Innovation and job creation: The role of 4G

Over the years, I’ve written repeatedly about the role of innovation in creating jobs. Industries with stagnant innovation lose jobs to more dynamic competitors, while innovative industries lead the jobs parade.  For example, in July 2010 I wrote a paper entitled “The Coming Communications Boom? Jobs, Innovation and Countercyclical Regulatory Policy”, where I argued that the communications sector is going to be the jobs leader in the current expansion:

Today, the broad communications sector is an innovation success story in an otherwise sluggish economy. And that success feeds on itself. The Internet companies have access to bigger potential markets as the broadband providers deepen and extend their networks. The broadband companies benefit from innovative applications that drive traffic and demand. And the applications developers, small and large, are able to take advantage of new capabilities.

This interconnected and self-reinforcing collection of industries is reminiscent of the early stages of past booms, which were never driven by a single industry. In this case, the employment expansion of several communications-related industries, despite the overall weak labor market, is a sign that the broad communications sector is going to be a leader in the coming recovery.

Now there’s a new study from Rob Shapiro and Kevin Hassett  which provides confirmation of this thesis, as it applies to 4G.

we find that the adoption and use of successive generations of cell phones from April 2007 to June 2011, supported by the transitions from 2G to 3G, led to the creation of more than 1,585,000 new jobs across the United States. Moreover, every 10 percentage point increase in the penetration rate of 3G and 4G phones and devices occurring as we write today — in the last quarter of 2011 — should add 231,690 jobs to the economy by the third quarter of 2012.

 This implies that accelerating the rate of 4G adoption, in whatever way possible, can accelerate job creation. Good stuff!

Comments

  1. True, but it’s not as cut and dried as you make out. For example, as the internet and 4G take off, people are increasingly shopping online, presaging the death of retail. Since a lot of those telco jobs are probably retail jobs, a lot of them won’t stick around either. The only telco jobs that will always be here are the technical operators who install and maintain the physical network, everything else can be offshored. Also, most of the “jobs” building those routers and smartphones are created in China and the third world, while most of the smartphone profits go to Apple (the rest going to foreign smartphone makers, Google doesn’t make much from Android).

    My point is that creative destruction has been kicked into fifth gear in the information age, with massive creation and destruction going on all at the same time. While telco jobs might be going up now, a lot of those retail jobs and the retail sector generally is slowly disappearing, hence Borders being liquidated and practically every other retail chain like Barnes & Noble or Best Buy under heavy pressure. It’s going to take whole new categories of information work to replace those jobs, simply replacing retail jobs in one sector with retail jobs in telco is never going to work when retail itself is being destroyed.🙂

  2. Looks like my comment got stuck in the spam filter, please free it and delete this one.

    • Mike, not bothering to look at the comments anymore? I posted a comment with a couple links a week ago but the spam filter is holding it back. Please release and delete these comments.

    • Hmm, why isn’t this getting out of the spam filter?

    • Since Mike couldn’t be bothered to fish my previous comment out of the spam filter, I’ve reposted it after taking one of the links out, so it doesn’t trip up the spam block again:

      True, but it’s not as cut and dried as you make out. For example, as the internet and 4G take off, people are increasingly shopping online, presaging the death of retail. Since a lot of those telco jobs are probably retail jobs, a lot of them won’t stick around either. The only telco jobs that will always be here are the technical operators who install and maintain the physical network, everything else can be offshored. Also, most of the “jobs” building those routers and smartphones are created in China and the third world, while most of the smartphone profits go to Apple (the rest going to foreign smartphone makers, Google doesn’t make much from Android).

      My point is that creative destruction has been kicked into fifth gear in the information age, with massive creation and destruction going on all at the same time. While telco jobs might be going up now, a lot of those retail jobs and the retail sector generally is slowly disappearing, hence Borders being liquidated and practically every other retail chain like Barnes & Noble or Best Buy under heavy pressure. It’s going to take whole new categories of information work to replace those jobs, simply replacing retail jobs in one sector with retail jobs in telco is never going to work when retail itself is being destroyed.

  3. Why would 4G create jobs, when landline broadband clearly has not over the last 4 years?

    Note that Verizon Fios FTTx service has only 25% of potential customers signing on to it. Of 12 m who can get it, only 3m have chosen to pay for the faster Fios service.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Archives

%d bloggers like this: