Universal internet access would boost remote work productivity

Achieving universal high-quality internet access would boost economic output by $160 billion a year, a new paper estimates.

Why it matters: The internet and remote working technology cushioned the economic blow during the pandemic, but millions of Americans still lack quality online connections. Closing that gap could enhance labor productivity in a future where more work will be done from home.

The big picture: In the paper, released Tuesday morning by the Aspen Economic Strategy Group, researchers found that moving to universal high-quality internet access would increase earnings-weighted labor productivity by an estimated 1.1% in the coming years.

• That's due in part to the fact that the researchers project that remote work will account for approximately one out of every five workdays in the post-pandemic era for the economy as a whole, with higher levels for more educated and highly compensated workers.

By the numbers: The researchers found that between May 2020 and April 2021, subpar internet access reduced earnings-weighted productivity by 3%.

• During the trough of the pandemic-driven economic crash, in the second quarter of 2020, economic output fell by 11%.
• "If we had an 8% drop instead of an 11% drop [with universal internet access], that would have been a big deal," says Steven Davis, an economist at the University of Chicago Booth School of Business and a co-author of the paper.
• "There are costs to not having that flexibility, and there are benefits to having it," he adds.

Of note: While Americans on the lower end of the earnings curve are more likely to have subpar internet access, the researchers found that the productivity gains from universal access would disproportionately flow to those earning between $50,000 and $200,000 a year.

• That's largely because "at the bottom end of the distribution, folks often don't have good internet access, but they're largely doing jobs that can't be done from home anyway," says Davis.

The catch: The researchers haven't yet done a cost-benefit analysis for achieving universal internet access, though they plan to tackle one soon.