SSTI Digest

Sometime in late May, the U.S. will pass a deadline that could have major repercussions for new administration rules, depending on the outcome of the 2024 federal elections. In effect, rules finalized before late May would be overturned only by going through a new, full rulemaking process, which can be a lengthy process. Rules passed after that date, however, could be overturned relatively quickly by Congress if control of the branches changes. Each new federal rule is subject to the Congressional Review Act, a piece of legislation passed in the mid-1990s that saw relatively little use until 2017. In brief, the law allows Congress to pass a resolution of disapproval against any new rule, which not only nullifies that rule but also prevents the agency from passing a similar regulation without congressional action. Because such a resolution must be passed by both chambers of Congress and signed by the president, the law does not see much use outside of sessions in which party control of one or both branches changes. According to the Congressional Research Service, the law was used to overturn only one law until 2017, when the 115th Congress introduced more than…

The Commerce Department has suspended plans to announce a funding opportunity for the construction, modernization, or expansion of commercial semiconductor R&D facilities, according to an announcement the CHIPS Program Office made in their newsletter last week. The suspension does not impact the $11 billion the CHIPS Program Office still plans to spend on semiconductor R&D through separate R&D programs, nor does it affect the awards for incentive program funding opportunities already announced. Commerce reported that they made this decision due to an “overwhelming demand” for funding from the $39 billion facility incentive program created by the CHIPS and Science Act. The four R&D programs that remain intact are the National Semiconductor Technology Center (NSTC); the National Advanced Packaging Manufacturing Program (NAPMP), including the current NAPMP funding opportunity; CHIPS Metrology; and the CHIPS Manufacturing USA Program. Information about these programs is on the CHIPS website. The CHIPS Program Office will discuss its strategy for supporting semiconductor R&D in an April 9 webinar focused on the National…

SSTI has updated data across four states, and added data for an additional two and Puerto Rico, in last week’s “SSBCI 2.0: An overview of state uses of funds” article. Select programs in Minnesota, Nevada, North Dakota and Oregon were reclassified by SSTI, and may differ from Treasury's “Capital Program Summaries”– which the original article was based on. A total of nine venture capital programs across these states were broadly classified as credit support programs by Treasury but reclassified as equity/venture capital programs by SSTI soon after the article was posted on March 28, 2024. Missouri, Vermont, and Puerto Rico were added by SSTI with information based on their respective press release documents. The analysis has been updated to reflect these changes, and will continue to be updated as more information becomes available.

Shrinking shares of job-creating, high-growth firms across the country, the topic of SSTI’s Useful Stats column in last week’s Digest, is not being experienced within all sectors of the economy, according to analysis of the Business Dynamics Statistics of High Growth Firms (BDS-HG) experimental dataset from the Census Bureau. From 1978-2021, the number of high-growth firms, measured by change in employment, has increased in five sectors, stayed the same in one, and decreased in the remaining 13 classifications of U.S. business and industrial activity. Slower-growth firms expanded their dominance of the economy, as all sectors experienced a decrease in the number of high-growth firms as a percentage of their total respective firms. The number of high-growth firms increased the most in the educational services sector, consistent with the growth of private charter schools, mentoring services, and edtech over the period. Alternately, high-growth firms in mining decreased the most relative to their 1978 values, which one might expect as the U.S. offshored resource-intensive industries and adopted mining approaches that required fewer workers. In terms of sector…

This article, written by Leonardo Vasquez and reproduced from the April 2024 issue of NBER Digest, is a summary of NBER Working Paper 31948, prepared by Luisa Gagliardi, Enrico Moretti, and Michael Seranfelli. SSTI note: We would contend the findings presented in the paper suggest state and local policymakers strongly consider making sustained, long-term investments in TBED priorities such as growing knowledge-intensive sectors and enlarging the college-educated workforce to help industrialized regions overcome negative changes in manufacturing due to technological change and global competition. Vasquez’s article for the NBER Digest: Manufacturing employment peaked in the United States and the United Kingdom in the 1970s, in France and Italy in the '80s, and in Germany and Japan in the '90s. Each of these countries experienced deindustrialization that lowered manufacturing employment. On average, between the peak manufacturing year for each country and 2010, total employment rose by 7.5 percent while manufacturing employment dropped by 7 percent. In The World's Rust Belts: The Heterogeneous Effects of Deindustrialization on 1,993 Cities in Six…

In the 1970s, the U.S. government took antitrust actions against IBM and AT&T, causing considerable controversy. Walter Wriston, the then-president of Citibank and a key leader on Wall Street, questioned the value of doing this, apparently (according to Lina M. Khan, Federal Trade Commission Chair), likening the move to breaking up the Yankees, because they were so successful. In a presentation she delivered at the Carnegie Endowment for International Peace on March 13, Lina M. Khan, chair of the Federal Trade Commission, disagreed with Wriston’s perspective. In her comments, Khan contended that breaking up monopolies is essential for promoting innovation, that by breaking up companies like AT&T and IBM, the U.S. opened a path to “waves of innovation, including the personal computer, the telecommunications revolution, and the logic chip.” Khan gave several examples of how consolidation and monopolization have discouraged innovation. She mentioned Boeing, which in 1997 became the only commercial aerospace maker in the U.S. after merging with McDonnell Douglas. Among other issues, Khan cited United Airlines CEO Scott Kirby as saying, "The merger allowed Boeing to…

