Infrastructure Spending Creates Thousands Of Jobs, Billions In Growth And Reduces The Deficit

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Investing $1.3 billion in infrastructure next year would add at least 29,000 jobs and $2 billion to economic growth while reducing the deficit by $200 million, according to a new report from Standard & Poors.

That kind of spending would likely add 29,000 jobs to the construction sector, particularly because unemployment in that industry is still so high, it finds. That means the jobs added are likely to be new ones, not just hiring people who are already employed. But even more jobs would probably be added to related industries. The report cites a 2012 study that found 61 percent of jobs directly created by infrastructure investment would be in that industry, with another 12 percent in manufacturing and 7 percent in retail and wholesale trade. “Almost nine out of 10 of those jobs would be defined as middle-class,” S&P notes, “or those paying between the 25th and 75h percentile of the distribution of wages.”

And the returns keep increasing even after the initial bump. “In addition to the short-term benefit of job creation, significant investments in large projects can enhance efficiency and allow goods and services to be transported more quickly and at lower costs — a longer-term reward,” the report notes. Once the infrastructure is up and running, it boosts the economy’s capacity and output, which “means increased growth and more job gains long after the project ended.” As an example, it notes that the U.S. Interstate Highway System built in the 1950s has likely added far more to growth than the $400-500 billion price tag (adjusted for inflation).

There are plenty of places where the U.S. could spend money improving infrastructure. The American Society of Civil Engineers gives us a D+ grade on our roads, bridges, waterways, electrical grids, and other infrastructure, and says the country would need to spend $3.6 trillion by 2020 to get it all up to par. In the meantime, bridges have collapsed while more are at risk and some roads have been converted to gravel because there weren’t enough funds for upkeep on the pavement.

Instead of beefing up infrastructure spending, however, the country is facing a huge shortfall. Government spending has fallen by about $60 billion in just a few years and spending on infrastructure and other long-term priorities has fallen below any level since World War II. On top of all of this, the Highway Trust Fund, which gives federal money to states for infrastructure projects, will become insolvent by the summer. President Obama has proposed a four-year, $90 billion plan that would put $150 billion back into the fund, but that’s still far from what the country should be spending.