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Rural Broadband Investments Promote an Inclusive Economy – Center For American Progress

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Broadband is essential to economic growth in the 21st century. This became starkly apparent over the past year as the coronavirus pandemic deepened Americans’ reliance on the internet. Families need the internet to access essential services, including education and health care, while small businesses and entrepreneurs need it to improve their operations and reach more customers to bring new economic opportunities to left-behind communities. Though many schools and offices are now starting to reopen, the pandemic has illustrated not only that broadband internet access at home will remain an indispensable utility in the future, but also that it’s an equity issue.

Between 6 percent and 12 percent of Americans do not have high-speed internet service, either because of a lack of infrastructure access or an inability to afford the service. Rural communities, low-income people, and communities of color experience the highest barriers to broadband access—and many found themselves unable to access key services online during COVID-19. Those same groups experienced the brunt of the pain from the pandemic and resulting economic recession, including disparities in COVID-19 deaths, dramatic job loss and financial insecurity, and a higher risk of infection caused in part by occupational segregation into low-paid and high-risk front-line roles as well as other manifestations of structural racism and marginalization built into the economy. For people of color in rural communities, racial and geographic disparities compound one another. In majority-white rural counties, about 72 percent of the population has broadband available; for majority-African American rural counties and majority-Native American rural counties, it’s 56 percent and a staggering 27 percent, respectively. People of color in both rural and urban areas are less likely to have access to high-speed internet due to residential segregation caused in part by racist zoning and investment practices paired with a monopolistic market, where internet companies choose not to build or extend affordable, high-quality services without a higher profit margin.

This column focuses on these disparities between rural and urban areas during the pandemic, what they mean for rural Americans’ access to services that meet their basic needs, and why broadband is a part of the country’s essential infrastructure. Using data from the Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED), the column finds:

  • Rural residents* are almost twice as likely as urban ones to lack high-speed internet at home, at 19.69 percent compared with 10.23 percent.
  • 31.62 percent of workers in urban areas reported working from home full time in the previous week due to the pandemic, compared with just 13.61 percent of rural workers.
  • Rural students were twice as likely as urban students to report lacking adequate technology to complete their coursework during the pandemic, at 11.45 percent and 5.74 percent.
  • Low-income families and communities of color are less likely than white, affluent households to have broadband at home.

A path forward for broadband investment

President Joe Biden’s infrastructure plan aims to jump-start the economy by making historic investments in infrastructure—including broadband. Of Biden’s originally proposed American Jobs Plan, $100 billion of the more than $2 trillion would go to broadband infrastructure build-out and monthly subscription subsidies to assist low-income individuals with affordability. The plan also includes set-asides for tribal communities and preference for broadband networks owned or operated by, or affiliated with, local governments, nonprofits, and cooperatives. To ensure that broadband investments go where they are most needed, the Biden administration recently released a map that combines private and public data to illustrate gaps in broadband coverage. Ultimately, however, congressional negotiations will determine the total investment in broadband, including where these investments are targeted geographically.

Regardless of its final size, any infrastructure package must include significant investments in broadband. The provisions must be guided by the goal to ensure equity for low-income communities and communities of color and to close access gaps between rural and urban residents. To realize this aim, investments must span both rural and urban contexts and address affordability in addition to availability.

Internet access gaps during the pandemic

There has been some progress in shrinking the gap between rural and suburban broadband adoption—a decrease in the gap from 16 percent to 7 percent in the last two years, according to Pew Research Center. However, tens of millions of Americans still lack access to this essential utility, and major differences across race, income, and region raise equity concerns. 2020 data from the Federal Reserve’s SHED capture how this broadband access gap played out during the coronavirus pandemic. According to the authors’ analysis of these data, rural households were almost twice as likely as urban ones to lack broadband internet, at 19.69 percent versus 10.23 percent.

Figure 1

The SHED data show concerning inequities in online learning due to a lack of high-speed internet access in rural areas. While 82.62 percent of respondents in metropolitan areas reported that their children had sufficient internet access to complete their virtual coursework, this was true for only 76.15 percent of people in rural areas. Similarly, 11.45 percent of people in rural areas disagreed with the statement that their children had adequate internet to complete their coursework, compared with 5.74 percent of people living in metropolitan areas.

