A new report reveals that well designed infrastructure investment will raise the nation’s economic output, enhance America’s global economic competitiveness and create good jobs for middle class Americans. Entitled An Economic Analysis of Infrastructure Investment and prepared by The Department of the Treasury with the Council of Economic Advisors, the report specifically finds that 80 percent of the jobs directly created by investing in transportation infrastructure would be in the construction, manufacturing, and retail trade sectors.
The report notes that there is currently very little direct private investment in the nation’s highway and transit systems due to the current method of funding infrastructure, which lacks effective mechanisms to attract and repay direct private investment in specific infrastructure projects. Investing rationally in infrastructure is critically important, as is providing opportunities for the private sector to invest in public infrastructure, the report suggests. Research has shown that well designed infrastructure investments can raise economic growth, productivity, and land values, while also providing significant positive spillovers to areas such as economic development, energy efficiency, public health and manufacturing.
The analysis suggests that 61 percent of the jobs directly created by investing in infrastructure would be in the construction sector, 12 percent would be in the manufacturing sector, and 7 percent would be in retail trade, for a total of 80 percent in these three sectors. Nearly 90 percent of the jobs in the three sectors most affected by infrastructure spending would be middle class jobs, defined as those paying between the 25th and 75th percentile of the national distribution of wages.
The report points out that construction costs and other costs associated with building projects are especially low in the current environment. The Department of Transportation’s (DOT) experience with Recovery Act funding has shown that more than 2,000 additional airport, highway, bridge and transit projects were funded because of low bids, or projects being completed under budget. DOT also reported that among its $1.1 billion in aviation investments, winning bids for the projects came in $200 million below their initial engineering estimates.
As a result of years of under-investment in the transportation system, Americans’ satisfaction with the public transit system, when compared to public satisfaction with public transit systems around the world, ranks 25th out of 32 OECD nations, says the report. While the nation has historically favored road building over public transit, the U.S. ranked only 17th out of 32 with respect to satisfaction with roads and highways. The relatively higher satisfaction with roads and highways is consistent with the observation that the nation’s historic investment pattern favored highways and roads over public transit.
According to the report, one study found that almost 19 out of 20 Americans are concerned about America’s infrastructure and 84 percent support greater investment to address infrastructure problems.
Notwithstanding the foregoing, more than 18-months into his term, President Barack Obama recently announced a plan to renew and expand America’s infrastructure. The plan includes a $50 billion up-front investment connected to a six-year reauthorization of the surface transportation program and the creation of a National Infrastructure Bank to leverage private capital and select projects of regional and national significance.
