When President-elect Barack Obama met with the nation's governors in early December, they urged him to invest more than $130 billion in federal dollars to revitalize our country's aging infrastructure. The governors pointed out that this kind of public spending has far greater potential for creating jobs and stimulating the economy than the financial sector bailouts advanced by the Bush Administration and adopted by Congress just a few months ago.
Government spending on public works projects has played a key role in America's economic growth, from the great canal and rail projects of the 19th Century to the innovative public works programs of the New Deal, the construction of the interstate highway system in the 1950s and 1960s, and the space program in the 1960s and 1970s. These investments laid the foundation for entirely new industries and supported a robust economy and employment growth for decades.
Some critics argue that public works projects do not create jobs fast enough to help our ailing economy. But, this observation ignores the fact that there are thousands of backlogged highway improvement projects and mass transit expansions that have already been designed and are "ready to go" within a matter of months, if not weeks, after funds are made available.
It's true that given the shape of the federal budget, any new infrastructure program will be paid for with borrowed money and thus contribute to the already burgeoning deficit. Such expenditures are justified, however, because they will immediately get millions of unemployed workers back to work, paying taxes, and buying goods and services. Moreover, the benefits of projects built with borrowed money will be recaptured by the national economy for decades to come.
The jobs created by these long-delayed projects extend far beyond the construction industry, boosting employment among suppliers in manufacturing, transportation, retail, and professional services. This is especially true if the government broadly defines infrastructure to encompass not just traditional highway and bridge work, but alternative energy projects and 21st Century school buildings.
A recent hearing by the U.S. House Committee on Transportation and Infrastructure highlighted the enormous stake American businesses have in a revitalized infrastructure. Only 40% of the nation's roads are in good condition and more than half of all urban rail stations are substandard. By 2035, the U.S. Department of Transportation predicts overloaded rail corridors could force large amounts of commercial freight back onto already congested highways.
As construction projects get underway, demand for skilled workers, goods, and services in each project's supply chain will increase. Manufacturers of everything from steel and cement to glass, furniture, and fiber optic wiring will benefit. Demand for engineering and design services will also rise. Construction of new schools and other buildings will boost demand for state-of-the-art technical equipment and for employees trained to use advanced hardware.
Infrastructure investments also enhance the long-term employment prospects of Americans as well. Facilities for education and training are in serious need of repair or replacement. A new generation of properly-equipped school buildings will strengthen the competitiveness of young people looking for work in all industries. Dislocated workers will also benefit from being trained in new high-demand skills as part of their infrastructure work.
Projects to extend broadband services will increase the skill levels of American students and workers--something that should be a high priority given that the Organization for Economic Co-operation and Development (OECD) ranks the U.S. 15th out of 30 developed countries in terms of access to high-speed Internet services.
Americans should be encouraged that President-Elect Obama, nearly all of the country's Governors and leading members of Congress have embraced infrastructure investments as a central component of their strategy to revive the economy. A significant and well-designed infrastructure investment plan is a very effective approach for putting people back to work while also advancing the nation's long-term productivity and growth.
Carl Van Horn, Ph.D. is professor of public policy and director of the John J. Heldrich Center for Workforce Development at Rutgers, The State University of New Jersey www.heldrich.rutgers.edu.