Two senior leaders of state programs designed to help commercialize new intellectual property joined a TBED CoP webinar last week to discuss how they determine whether those initiatives are successful. John Hardin, executive director of the Office of Science, Technology & Innovation at the NC Department of Commerce, described the One NC Small Business Program and the evaluation process the office performs each year. They use surveys of award recipients and econometric analysis to demonstrate the program’s effectiveness. Vinit Nijhawan, managing director, MassVentures, discussed the START program targeted at deep tech companies and Catalyst grants, which support clean tech startup companies. Both programs have been shown to assist companies with commercialization activities. More than 100 attendees participated in the webinar, which generated many practical questions (and thoughtful answers) about how methods used in North Carolina and Massachusetts may be transferable to other states. The presentation and recording are available here. SSTI’s TBED Community of Practice is always looking for new webinar topics and speakers.  To share your ideas, volunteer…

High-growth firms are often conflated with all other firms. Unfortunately, this tendency makes it extremely difficult to differentiate those with a higher likelihood of significantly impacting the economy and innovation. While reports like the Global Entrepreneurship Monitor (GEM) have found increasing rates of entrepreneurship over the past decade, barring a drop at the onset of the pandemic, new U.S. Census Bureau data on high-growth firms reveals the opposite for the number of high-growth firms, with steady, significant decreases in the number and share of high-growth firms across the nation. This edition of Useful Stats will look at the Business Dynamics Statistics of High Growth Firms (BDS-HG) experimental dataset from the Census Bureau. Specifically, it explores state-level trends for the percentage share of high-growth firms among all firms since the late 1970s. SSTI calculated the percentage share of high-growth firms by taking the number of high-growth firms and dividing by the total number of firms captured by the BDS-HG. Firm growth data within the BDS-HG is broken down into nine growth rate bins, ranging from -2 to 2. The -2 bin represents exits,…

While some college computer engineering profs may be advising their students not to worry about artificial intelligence derailing their salary projections and long-term career options, it would appear businesses are getting on with deploying the latest AI advances as quickly as possible to see what improvements might be made for the firms’ productivity rates and bottom lines. A recently released working paper from Germany’s Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) reports on an early analysis of AI adoption in the innovation research process. The authors’ preliminary conclusion?  “AI is currently used more for competitive differentiation, but in 15 years it can become the standard as a so-called basic technology and thus a factor critical to competition.” The authors suggest, however, that “the energy-intensive use of AI will remain an immense challenge.” One may wonder, in addition to the authors’ observations, if AI electricity demand will drive electricity rates to the point that only the companies in the best market and financial position will be in a position to optimize AI use, particularly when AI energy draw is coupled with…

The national picture of how 46 states, Washington, D.C., Puerto Rico, and the U.S. Virgin Islands chose to allocate $7.9 billion approved so far by the U.S. Treasury to spend through the nation’s second go at the State Small Business Credit Initiative (SSBCI) is getting clearer. Equity and venture capital programs—often important financing tools for high growth and innovation-oriented companies—have garnered approximately $2.9 billion, across 79 equity/venture capital programs, based on a Treasury-generated list of all programs and allocations and SSTI analysis of press releases. The remainder of the total approved is distributed across 110 credit support programs.

Information on the geographic distribution of innovation and entrepreneurship is not easy to tease out of many federal statistical data sets, leading regional policy often to be based on trends in all business starts or life span and size—ignoring the fact that some firms have greater impact on regional economic growth than others. The U.S. Census Bureau is well aware of the challenge and, earlier this week, released an experimental data set that allows for an examination of state-level long-term trends in the change in high-growth firms and establishments across the nation. The data set, titled “The Business Dynamics Statistics of High Growth Firms,” with the acronym of BDS-HG, covers key economic data on high-growth firms with metrics such as the number of firms and establishments, job creation and destruction, employment, and growth rates. It extends the statistics published by the Business Dynamics Statistics (BDS) program with a focus on high-growth companies. The BDS-HG was developed by the Center for Economic Studies, and its data compiled from the Longitudinal Business Database. The methodology can be found here.   What data is…

As part of the CHIPS & Science Act, Congress created the Tech Hubs program to help more regions become leaders in key technology sectors through substantial investments into regional consortia. It authorized spending $10 billion on the program from FY2023 through FY2027. But appropriations for the program are not keeping up with the vision that was embraced by strong bipartisan majorities in both chambers. For FY2023, Congress appropriated $500 million for the program, and it followed that up with only $41 million for FY2024. The need for the program has not changed. If you believe the program should receive funding in line with the vision Congress laid out in the CHIPS & Science Act, we invite you to join us and let Congress know by signing a letter that will strongly voice support for the program. Read the full letter and sign on today.   This article was prepared using funds from the Innovation Advocacy Council (IAC). For information on joining the IAC, contact Jason Rittenberg at rittenberg@ssti.org