The Infrastructure Bill: What It Means for Business

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The Infrastructure Bill: What It Means for Business

In recent years American infrastructure has deteriorated rapidly.

Historical US Infrastructure Rank

2008 7
2009 8
2010 15
2011 16
2012 14
2013 15
2014 12
2015 11

The ASCE’s report card is bleak.

A = Exceptional
B = Good
C = Mediocre
D = Poor
F = Failing

Energy D+
Parks and Rec C-
Roads D
Ports C
Bridges C+
Wastewater D
Levees D-
Drinking Water D
Schools D
Transit D
Rail C+
Inland Waterways D-
Aviation D
Solid Waste B-
Hazardous Waste D
Dams D
Cumulative GPA D+

Largely a measure of no long term reauthorizations of transportation spending.

Why?

The Highway Trust Fund Deficit

1957-2007 $0
2008 $8.8B
2009 $7.1B
2010 $9.7B
2015 $15B

December 2015: Congress passes a $305 billion bill to fund roads, bridges, and rail lines.
(Senate Vote: 83-16)
$61 billion a year for the next five years.

While it’s the longest reauthorization of transportation spending in a decade, is it enough?

In 2014 the Economic Policy Institute issued a report outlining the effects of three tiers of transportation bills.

Largely affecting our future, including:

overall economic activity
productivity
number and types of jobs
sustainability

Scenarios range from $18-$250 billion annually.

Scenario 1:
$30 billion annually over the next ten years
Cancellation of automatic across-the-board cuts from the sequester
Traditional infrastructure investments
–Largest portions of funding:
Construction (9 out of 18 billion)

Scenario 2:
$92 billion annually over the next ten years
Centered on energy efficiency in residential and commercial buildings
Creation of national “smart grid”
–Largest portions of funding:
Construction (52/92 billion)
Smart Grid (40/92 billion)

Scenario 3:
$250 billion annually until 2020
Centered on traditional infrastructure (water treatment, distribution, and sewage systems)
Would nearly close the US “infrastructure deficit”
–Largest portions of funding
Construction (83/250 billion)
Water and sewage systems (50/250)
Transit and ground passenger transport (35/250)

All Three Options Would Yield Immediate Economic Boosts

Option 1:
cost: $18 billion
Yield: $29 billion increase in GDP and 216,000 new jobs by year one
Option 2:
cost: $92 billion
Yield: $147 billion in GDP and 1.1 million new jobs by year one
Option 3:
cost: $250 billion
Yield: $400 billion and 3 million net new jobs by year one

Employment:
All three options create jobs that are disproportionately male, Latino, high-earning, and skewed away from young workers.

Male/Female
Option 1: 77/23
Option 2:80.4/19.6
Option 3: 74.1/25.9
Economy average: 50.2/49.8

Latino/non-Latino
Option 1: 15.4/84.6
Option 2: 16.2/83.8
Option 3: 14.3/85.7
Economy average: 13.2/86.8

Under 25 Adults/Over
Option 1: 9.3/80.7
Option 2: 9.5/80.5
Option 3: 7.8/82.2
Economy average: 13.2/86.8

Jobs in bottom wage quintile/Above
Option 1: 9.5/90.5
Option 2: 9.4/90.6
Option 3: 11.2/88.8
Economy average: 18.9/82.1

Economy:
Option 3–the most aggressive policy–would increase productivity growth by .3% annually
That’s equal to half of productivity acceleration in the US Economy between 199-2005
One of the most prosperous periods in American history.

Focus on water/sewage and passenger transport sectors would help many of the largest offenders

Cost to economy per year from lagging infrastructure
[type, cost]
Roads: $130 billion
Transit: $90 billion
Bridges: $76 billion
Rail: $24 billion

As well as help save American infrastructure, life blood of the American economy from WWII to the 1990’s.

ROADS

World Rank: 16

32% Poor or Mediocre Condition [pie chart]

Per Year:
Cost to Economy $130B
Needed Investment $179B
Actual Investment $91B
Shortfall $88B

Unfunded Gap
2010 48%
2048 54%

BRIDGES

Per Year:
Cost to Economy $76B
Needed Investment $20.5B
Actual Investment $12.8B
Shortfall $7.7

25% of US bridges are structurally deficient or functionally obsolete.

TRANSIT

Per Year:
Cost to Economy $90B
Needed Investment $62.5B
Actual Investment $37.5B
Shortfall $25B [same format]

Unfunded Gap
2010 40%
2040 55%
$1 trillion economic cost by 2040.

Accessibility Gap
Households With No Transit 45%
Rural Households With No Transit 86%

RAIL

World Rank: 15

Freight (Private)
Investment 1980-2015: $600B
40 cents / $1 Revenue

Congestion Cost to Economy:
2013 $200B
2040 $288B

Passenger (Public)

Ridership
2000 16 million
2014 31 million
50% up

Northeast Corridor Ridership
2014 11.66 million
2040 43.5 million
75% up

Next 15 Years
Needed Investment $15B
Actual Investment (+)$8B
Shortfall $7B

AIRPORT

World Rank: 5

Cost to Economy
2007 $22B
2012 $24B
2020 $34B
2040 $63B

Per Year:
Needed Investment $7.85B
Actual Investment $3.35B
Shortfall $4.3B [same subtraction format]

Increased infrastructure spending is a key component to making America great again.

Citations

The Infrastructure Bill: What It Means for Business