Broadband network grants should boost employment
- By William Jackson
- Oct 31, 2011
Broadband infrastructure being created in Northeast Ohio by the nonprofit OneCommunity is intended to help area governments, educational institutions and health care facilities take advantage of the move to cloud computing, said Brett Lindsey, the group's chief operating officer.
It also is expected to generate jobs. That is, after all, the purpose of the American Recovery and Reinvestment Act, under which OneCommunity received a $44.8 million grant. How many jobs will it create? The Council of Economic Advisers came up with a formula for calculating the employment impact of various types of federal stimulus, measured in job years, a job-year being one job lasting one year.
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The most effective form of stimulus is direct government spending, the council said, which creates one job-year for each $92,136 spent. It takes more than $145,000 in tax cuts to create a job-year and more than $116,000 of fiscal relief to states.
The spending will create jobs in different categories. About two-thirds of them are direct jobs, created directly by the government-sponsored program, and indirect jobs for suppliers who support the program. The remaining 36 percent are induced jobs created elsewhere in the economy by additional spending. So the council’s simple rule for estimating job-years created by government spending is:
- About $92,000 of government spending creates one job-year.
- 64 percent of the job-years represent direct and indirect effects.
- 36 percent of the job-years are induced effects.
Based on this formula, OneCommunity estimates that the $45 million grant, not counting the $25 million being chipped in locally, will create:
- 192 direct job‐years (construction, engineering, operations, consulting).
- 127 indirect job‐years (equipment, fiber, peripherals, other material vendors).
- 180 induced job-years (jobs created through the net effect of adoption and use of broadband by area businesses).
It’s tough to nail down the exact number of jobs that such a project will create, Lindsey said. “But people seem to believe we’re having an impact on their business.”
William Jackson is a senior writer of GCN and the author of the CyberEye blog.