Figure 2

The 2020 SHED data also found that people in metropolitan areas were more than twice as likely as people in rural areas to be working remotely full time during the pandemic.

Figure 3

Affordability is another major barrier to families in need of broadband access. More than one-fifth of all families with an annual income below $25,000 lack broadband at home. To bridge this gap, the Federal Communications Commission offers low-income families a subsidy through the Lifeline program, which the Emergency Broadband Benefit program expanded in response to the COVID-19 pandemic. Such programs, paired with robust outreach and comprehensive implementation, will continue to be necessary in the coming years in order to achieve universal broadband access.

Figure 4

Why broadband is infrastructure

Though experts cannot predict the degree to which the shift from in-person to online services is permanent, broadband internet will be essential to participate in society moving forward. Online offerings have the potential to expand access to remote or virtual services that are difficult to find in rural communities, such as mental health care, access to and enrollment in public benefit programs, and banking, but those benefits are impossible to gain without reliable broadband service. The following are just five areas in which rural communities would benefit from strong federal investments in broadband deployment and adoption:

  1. Education: As education across grade levels dramatically shifted to virtual learning at the onset of the pandemic, computer and high-speed internet access became more important than ever. One in 5 parents nationwide reported that it was likely their children would be unable to complete schoolwork because they lacked access to a computer at home, while 1 in 3 parents with lower incomes reported needing public Wi-Fi because they lacked reliable internet service at home. Among Black, Latino, and American Indian/Alaska Native families, only 1 in 3 households reported having sufficient high-speed internet access at home to support online learning. Limited access to technology during the pandemic exacerbated the existing “homework gap” between students with internet and those without. These disparities have repercussions for learning and opportunity that will endure beyond the pandemic and will only worsen without investments in reliable broadband for all students.
  2. Public benefits: Applications, enrollment in, and the administration of Supplemental Nutrition Assistance Program (SNAP) benefits, unemployment insurance, Supplemental Security Income, and other benefits went solely virtual during the pandemic for the sake of safety and efficiency—excluding those without internet access. Many public offices—all Social Security Administration locations, for example—were closed, as were public libraries and case management services that might usually provide internet access. Increased outreach to vulnerable populations through tools such as online portals and educational webpages does not extend to those with unreliable or nonexistent internet access. While internet access is not a silver bullet, and availability of in-person resources and mail and phone services remains vital, more equitable access can help those using public benefits.
  3. Health care: Broadband access is also a public health issue, particularly for rural communities, where doctor’s offices and hospitals may be an hour’s drive away or farther. From April 2019 to April 2020, national privately insured telehealth claims rose by more than 8,000 percent. While those rates have likely tapered as some offices have reopened, uptake of telehealth services will likely continue to be higher than it was prior to the pandemic, especially if proposed changes to make pandemic-era Medicare telehealth flexibility permanent are enacted. However, the rural and vulnerable populations that would be best served by accessible telehealth services are also the least likely to have reliable broadband access.
  4. Telework: In June 2020, 67 percent of workers in nonmetropolitan areas—particularly workers of color and low-wage workers—were unable to telework. Though some could not perform their jobs virtually, others simply lacked the technology to work from home. Reliable broadband presents a wide range of opportunities for economic growth in rural communities. Attracting workers with remote jobs has spillover effects that can create other jobs in the area. However, in one October 2020 survey, more than one-third of respondents cited unreliable or limited internet access as a barrier to moving to a rural area. Moreover, enabling current rural residents to telework broadens the number of employment opportunities to include remote jobs of all kinds, such as customer service and data entry roles.
  5. Online banking: Online account access for banked households is a crucial service that more than one-fifth of families rely on each year. Meanwhile, approximately 4 percent of U.S. households in 2019 were “unbanked,” meaning they had no checking or savings account; in 2017, 18.7 percent of households were “underbanked,” relying on alternative financial services as well as a bank account. These households, which are more likely to be poor and families of color, typically use alternative banking services, such as payday lending and check cashing or mobile banking services. For unbanked and underbanked people, online banking and bill pay services can be an important alternative to these exploitative options.

