Press Releases

News from EPI Investing in Infrastructure Will Create Jobs and Boost Productivity

The importance of maintaining and even expanding infrastructure spending for economic recovery and growth is highlighted by a new paper, The Short- and Long-Term Impact of Infrastructure Investments on Employment and Economic Activity in the U.S. Economy, written for the International Labour Organization by EPI Research and Policy Director Josh Bivens. In the paper and the accompanying executive summary, Bivens examines the economic impact of substantial increases in infrastructure investment over the next decade. Bivens analyses three possible scenarios for infrastructure investment:

  • A permanent rollback of the budget cuts from the 2011 Budget Control Act (BCA) on non-defense spending
  • A package of green investments that boost energy efficient and provide a down-payment on constructing a national “smart grid”
  • An across-the-board increase in transportation and utility investments that would fill the nation’s “infrastructure deficit”

“If policy followed evidence, then the response to the Great Recession would have ushered in a flood of infrastructure investments, but since the spending in the Recovery Act faded we have instead embraced austerity that has throttled the recovery,” said Bivens. “The economy remains substantially below full-employment and one of the best ways to insure we get there quickly is a large program of infrastructure investments.”

The debate over infrastructure spending has been re-ignited in recent weeks with the looming deadline facing the National Highway Trust Fund (NHTF). Unless Congress finds a way to increase funding for the NHTF it will become insolvent by the end of the summer, leading to damaging cutbacks in infrastructure spending that will slow the economic recovery. A program of ambitious infrastructure investments, begun while the economy is still weak, would boost economic growth and employment in the short-run and would boost productivity in the long-run.