Alerting Congress: Most jobs created by transportation investment occur in non-construction sectors
Brian Ethridge | December 10, 2014
If Congress somehow lacks the motivation needed to agree on a long-term Highway Trust Fund, a new report from IHS Inc., a leading global source of critical information and insight, may lead to some more serious discussions.
“Congress has decided to leave town and leave behind a gaping policy hole that needs to be filled,” said Pete Ruane, president and CEO, American Road & Transportation Builders Association and co-chair of the Transportation Construction Coalition, before the official release of the report.
The report indicates that two-thirds of the economic benefits and jobs created by federal highway and transit investment occur in non-construction sectors. The study also finds that every dollar invested through the federal Highway Trust Fund (HTF) in state highway, bridge and public transit infrastructure programs returns 74 cents in tax revenue.
The report, “Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Program,” reveals that 70 percent of the economic benefits, or value-added, of federal HTF investments in transportation improvements occur in non-construction sectors of the economy. Among the sectors that benefit the most are service industries such as business, education, health and leisure, and hospitality.
“62 percent of the jobs created from federal highway and mass transit investments are outside the construction industry.”
The study also finds that 62 percent of the jobs created from federal highway and mass transit investments are outside the construction industry. Over one-third of all jobs created are also in service industries like business, education, health and leisure, and hospitality.
“What this report makes clear is that our entire economy benefits from federal investments in highway and transit projects,” said Stephen E. Sandherr, chief executive officer, Associated General Contractors of America and co-chair of the Transportation Construction Coalition. “But that economic activity and those jobs are at risk if Congress and the Obama administration can’t figure out a way to pay to get our roads, bridges and transit systems back up to a state of good repair and to meet future travel and shipping needs.”
Current federal highway and public transit investment, which is about $50 billion annually, generates an average $31 billion in personal income tax receipts per year and $6 billion in federal corporate tax receipts per year due to increased economic activity, according to the analysis. This amounts to 74 cents returned on every dollar invested.
Congress has been aware of the country’s deteriorating transportation infrastructure for quite some time. There are several reports that indicate the lack of funds needed to maintain current infrastructure and build new, better, roads. But the IHS, Inc. report is different.
“Our message for the new Congress is simple: Find a permanent solution for the Highway Trust Fund early next year…”
“What makes this study different is that it focuses on the outcomes of federal-level highway and transit investment and measures its significant impact on every sector of the U.S. economy,” said Ruane. “This is one policy area where Congress’ involvement could actually yield meaningful and long-lasting economic results for hundreds of industries and millions of households. Our message for the new Congress is simple: Find a permanent solution for the Highway Trust Fund early next year so that state governments have the resources they need to make strategic and economically-beneficial transportation investments.”
IHS notes that current levels of federal investment on highway and public transit spending contribute nearly one percent to the U.S Gross Domestic Product (GDP), the measure of goods and services produced by the economy.
Other economic benefits include:
• Every $1 in federal highway and mass transit investment increases the nation’s GDP between $1.80-$2.00
• Current federal transportation spending contributes on average $410 to real income per household each year.
IHS also studied the resulting impacts from five percent annual increases in federal highway and transit investment from 2014-2019, and found the added investment would create:
• Between 78,000 and 122,000 new jobs by 2019 (includes direct, indirect, and induced jobs);
• An annual average increase of $40 in real household income each year;
• An additional $9.6 billion in real GDP for the U.S. economy by 2019; and
• On average an additional $4.9 billion per year in federal, state and local government revenue.
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