The Coming Communications Boom? Jobs, Innovation and Countercyclical Regulatory Policy

This policy memo brings together three important strands of current policy debate: jobs, innovation, and regulatory policy.

Most distressingly, America's great strength—its innovative sector—actually lost jobs during the 2000-2007 business cycle. This sector includes everything from aerospace to pharmaceuticals to telecommunications to software. Some individual industries added employees, but collectively the innovative sector lost almost 700,000 jobs from 2000 to 2007, before the bust hit. That performance was far worse than anyone expected: In 2001, the Bureau of Labor Statistics published projections implying that the innovative sector would create 1.7 million net new jobs by 2007. In other words, the innovative sector had a shortfall of 2.4 million jobs relative to expectations, even before the bust.

There are promising signs, however, of a rebound in one part of the innovation sector: communications. Internet companies, along with firms engaged in wireless telecom and computer systems design, seem to be emerging as "job leaders" in the next economic expansion. Unfortunately, these companies are also embroiled in struggles with federal agencies - and among themselves - over whether more regulation is required to police competition in communications.