Conclusion

High-speed internet is a necessity, but rural Americans, particularly poor people and people of color, often lack access to this important utility. This challenge requires investment on a historic scale. Congress must take bold steps to close the urban-rural broadband gap and center equity in its plan to expand internet access to more families.

Zoe Willingham is a research associate for Economic Policy at the Center for American Progress. Areeba Haider is a research associate for the Poverty to Prosperity Program at the Center.

* Due to limitations of available data, the authors define rural as “nonmetropolitan” and urban as “metropolitan” for the purposes of this column.

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Russia ministry says economic slump less severe than feared – Al Jazeera English

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Economy ministry says gross domestic product to shrink 4.2 percent this year amid sanctions over the war in Ukraine.

Russia’s economy will contract less than expected and inflation will not be as high as projected three months ago, economy ministry forecasts showed, suggesting the economy is dealing with sanctions better than initially feared.

The economy is plunging into recession after Moscow sent its armed forces into Ukraine on February 24, triggering sweeping Western curbs on its energy and financial sectors, including a freeze of Russian reserves held abroad, and prompting scores of Western companies to leave.

Yet nearly six months since Russia started what it calls a “special military operation”, the downturn is proving to be less severe than the economy ministry predicted in mid-May.

The Russian gross domestic product (GDP) will shrink 4.2 percent this year, and real disposable incomes will fall 2.8 percent compared with 7.8 percent and 6.8 percent declines, respectively, seen three months ago.

At one point, the ministry warned the economy was on track to shrink by more than 12 percent, in what would be the most significant drop in economic output since the fall of the Soviet Union and a resulting crisis in the mid-1990s.

The ministry now sees 2022 year-end inflation at 13.4 percent and unemployment of 4.8 percent compared with earlier forecasts of 17.5 percent and 6.7 percent, respectively.

GDP forecasts for 2023 are more pessimistic, though, with a 2.7 percent contraction compared with the previous estimate of 0.7 percent. This is in line with the central bank’s view that the economic downturn will continue for longer than previously thought.

The economy ministry left out forecasts for prices for oil, Russia’s key export, in the August data set and offered no reasons for the revision of its forecasts.

The forecasts are due to be reviewed by the government’s budget committee and then by the government itself.

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China’s premier urges pro-growth policies as economy sputters – Al Jazeera English

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Li Keqiang calls on provinces to bolster growth after consumption and output fall short of expectations.

China’s Premier Li Keqiang asked local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures after data for July showed consumption and output grew slower than expectations due to Covid lockdowns and the ongoing property slump.

Li told officials at a meeting to take the lead in helping boost consumption and offer more fiscal support via government bond issuance for investments, state television CCTV reported Tuesday evening. He also vowed to “reasonably” step up policy support to stabilize employment, prices and ensure economic growth.

“Only when the main entities of the market are stable can the economy and employment be stable,” Li was cited as saying at the meeting in a front-page report carried in the People’s Daily, the flagship newspaper of the Communist Party.

The meeting came after Monday’s surprise interest-rate cut did little to allay concern over the property and Covid Zero-led slowdown. Economists have warned of even weaker growth and have called for additional stimulus, such as further cuts in policy rates and bank reserve ratios and more fiscal spending.

Li acknowledged the greater-than-expected downward pressure from Covid lockdowns in the second quarter and asked the local officials to strike a balance between Covid control measures and the need to lift the economy. “Only by development shall we solve all problems,” Li said, according to the broadcaster.

Indicating China may resort to more local debt issuance to pump-prime the economy, Li said “the balance of local special bonds has not reached the debt limit” and the country should “activate the debt limit space according to law,” according to the People’s Daily report.

Based on the government budget, local authorities may be able to issue an estimated 1.5 trillion yuan ($221 billion) of extra debt and bonds this year to support infrastructure spending, after top leaders urged better use of the existing debt ceiling limit in a key July Politburo meeting. The arrangement could be approved in August, according to some analysts.

China’s 10-year government yield rose for the first time this week, up one basis point to 2.64% from the lowest in more than two years.

