Infrastructure Investment is "Just-Right" Jobs Strategy

How can we build modern transportation, green jobs, energy independence? How do we know that these "shovel-ready" projects are all worthy of our investment?
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Watching the unfolding debate over the Obama administration's plan to stimulate job growth by investing in infrastructure reminds me of an old joke about two guys in a diner. The first one says, "Ugh, this food really tastes bad." His friend replies, "Yeah it's awful -- but you know what's worse? The servings are too small!"

The current version of the story, playing out in The Washington Post and elsewhere, contains its own glaring contradictions. According to its critics, the problem with the Obama plan is that it's not only too slow, it's also too fast.

The "too slow" argument is familiar for me and my colleagues at the Economic Policy Institute. Late last year, with the recession clouds gathering, we put together recommendations for an economic recovery plan to try to get lawmakers focusing on what everyone knew was coming. We urged Congress to start assembling a comprehensive stimulus package to head off at least some damage from a new recession through strategic investment in the needs of people, states, and infrastructure in order to slow and shorten the decline, contain damaging layoffs, and, at the same time, give us tangible, essential projects like road, bridge, sewer and school repairs and construction that we needed to be doing anyway.

The mention of infrastructure got the attention of some critics, as we had anticipated. They complained that new infrastructure projects require too much start-up time and that new jobs wouldn't materialize in time to help. And we pointed to a backlog of ready-to-go projects and infrastructure repairs that, if funded, could be accelerated to keep more American workers earning -- and spending -- paychecks.

Then in January, when the 2008 recession was just two weeks old and the economy was already losing the battle to create enough jobs just to keep even with population growth, the Joint Economic Committee asked EPI to testify about what we should be doing to avoid recession. We recommended essential infrastructure repairs and projects as the cornerstone of a job-growth strategy, with an emphasis on both "shovel-ready" projects, to satisfy the "too slow" critics, and longer term projects that would help sustain a recovery by kicking in later. (Even in so-called "short" recessions there are several subsequent years of job shortages and high unemployment, so projects that begin within a year would still be very useful in sustaining job growth while giving us the schools, sewage treatments, and bridges that we need.) After more testimony and a policy forum keynoted by Pennsylvania's Governor Ed Rendell, more people came around to the idea including, to his credit, President-elect Obama and his economic team.

Unfortunately, now that the "too slow" critics are (mostly) in retreat, the "too fast" reinforcements have arrived. They worry that the "shovel-ready" projects are too small-bore and might derail the funding that would be needed for bigger, longer-term projects that are yet to be conceived and developed. The Post article captures this objection when it notes that fixing potholes and shoring up bridges are not the kinds of projects with the "power to stir men's souls," as one quote put it.

So, what about the big picture? How can we build modern transportation, green jobs, energy independence? How do we know that these "shovel-ready" projects are all worthy of our investment? If we spend too much refurbishing what we've got now, don't we endanger our ability to get what we want for tomorrow? And how do we make sure that the jobs we're creating are the ones we want - jobs to open opportunities, to sustain families, to rebuild the ladders up for the next generation. Can we do all this at once?

To that big final question, I have a one-word answer: Yes - not because it will be easy, but because we have to. We are deep in a recession that's nearly a year old with no bottom in sight. Therefore we need big, bold action - spending, not tax "rebates" - that that can help us stop losing jobs and start creating new ones quickly, and also for the longer term.

We have to avoid the trap of "either-or" thinking. Without a major, multi-year recovery package we can expect unemployment above 10% in early 2010, and black unemployment approaching 20%. Therefore, while we are taking fast action to stimulate the economy quickly, we must also start addressing our longer-term public investment needs as well: clean, renewable energy; upgrading our health care infrastructure (computerizing hospitals and doctors' offices); and, providing broadband connectivity to rural areas and urban neighborhoods now being left behind. We need to find ways to target these investments so that they will generate employment in the low-income and heavily minority communities, which are always in recession and now face depression-level challenges.

And finally, we have to enable working people to share, once again, in the prosperity that they will help to create. A crucial step is to fix our broken labor system, which now gives most people no wage or income growth even when productivity is rising rapidly. We need to reset the minimum wage to half of the average wage - a level where it used to be and one which people can actually live on. We need to enforce and improve labor standards for overtime and other matters. Restoring workers' right to form unions through the Employee Free Choice Act is another critical part of fixing our broken labor system.

Thinking small is not an option. What gives me great hope is that this is where I think the Obama administration is going.

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