Infrastructure Spending Gap Will Cost More Jobs
Policy + Politics

Infrastructure Spending Gap Will Cost More Jobs


A new report by the nation’s engineers warns that a growing shortfall in government spending to rebuild or upgrade deteriorating highways, bridges and transit systems will further undermine the economy and add to the country’s unemployment woes in the coming years.

The report by the American Society of Civil Engineers said that glaring deficiencies in America’s surface transportation systems drained households and businesses of nearly $130 billion last year, including about $97 billion of increased costs to operate and repair vehicles and , $32 billion of increased travel time because of congestion and delays.

If current federal and state government spending patterns continue – or if, more likely, Congress takes a big whack out of transportation spending as part of a deficit reduction deal -- the country’s infrastructure deficiencies could result in the loss of more than 400,000 jobs by 2040, as businesses are forced to cut back to meet their added transportation expenses, according to the study. Within a decade, the economic costs to the country of a deteriorating infrastructure will increase by 82 percent, to $210 billion annually.

The study is the latest in a long series of warnings by think tanks, academics and transportation advocacy groups of the risks of underfunding repairs and upgrading the nation’s infrastructure. Experts say the problem has grown steadily over the past 30 years, as budgetary problems for federal and state officials have gradually mounted.

“But a politically fractured government has mustered little appetite to confront the daunting challenges, which include finding an estimated $2 trillion just to rebuild deteriorating networks,” noted a recent Urban Land Institute/Ernst & Young study on global trends in infrastructure. A Heritage Foundation report said that federal programs spend approximately $50 billion per year on roads and transit systems, which supplements similar spending by state and local governments, usually derived from a state-imposed fuel tax.

More than 65 percent of all federal trust fund spending goes toward general-purpose roads. The rest of these funds are diverted to mass transit, national parks and forests, bicycle trails, earmarks, bureaucracy, urban revitalization, and historic preservation. Because of the vast diversity of transportation spending, the Heritage study said, congestion has worsened in most major metropolitan areas, and roads and bridges have deteriorated everywhere.

Moreover, Congress has failed to authorize the next federal surface transportation bill. SAFETEA-LU, the 2005 transportation authorization legislation, should have expired nearly two years ago, but has been extended a number of times without increased funding levels. Some lawmakers have urged creation of an infrastructure bank to promote highway and bridge construction and repairs.

The American Society of Civil Engineers report focuses on the long term economic downside to underfunding highway, bridge and mass transit projects. Deteriorating conditions and performance impose costs on households and businesses in a number of ways, the report said, including increased operating costs for trucks, cars and rail vehicles and damage to vehicles from pitted roadways.

“As conditions continue to deteriorate over time, they will increasingly detract from the ability of American households and businesses to be productive and prosperous at work and at home,” according to the report.

One troubling side effect of this trend, the study says, is that the U.S. will lose jobs in high value, high-paying services and manufacturing industries. That’s because as more funds are diverted to transportation-related costs, businesses and industries will cut back on their labor costs. This dynamic will create lower demand in key economic sectors associated with business investments for expansion and research and development, and in consumer sectors.