electric cars and trucks Americans want and can afford, Congress can help the nation take a dramatic, yet pragmatic, step forward toward growing the economy, cutting oil use and consumer costs, improving air quality and combatting climate change.
ENDNOTES
1) “Electric Vehicle Outlook 2018 | Bloomberg New Energy Finance.” Bloomberg NEF. https://about.bnef.com/electric-vehicle-outlook/.
2) Niu, Isabelle. “Your next Car Could Be Electric-and Chinese.” Quartz. November 15, 2018.
3) Kane, Mark. “US All-Electric Car Sales Charted: November 2018.” Inside EVs. December 30, 2018.
4) “Top-selling Electric Cars in the United States 2017 | Statistic.” Statista. https://www.statista.com/statistics/257966/best-selling-electric-cars-in-the-united-states/.
5) Beinhart, Larry. “Why China, and Not the US, Is the Leader in Solar Power.” Al Jazeera. August 22, 2018.
6) Nealer, Rachael, David Reichmuth, and Don Anair. “Cleaner cars from cradle to grave: How electric cars beat gasoline cars on lifetime global warming emissions.” Union of concerned scientists report (2015).
7) Reichmuth, David. “New Data Show Electric Vehicles Continue to Get Cleaner.” Union of Concerned Scientists (blog), March 8, 2018. https://blog.ucsusa.org/dave-reichmuth/new-data-show-electric-vehicles-continue-to-get-cleaner.
8) Richardson, Jake. “Electric Vehicles Reduce Toxic Air Pollution – Pollution That Hurts & Kills Humans.” CleanTechnica. May 12, 2018.
9) “Electric Vehicles Have Lowest Total Cost Of Ownership, Study Finds.” CleanTechnica. February 05, 2018.
10) “EGallon: Compare the Costs of Driving with Electricity.” Energy.gov. February 9, 2019. https://www.energy.gov/maps/egallon.
11) Kljaic, Vanja. “U.S. Electric Car Battery Production Is Lacking, Says Expert.” Inside EVs. October 7, 2018. https://insideevs.com/us-electric-battery-production-lack/.
12) U.S. Senate. Jeff Merkley. “MERKLEY, HEINRICH, CORTEZ MASTO INTRODUCE LEGISLATION TO EXTEND ELECTRIC VEHICLE TAX CREDIT FOR 10 YEARS.” News release, September 17, 2018. U.S. Senator Jeff Merkley of Oregon. https://www.merkley.senate.gov/news/press-releases/merkley-heinrich-cortez-masto-introduce-legislation-to-extend-electric-vehicle-tax-credit-for-10-years.
13) “EV Statistics of the Week: Range, Price and Battery Size of Currently Available (in the US) BEVs.” EVAdoption. January 21, 2018. https://evadoption.com/ev-statistics-of-the-week-range-price-and-battery-size-of-currently-available-in-the-us-bevs/.
He has broken every one of those promises over the last two years. What’s more, the White House campaign to sabotage the Affordable Care Act (ACA) sparked a voter backlash that cost Republicans dearly in last year’s midterm election.
The president apparently has learned nothing from that rebuff. Having failed to pass legislation to kill the ACA, the administration is now turning to judicial activism and the courts. The Department of Justice (DOJ) announced yesterday that it is endorsing a Texas court ruling striking down the entire ACA.
Freshman Rep. Alexandria Ocasio-Cortez recently drew big cheers at the South by Southwest conference in Austin, Texas, earlier this month when she dissed the views of political moderates as “misplaced.” “Moderate is not a stance. It’s just an attitude towards life of, like, ‘meh,’” she told a standing-room only crowd. “The ‘meh’ is worshipped now — for what?”
Ocasio-Cortez’s remarks reflect an old line of attack from the progressive left: that moderates are “mushy” — timid, if not cowardly; that they value incrementalism over true progress; and, worst of all, that they are guilty of “triangulation” — the unprincipled pandering to swing voters by pushing off both left and right.
A common view among the left is that the “skills gap” – a shortage of workers with the skills employers want – is a mirage.
A new PPI report decisively debunks this myth. As author Ryan Craig explains, the skills gap is real: employers are having trouble finding enough workers with digital skills and “soft skills.”
Craig attributes these shortages to two factors: “Education friction” – the failure of higher education institutions to turn out job-ready graduates — and “hiring friction” – digital screening practices that cause employers to overlook qualified workers.
Craig offers a fresh take on why skills gaps persist, the consequences for economic growth and what he calls “economic alienation” among workers feeling left behind in today’s economy.
The last time we checked, the United States was locked in a high-stakes race with China to lead the world on digital innovation. So we’re mystified by Sen. Elizabeth Warren’s call today to break up Google, Amazon and Facebook. These are not only America’s most creative companies, but they and other large tech platforms have pioneered a global digital revolution.
They’ve grown big because they’ve been successful. That doesn’t make them perfect and, like any private enterprise large or small, they need strong public oversight and regulation. But breaking them up, absent compelling evidence that they are systematically gouging consumers or stifling competition, would be an act of stupendous economic folly.
To be sure, business consolidation and concentrated market power are real concerns. But as PPI economist Michael Mandel has demonstrated, such worries apply less to the dynamic and fiercely competitive digital ecosystem than to America’s older and more static physical industries.
Perhaps Sen. Warren is jockeying to enter a very crowded populist “lane” in the 2020 presidential nomination contest. But if she believes that anti-tech populism is broadly popular with U.S. voters, she’s mistaken. In fact, as a recent PPI poll makes clear, most Americans have a favorable view of the big tech companies, and oppose breaking them up.
Our poll found that 67 percent of likely voters view the tech companies positively, as shown in Figure 1, and 55 percent oppose breaking them up. While 60 percent of voters acknowledge they are concerned about tech companies’ handling of privacy and data protection, 71 percent of voters view tech companies as “a sign that the American economy is working.” In contrast, just 32 percent view Big Tech as “too powerful.”
Sen. Warren’s call to break up America’s tech leaders may go down well with her party’s “democratic socialist” faction. It will no doubt be applauded by European regulators, who have also drawn a bead on U.S. tech companies. But to most voters, they symbolize American ingenuity and entrepreneurial prowess. Are those qualities progressives really should oppose?
WASHINGTON – “Senator Edward J. Markey (D-Mass.) and Congressman Mike Doyle (PA-14) today unveiled a bill that will only continue to delay real action on net neutrality. Congress last passed significant legislation on our communications networks in 1996 and this new proposed bill is a continuation of the DC game of rhetoric and no action as this bill has no chance of passing Congress.
“For the last two decades, different versions of net neutrality have bounced between Congress, the FCC, the courts, and most recently within states — but even with today’s proposal, many of the issues surrounding Net Neutrality will still go unsolved.
“Bipartisan compromise on strong, permanent, clean net neutrality is clearly within reach. We are confident that a practical deal that will protect consumers, strengthen the internet, grow the digital economy, and add jobs in an evolving and modern sector is on the horizon, but this proposal doesn’t pass the smell test.
“It’s not enough to hold press conferences and introduce message bills – American consumers deserve effective action that actually solves the problem of net neutrality. The backward-looking poison pill approach we have seen so far only makes it harder to achieve. Hopefully, Democrats and Republicans in the House and Senate will work together moving forward on changes to this legislation that can get us over the finish line and deliver a lasting solution on Net Neutrality – not just more talking points and fundraising emails.
“We continue to urge Congress to solve this problem for good by enacting a strong, pro-consumer, clean net neutrality law ensuring an open internet for all that does not apply European style regulations to a true American success story: the communications sector.”
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