|Photo credit: Alamy
Economic stimulus to create jobs via broadband
The American Recovery and Reinvestment Act, enacted
by Congress in February 2009, envisaged grants to be
disbursed to implement broadband. A study attempting
to estimate the jobs that could be generated as a result
of these broadband provisions differentiated between,
on one hand, jobs generated through capital spending
in the form of grants allocated to unserved and underserved
areas and, on the other hand, employment created
as a result of network externalities caused once the
infrastructure was deployed.
The study found that approximately 127 800 jobs
could be created over a four-year period from broadband
network construction. According to the analysis,
the investment of USD 6.390 billion will generate
37 300 direct jobs over the course of the stimulus programme
(estimated to be four years). In addition, the
bill could generate 31 000 indirect jobs, and an additional
59 500 induced jobs.
In addition to network construction, the investment
in broadband would trigger new jobs as a result of
spill-over effects on the rest of the economy. The calculation
of spill-over effects was performed by selecting
those states in the United States where the percentage
of residential households which have access to at
least one broadband supplier (that is to say, primarily
telco or cable) is 93 per cent or less. There are eighteen
states that significantly lag behind the national average
broadband penetration rate. While broadband in these
states has been adopted by 47 per cent of households
(or 21 per cent of the population), the United States average
is 62 per cent (or 25 per cent of the population).
The assumption used to estimate the network effects of
the stimulus programme on employment was that the
programme would deploy enough lines to allow these
eighteen states to reach the national average, meaning
that 3,928,000 broadband subscribers would be added
to the existing base.
Job gains driven by network effects in the targeted
regions result from three combined trends: innovation
and the creation of new services; attraction of jobs
(from either other United States regions or overseas);
and productivity enhancement. The impact of innovation
on the professional services sector was estimated
by applying the ratio of productivity gains to the creation
of new employment. Then this effect was applied
to the economy of the targeted states as a whole. The
impact of broadband on outsourcing operates in two
directions: broadband can facilitate the attraction of
new jobs; and it can enable the relocation of others to
regions other than the one being targeted.
|Photo credit: AFP/HO/Ford
Because of the uncertainty regarding the number of
jobs that will be gained or lost, three scenarios were estimated:
a pessimistic scenario; a baseline scenario; and
an optimistic scenario. In addition, increased adoption
of broadband has an impact on productivity because it
is an enabler of more effi cient business processes.
The estimates point to the following conclusions.
The deployment of broadband resulting from the stimulus
programme is likely to have moderate direct employment
effects (creating 37 300 jobs over a four year
period). Indirect and induced multipliers are important,
generating a total of 127 800 jobs over four years. A
mid-range estimate of the effect of externalities on employment
results in 136 000 jobs.
In sum, a USD 6.3 billion investment in broadband
network deployment is likely to result in 263 800 jobs
over the four years of the deployment of the programme.