The Digital Divide and Economic Benefits of Broadband Access

Introduction This issue brief provides an overview of the state of broadband in the United States using the most recent data available from the 2014 American Community Survey and building on the Council of Economic Advisers’ previous analysis of the digital divide. Much progress has been made connecting Americans to broadband Internet, but a substantial digital divide remains. This brief reviews the benefits of Internet connectivity, highlighting one in particular—better labor market outcomes—that can accrue to American workers from accessing broadband Internet, especially through online job searches. Addressing the remaining digital divide will require a focus on affordability—which can be addressed by a range of measures including policies to foster more competition between broadband providers—as well as on access to devices, and digital literacy.

The main findings highlighted in the issue brief include:

  • The number of U.S. households subscribing to the Internet has risen 50 percent from 2001 to 2014, and three-quarters of American households currently subscribe;
  • A digital divide remains, however, with just under half of households in the bottom income quintile using the Internet at home, compared to 95 percent of households in the top quintile;
  • Supply-side factors may also have an important influence on the rate of broadband subscription: areas with more wireline providers have higher Internet subscription rates;
  • Broadband provides numerous socio-economic benefits to communities and individuals,improving labor market outcomes for subscribers, increasing economic growth, providing access to better health care, and enhancing civic participation;
  • Academic research shows that using online job search leads to better labor market outcomes, including faster re-employment for unemployed individuals, yet because of a digital divide, low-income households are less able to use these tools than high-income households;
  • Unemployed workers in households with Internet were 4 percentage points more likely to be employed one month in the future than those in households without Internet. This difference persists over time.

State of Broadband in the United States

Since 2009, more than $260 billion has been invested in broadband infrastructure, largely by the private sector but also by the public sector. Investments from the Federal Government alone have led to the deployment or upgrading of over 115,000 miles of network infrastructure. The President has announced concrete steps to ensure that fast and reliable broadband is available to more Americans at the lowest possible cost, and these initiatives are bearing fruit. For example, in 2013 roughly 40 million students lacked access to broadband at their schools and, in response, the President’s ConnectED initiative was created to help connect 99 percent of American students to high-speed broadband in their classrooms and libraries by 2018. Data from 2015 show that since ConnectED was launched in 2013, an additional 20 million students and 1.4 million teachers now have access to fast broadband.

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