Research: Invest in public infrastructure to boost productivity, increase pay, and accelerate economic growth

A new study from the Business Roundtable details how investing in essential public infrastructure produces positive economic outcomes.

…Business Roundtable – an association of CEOs of America’s leading companies – released a new economic analysis  that shows a significant reinvestment in U.S. public infrastructure systems would create 31,000 additional new jobs over the next decade and add $1,600 in disposable income for the average Washington household every year for 20 years.

In addition, the analysis shows that as a result of increased infrastructure investment over a 20-year period, Washington would benefit from:

  • $93 billion of additional output from personal and non-tradable services;
  • $41 billion of additional output from finance, insurance and real estate; and
  • $29 billion of additional output from trade.

There’s more in this graphic:

As we reported earlier this week, Washington has significant infrastructure deficits. The Business Roundtable report, prepared by the Interindustry Forecasting Project at the University of Maryland, finds a consistent pattern of underinvestment in public infrastructure.

A modern infrastructure system is key to unleashing the full productive potential of the U.S. economy. In recent years, however, public-sector investment in infrastructure has not kept pace with the dynamism, innovation and growth elsewhere in the U.S. economy. This study is designed to quantify and make the case for the benefits of taking action to reverse this trend. Using an industry-base macroeconomic model, it estimates the economic impacts of a fiscally responsible investment of $737 billion over 10 years in surface transportation, water and wastewater, aviation, water resources, and water transportation, plus the crucial step of establishing a “new normal” level of public-sector commitment to maintaining American infrastructure. 

The report is rich in detail, contains easy to navigate interactive features, and makes a compelling case for public investment. The researchers lay out their objectives:

The purpose of this modeling study is to quantify the significant, long-term economic benefits of rightsizing investment in the nation’s public infrastructure systems. The costs of doing nothing have been well documented. This study endeavors to advance the national conversation by articulating the benefits of doing something.

What the study is not intended to do is advocate a specific spending amount or particular policy mechanisms for increasing investment. What is clear — and what is reflected in the policy scenario — is that it will take hundreds of billions of dollars in additional investment to bring America’s infrastructure systems back into a state of good repair and capacity capable of supporting continued economic growth and international competitiveness. What is also clear is that the federal government must take a leadership role in renewing investment in the nation’s infrastructure systems and that this investment can and must be made in a fiscally responsible manner.

Right.