July 27, 2011
by Harold Furchtgott-Roth
Suppose you met a young person who just received a job offer from a wireless communications company. Should you congratulate him or her on entering one of the few bright areas in the American economy or should you warn this person away by reminding them that employment in wireless is about a secure as the buggy-whip industry?
A recent article in the Wall Street Journal ("Wireless Jobs Vanish" by A. Troianovski, July 18, 2011) and referenced in FierceWireless, might suggest cautioning the young person against pursuing a career in the wireless industry. After all, according to the article, wireless industry employment peaked at 207,000 in 2006. Supposedly, the industry's "mostly nonunion work force has shrunk about 20%" since 2006.
Even an armchair economist could tell the numbers in the WSJ article did not make sense. The article suggests that 166,000 workers generated about $166 billion in revenue in 2010. Workers in the wireless industry are effectively productive-even excellent-but they do not likely each generate $1 million in revenue. Something is obviously wrong with the WSJ numbers, which simply do not add up.
An explanation for the disjointed data is that the wireless industry is much larger than the WSJ article suggests. The Census Bureau's Information Sector Quarterly finds that industry revenue exceeded $200 billion on an annualized basis, substantially exceeding revenue for the wireline industry of less than $160 billion, in the first quarter of 2011. The wireless industry is even much larger than narrowly measured by the Census Bureau. If one includes related manufacturing, services, and retail distribution, the industry is substantially larger. Throw in other related industries and ubiquitous unlicensed devices that can be found on practically every consumer electronics device in America and the broader sector easily exceeds $1 trillion. The wireless jobs numbers reported by the Bureau of Labor Statistics were narrowly focused and did not accurately capture nor account for the larger wireless ecosystem in America. It certainly didn't account for the app developer who went from working out of his garage to renting commercial space in a high-rise building in a metropolitan area.
Walk down any street, by any home, to any store, past any factory, around any car, through any office, into any school and you will see wireless services at work in America. Demand for electronic devices with wireless capabilities is exploding across the nation.
The notion that the wireless industry's employment has "shrunk" may come as a surprise to the many Americans working in the industry, and the many more Americans--our unemployment rates stands at 9.2 percent among those actively looking for work--seeking employment in the industry.
The WSJ article may also come as a surprise to the Census Bureau, which found that employment grew from 281,263 according to the 2007 Economic Census to 286,323, based on its Statistics of U.S. Businesses for 2008, the most recent year available. Gross payroll during the same period grew from $15.6 billion to nearly $17.8 billion. The Census Bureau's Annual Survey of Service Industries finds that gross compensation in the wireless industry grew between 2006 and 2009, the latest year for which information is available.
The Census Bureau data reflect only direct payroll employees of the wireless services industry. These do not include contract employees in the industry or the many other workers whose jobs are indirectly related to the wireless services industry. These include manufacturing of wireless devices and network equipment; installation, maintenance, and repair of network equipment including towers; sales and service of wireless devices; and sales wireless services contracts through third-party distributors. The total of all of these workers directly related to wireless services industry is almost certainly much larger than the number of workers directly employed in the industry.
In Washington, it passes as a political sport to underestimate American industry, to invent weaknesses for it, to compare it unfavorably to industries in other countries, even to tell newspaper reporters how badly America is doing. Industry bashing in Washington often serves an ulterior purpose-a pretext to increase regulation.
Increasing regulation today on any segment of the American economy, including the wireless industry, would be a mistake.
Fifteen million Americans desperately look for work. Millions more have despaired and abandoned looking. Still millions more are unsatisfied in their jobs but cling to them afraid that they cannot find better work. This is not the time to weaken the very businesses that can offer jobs and hope to struggling Americans.
The American wireless industry is large and growing. Few other industries can make that claim. It is a source of vitality, a rare sign of optimism in an economy mired in decline, uncertainty and pessimism. It has grown and succeeded not because Washington has nurtured it but because Washington has neglected it. Neglect was rarely more benign.
Harold Furchtgott-Roth is a Senior Fellow and Director of Hudson Institute's Center for Economics of the Internet.
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