Infrastructure Spending Not Targeted to High-Unemployment States: But Should It Be?

Pro Publica put together an informative analysis and interactive chart showing that stimulus money isn’t being targeted at high-unemployment states:


This is useful information. That said, I don’t actually think infrastructure spending should be targeted at high unemployment states. Look, for example, at a quintessential high-unemployment state like Michigan. Things are bad there for the same reasons things are bad everywhere. But the reason things are especially bad in Michigan is the structural decline of employment levels in the Detroit-centered automobile industry. One upshot of this structural decline is that today Michigan accounts for a smaller share of America’s population than it did in the past, and it will represent an even smaller share in the future. Under the circumstances, it wouldn’t make sense to locate a disproportionately large share of new infrastructure money there. Infrastructure should be built where it’s most useful—primarily in the largest and/or fastest growing of the 100 largest metro areas.

One thing to note about this is that it’s not as if it’s impossible for spending outside of Michigan to help people living in Michigan. If currently unemployed Northern Virginia and Maryland construction workers get jobs building the Silver Line and the Purple Line that makes it more likely that they’ll buy the products Michigan makes than they would be if they were sitting around idle.

Stimulus money has dual purposes, to provide direct assistance to people in need and stimulate the economy, and also to lay the groundwork for future prosperity by undertaking worthwhile projects. In the case of infrastructure, it’s appropriate to weight the balance of considerations primarily toward “undertaking worthwhile projects” which means the benefits probably won’t be narrowly targeted at the worst-off places. Other aspects of the stimulus package are directly targeted at unemployed workers and therefore will disproportionately benefit areas with a lot of unemployed workers.