Broadband helps create jobs, not higher wages

Arik Hesseldahl
20 Jan 2010

Increased access to high-speed Internet connections helps create jobs, though it doesn't always result in higher wages, according to a new research report from the Public Policy Institute of California.

Areas of the U.S. that went from having no broadband provider to as many as three in the period from 1999 to 2006 had faster job growth than the rest of the country, according to the study, presented in Washington, D.C., at an event hosted by the New America Foundation, a nonpartisan think tank. Along with more jobs come additional employers and new residents who compete with workers for jobs. That in turn keeps pressure on salaries, the report says.

"This expansion in the labor supply keeps the employment rate from going up, and prevents wages and earnings from rising rapidly," says PPIC fellow Jed Kolko, a former research director at Forrester Research. "While the effect on places seems very clear, the effect on residents is somewhat ambiguous."

Because the population increases at the same time more jobs are created, the rate of joblessness changes little, Kolko says. Existing residents have to compete harder for new jobs and see no change in their chances of getting a job, according to the report.

Broadband stimulus expectations

The results may be useful in assessing the impact of government plans to spend $7.2 billion to fund grants aimed at improving access to broadband in the U.S., especially in areas that have little access to fast Web connections. "We looked at the recent past as our guide for what is likely to happen as a result of broadband stimulus initiatives designed to raise availability," Kolko says.

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