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Treasury Notes

 Now is the Key Time to Invest in Infrastructure

By: Dr. Jan Eberly and Aaron Klein
3/27/2012

​As President Barack Obama said in his weekly address this weekend, “So much of America needs to be rebuilt right now.  We’ve got crumbling roads and bridges.  A power grid that wastes too much energy.  An incomplete high-speed broadband network.  And we’ve got thousands of unemployed construction workers who’ve been looking for a job ever since the housing market collapsed.  […] Right now, all across this country, we’ve got contractors and construction workers who have never been more eager to get back on the job.  A long-term transportation bill would put them to work.  And those are good jobs.  We just released a report that shows nearly 90 percent of the construction, manufacturing, and trade jobs created through investments in transportation projects are middle-class jobs. Those are exactly the jobs we need right now, and they’ll make the economy stronger for everybody.”

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The report he referenced, published on Friday by the Treasury Department with the Council of Economic Advisers, found that right now is the key time to invest in infrastructure to create middle-class jobs, increase our long-term competiveness, and support a more secure energy future. Unemployment among construction workers stands at over 17 percent right now and has averaged 15.6 percent for the past twelve months. Overall, the unemployment rate among those expected to gain jobs from investment in infrastructure has averaged approximately 13 percent over the past twelve months.  These investments create middle-class jobs – 80 percent of the jobs created are in the construction sector, the manufacturing sector, and the retail and wholesale trade sectors – where nearly 90 percent of the jobs have middle-class wages.

In the long term, transportation choices, including public transit and high-speed rail, deliver benefits to families burdened by fluctuating global oil markets, congested roads, and a lack of transportation options. As you can see in the chart below, the average American family spends more than $7,600 a year on transportation, which is more than they spend on food and more than twice what they spend on out-of-pocket health care costs.

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Additionally, a more efficient transportation infrastructure system reduces our dependence on foreign oil, while saving families time and money today. “As Americans pay about $4 per gallon for gasoline, they're wasting 1.9 billion gallons of it annually in traffic on congested roads,” wrote USA Today, citing the Treasury report. And as Politico reported, the Treasury report notes that traffic congestion on our roads costs drivers more than $100 billion in wasted fuel and lost time. In the long run as these investments bear fruit, American families will continue to benefit by having additional transportation choices which will save them time and money. WTOP radio reported new research shows “Americans could save $200 a month in lower costs if they were able to live in ‘location efficient’ housing.”

Wise investment in infrastructure now saves taxpayers money in the long run. Both the U.S. Chamber of Commerce and the AFL-CIO endorse increasing our investment in infrastructure immediately. The report is “the latest reminder that it’s time to stop the partisan bickering in Washington and invest in our nation’s infrastructure,” said Los Angeles Mayor Antonio Villaraigosa, president of the U.S. Conference of Mayors.

Check out the full report for yourself: “A New Economic Analysis of Infrastructure Investment”

Dr. Jan Eberly is Assistant Secretary of the Treasury for Economic Policy and Aaron Klein is Deputy Assistant Secretary of the Treasury for Economic Policy.

Posted in:  Economic Policy
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