Li urged local governments to accelerate the construction of projects with sound fundamentals in the third quarter to drive investment, the report said, and also asked officials to expand domestic consumption of big-ticket items such as automobiles and support housing demand.

He also stressed the importance of opening up the domestic market to foreign investors, noting that the six major provinces — Guangdong, Jiangsu, Zhejiang, Henan, Sichuan and Shandong — account for nearly 60% of the country’s total foreign trade and foreign investment.

“Opening up is the only way to make full use of the two markets and resources and improve international competitiveness,” Li was cited as saying.

Li’s appearance suggests state leaders have completed their annual two-week policy retreat in resort area of Beidaihe.

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German recession fears deepen as economy is hit by 'perfect storm' – Financial Times

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Investors are now more pessimistic about the German economy than they have been at any time since the eurozone debt crisis more than a decade ago, worrying that a sharp fall in Russian natural gas supplies and soaring energy prices will plunge the country into recession.

The ZEW Institute’s gauge of investor expectations about Europe’s largest economy has sunk to its lowest level since 2011, dropping from minus 53.8 to minus 55.3, underlining the deepening gloom about the economic fallout from Russia’s invasion of Ukraine.

The think-tank’s survey of financial market participants provides an early indicator of economic sentiment after Russia reopened the Nord Stream 1 pipeline following a maintenance break last month, but kept the main conduit for delivery of gas to Europe operating at only a fifth of capacity.

Economists have slashed their estimates for growth in Germany and the wider eurozone this year, while raising their inflation forecasts and warning that an end to Russian energy supplies would force Berlin to ration gas supplies for heavy industrial users.

On Tuesday, German baseload power for delivery next year, the benchmark European price, rose over 5 per cent to a record €502 per megawatt hour, according to the European Energy Exchange. This is six times higher than the price a year ago — driven upwards by the sharply higher cost of gas used to generate electricity and the prolonged European heatwave that has disrupted generating capacity.

The surging price of energy has driven up the cost of imports for Germany and other eurozone countries, sending the bloc’s trade deficit up to €24.6bn in June, compared with a surplus of €17.2bn for the same month a year earlier, according to data from Eurostat, the European Commission’s statistics bureau. The value of exports from the bloc rose 20.1 per cent in June from a year ago, but imports were up 43.5 per cent.

Line chart of Visible trade balance (€bn) showing Energy costs have moved the eurozone's trade balance from surplus into deficit

“The still high increase in consumer prices and the expected additional costs for heating and electricity are currently having a particularly negative impact on the prospects for the consumer-related sectors of the economy,” said Michael Schröder, a researcher at the ZEW.

He said investor sentiment also worsened due to an expected tightening of financing conditions after the European Central Bank raised its deposit rate by 0.5 percentage points to zero in response to record levels of eurozone inflation.

Carsten Brzeski, head of macro research at Dutch bank ING, said the German economy was “quickly approaching a perfect storm” caused by “high inflation, possible energy supply disruptions, and ongoing supply frictions”. 

A heatwave and dry spell has reduced water levels on the Rhine below the level at which barges can be loaded fully, restricting important supplies for factories, which Brzeski estimated was likely to knock as much as 0.5 percentage points off German growth this year.

Adding to the gloom, German households will have to pay hundreds of euros more in fuel bills this winter after the government unveiled an extra gas levy of 2.419 cents per KWH from October. This is expected to push up the cost for a family of four by €240 in the final three months of the year.

Germany’s top network regulator told the Financial Times this month that the country must cut its gas use by a fifth to avoid a crippling shortage this winter. The economy ministry has also ordered all companies and local authorities to reduce the minimum room temperature in their workspaces to 19C over the winter.

The country has achieved its target of filling gas storage facilities to three-quarters of capacity two weeks ahead of schedule, after high prices and fuel saving measures led to reduced use. But there are worries its objective to lift gas storage to a 95 per cent target of capacity by November will be more challenging if Russia keeps throttling supplies.

The German economy stagnated in the second quarter, the weakest performance of the major eurozone countries. Last month, the IMF slashed its forecast for German growth next year by 1.9 percentage points to 0.8 per cent, the biggest downgrade of any country.

Additional reporting by Harry Dempsey

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