Journal class

Study says closing the digital divide in the state will ‘pay for itself’

A $400 million investment in broadband internet infrastructure approved by Illinois lawmakers in 2019 could be recouped through additional tax revenue alone within four years of construction completion, new research finds .

That’s according to a report by the University of Illinois Project for Middle Class Renewal and the Illinois Institute for Economic Policy, which estimates that 238,000 additional households, businesses and farms would have a new Internet access with state funding combined with at least $100 million. in new federal funding and other non-state funds.

The Illinois Economic Policy Institute is a nonprofit research organization closely tied to organized labor, while the Project for Middle Class Renewal is housed at the UI School of Labor and Employment Relations and has a mission to “raise the public discourse” on worker issues to promote middle-class jobs and reduce poverty.

Their report found that broadband expansion has several implications, from multi-billion dollar economic impacts to social impacts such as access to telemedicine that are harder to quantify.

“The economic aspect of the Internet was realized and mastered fairly quickly after its invention. But the social impact of the internet, I would say, is still being discovered, being studied,” said Andrew Wilson, policy analyst for the Illinois Economic Policy Institute and author of the report, in an interview. “And so, that’s why I think it’s always important to – yes, the economic reasons are important and we’ve shown them – but it’s also like telehealth, things like access to school , things like access to jobs and all that (is) important from a social point of view too.

The social significance was demonstrated early in the COVID-19 pandemic, as those who could work from home could keep their jobs during stay-at-home orders, and students with internet access fared better when schools were down. closed.

From a direct economic perspective, broadband expansion will raise workers’ wages by $843 million a year, the study found, while creating more than 25,000 short- and long-term jobs.

This includes 14,400 construction-related jobs, of which approximately 38% would be subject to the prevailing wage rate, and 11,400 jobs maintained thereafter.

According to the study, income, sales and property taxes would increase by $126 million during the construction and installation phase, and by $77 million each year thereafter, excluding the inflation.

The study analyzed data from the US Census Bureau’s American Community Survey which showed that about 83% of Illinoisans had internet access, and that number is expected to rise to 87% due to new funding.

“Access,” according to the study, was defined as the ability of a home, farm, or business to connect to Internet infrastructure at an affordable cost.

Dr. Robert Bruno, a professor at the UI School of Labor and Employment Relations and director of the Project for Middle Class Renewal, said state and federal government investments are helping affordability.

“For people who haven’t had access to it, it’s certainly not a desire or reluctance to use it.” he said, noting that private companies generally invest where they can make a profit. “That’s where, of course, the state contributes to this essential infrastructure in the same way that you would build roads and highways, it has a positive impact on affordability.”

The report also describes a “digital divide” between urban and rural areas, as 82% of the city of Chicago, 88% of its suburbs and 76% of the rest of the state had internet access according to an analysis of 2017 ACS data. -2019. .

Wilson compared the current internet access divide to an electrical divide in the 1930s that led President Franklin Roosevelt and Congress to create the Tennessee Valley Authority to, among other things, increase rural access to electricity. .

“It’s the same now, everything you need to do needs the internet,” Wilson said. “And so you get places that had electricity, because they had invested in it, they could afford it, and places that didn’t. You see the same thing now where places that could, when it was expensive, invested in (internet access), then places that couldn’t didn’t, and now we’re catching up.

To bring that connectivity number to 100% statewide, the study found that it would take approximately $3 billion in funding from state and non-state sources.

This number was based on spending that has already taken place since 2020 as part of the Rebuild Illinois expansion.

This included $162 million — $73 million from the state, plus $89 million in federal and non-state funds — expanding access to 39,000 homes, businesses or farms at a cost of about $4. $200 per location.

Frank Manzo, executive director of the Illinois Institute of Economic Policy and author of the study, said the state dollars could go even further than the study originally planned, because Illinois can ask additional federal grants beyond the base $100 million it will receive from the recently passed federal government. Law on investment in infrastructure and employment.

The study also revealed that there is greater income potential in households that have internet access than in those that do not.

With factors such as marital status, household size, gender identification, race and education level controlled for, the analysis showed that those with internet were 1% more likely to be employed. than those who did not have access to it. That equates to 6,800 new jobs that pay about $43,600 a year, according to the study.

Those with the Internet earned about 5% more than those without when working hours, industries, and sectors were controlled, a gain of about $2,200 per year.

The authors of the study said that the increase in income of those with internet access may be partly explained by the fact that people have the possibility of seeking higher paying jobs if they have an internet connection. , but Internet access itself can also make a worker more valuable.

“It’s a professional skill,” Bruno said. “It’s part of the infrastructure you need as an individual if you want to be job ready…You’re a lot less competitive if you don’t have that access.”

Bruno said some research suggests the digital divide is a major contributor to income inequality.

“The technology is there, but it only pays dividends for some people in the workforce,” he said.