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We can't afford to wait for Trump's $1 trillion spending spree

Sergio Hernandez works on the median just east of the new I-25 interchange in Castle Rock, Colorado.
Helen H. Richardson | The Denver Post | Getty lmages
Sergio Hernandez works on the median just east of the new I-25 interchange in Castle Rock, Colorado.

America's infrastructure has suffered from sustained, chronic underinvestment for more than 30 years. We are only now beginning to realize how much this has cost the economy, particularly in jobs.

Analysts estimate that modernizing, repairing and expanding our airports, bridges, electric grid, highways, mass transit, ports, and water and sewer systems to meet current and future needs will require an additional $1.5 trillion to $5 trillion in spending over the next 10 to 20 years.

This is on top of roughly $700 billion a year currently being invested at the federal, state and local level, according to our best estimate using data from multiple sources, including both private and public monies.

The administration has proposed an increase of $1 trillion in infrastructure spending over the next five years—about $200 billion a year. Some are leery, but they needn't be.

The additional spending is necessary. And, based on our analysis, if planned and managed properly, a robust infrastructure program would create millions of new jobs—many of them permanent jobs.

We can't afford to wait.

Despite the obvious need to ramp up infrastructure spending—driven home by occasional headline-making bridge collapses, subway line closures and other such occurrences—the public seems strangely unconcerned, with just 7 percent rating it as "one of the main problems facing America today" in an October 2016 Ipsos poll.

"While some may bristle at the suggestion that a burst of infrastructure spending will produce millions of new jobs, it's a fact."

Perhaps if they understood the substantial job creation potential—a much higher priority in the Ipsos survey—they would think differently.

Infrastructure spending today is responsible for about 15.5 million direct and indirect U.S. jobs, paying an average of $68,000 per year, 28 percent above the U.S. median ($53,000) income, according to the Bureau of Labor Statistics. Imagine 4 million more such jobs. That's what the data suggest is possible if the right infrastructure projects are prioritized.

We recently reviewed more than 100 past and planned infrastructure projects nationwide and determined that an additional $1 trillion in infrastructure spending could create as few as 1.6 million new jobs or as many as 3 million or more, depending on how wisely and effectively the money is spent.

Most infrastructure projects create large numbers of up-front design, engineering and construction jobs, but few long-term jobs. Some projects, such as expanding ports and airports, on the other hand, create large, ongoing, revenue-producing assets that, even after the construction phase, generate significant numbers of permanent jobs.

Infrastructure spending also creates huge numbers of indirect jobs: in manufacturing (steel, glass and concrete, for example), logistics and transportation (getting the goods to the job site when they're needed).

While many of these jobs likely would be created locally, within several hundred miles of the project, many also would be sourced from across the country, including from areas that have been hard hit by changes in manufacturing. These employment effects often are ignored or underestimated.

While some may bristle at the suggestion that a burst of infrastructure spending will produce millions of new jobs, it's a fact.

Indeed, that should be one of the main focuses of the program: maximizing job creation, with a heavy emphasis on long-term jobs that will generate tax revenues that help offset the up-front costs to taxpayers.

"The goal should not be to fund large numbers of one-off "white elephant" projects, but to create strong, vital, economically self-sustaining infrastructure."

Currently, policy makers have no way of assessing the impact of infrastructure on job creation. A lot of numbers get bandied about by advocacy groups and others, but there is no "scoring system" that focuses primarily on infrastructure and job creation, encouraging "seat of the pants" decision making. In other words, Washington and the states are making huge investments without being able to fully gauge the taxpayer's return on investment in terms of jobs.

As part of our analysis, however, we reviewed more than 60 projects, such as repairing Arlington Memorial Bridge, which opened in 1932, expanding Colorado's I-70 mountain corridor, building a new airport in Orlando, and accelerating expansion of Savannah harbor that could begin this year with the right support from Congress and the administration.

These projects, projected to cost some $200 billion to $300 billion, could be used to jump-start the president's initiative and, if acted upon quickly, could deliver real benefits by the first half of 2018, perhaps even sooner.

To set strategic priorities, decision makers need a new approach, focusing not only on the number of jobs but on their quality and economic sustainability. The goal should not be to fund large numbers of one-off "white elephant" projects, but to create strong, vital, economically self-sustaining infrastructure.

Ultimately, America needs to rebuild its infrastructure because America's infrastructure needs to be rebuilt.

But it shouldn't be too much to ask that a stepped-up infrastructure program also have as one of its goals a significant increase in employment. If Washington is successful in this, we can see infrastructure employment increasing from 15.5 million today to at least 18.5 million in five years.

Commentary by Jeff Hill and Norman F. Anderson. Jeff Hill is global leader of The Boston Consulting Group's engineering and construction sector and a member of BCG's global infrastructure steering committee. Norman F. Anderson is president and CEO of CG/LA Infrastructure, a Washington, DC-based consulting firm specializing in global infrastructure issues.

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