Faster Internet Service Could Boost US Output by 160 Billion Dollars

Internet Service

Economists estimate that universal high-speed internet access could improve the U.S. economy by $160 billion a year. Another way to look at this scenario is that investing in closing the digital divide is an investment in the U.S. economy that will pay dividends for at least the next 50 years and likely longer.

The U.S. Economy Is in a Transitional Phase

The current estimate is that one-fifth of all paid workdays will take place remotely by the end of the pandemic, and that number will likely grow as the economy continues to recover. It is worth noting that the economy was trending in this direction even before the pandemic, but there is little doubt that lockdowns and other logistical challenges certainly sped up the transition. In doing so, the pandemic shined a spotlight on the fact that the U.S. Internet infrastructure is absolutely not where it needs to be.

Survey of Working Arrangements and Attitudes

Supporting these theories is an ongoing survey conducted by the Mexico Autonomous Institute of Technology. The research project is called the Survey of Working Arrangements and Attitudes and now encompasses responses from more than 40,000 working-age adults who have been surveyed. The survey deals with all facets of working from home, including disposition and productivity. The research also factors in the plans of the companies who employ these people. It is through this data that the researchers are able to estimate the percentage of remote workdays and how much earnings could increase—both on an individual level and as a nation as whole. While the annual GDP would increase by $160 billion with the proper resources, most workers would increase their earnings by more than 1%.

The Role of High-Speed Internet

U.S. economists have been warning politicians for some time that our country has an Internet problem. The digital divide as it called is limiting how much rural America can contribute to the economy. It is also limiting the presence of tech jobs in this area. It is restricting the education opportunities of rural children, and it is playing a role in why there is currently a tech workforce shortage in the U.S.

Among those surveyed, about 25 percent stated that they did not have reliable access to high-speed Internet. Those people were asked how much their productivity would increase if they did. About 33% indicated a 5% increase, 28% indicated a 10% gain and 17% estimated a 20% jump. But the estimates that the GDP would increase $160 billion annually were based on more than just perception. In addition, the researchers are forthright about not estimating the cost to provide universal broadband internet.

Closing the Digital Divide Is Expensive

Providing high-speed internet to all is not a cheap endeavor. In fact, it often costs $25,000 or more per single mile, and there are many miles to go. There was once hope that the private internet service providers would eventually reach these areas. The ISPs may eventually get there, but it is clear at this point they will not do it on the schedule that the country requires from an economic standpoint.

The federal government is working to help the states. The CARES act includes millions of dollars that are available via grants to municipal ISPs. Private ISPs and public-private partnerships that are striving to expand into underserved areas. More recently, the infrastructure bill was passed, and that includes up to $65 billion to be used to expand Internet infrastructure. That investment will be significant, but even that will likely not be enough to close the digital divide in the time frame in which we need it.