Infrastructure Spending Stimulates the Entire Economy

President Obama’s $787 billion American Recovery and Reinvestment Act — “the stimulus” — originally offered nearly $400 billion for infrastructure projects until the republithugs threw another tantrum and hijacked $260 billion of it for tax cuts. That’s one third of the entire stimulus package. No wonder it hasn’t worked as well as it could have. Now they’re whining that the stimulus didn’t create enough jobs. Well, duh. That’s because tax cuts don’t create jobs. Only consumer demand for products and services does that.

In February, the White House announced plans to spend $53 billion on an intercity high-speed passenger rail system. President Obama wants to give 80 percent of Americans access to high-speed rail within 25 years. This is the first step in that process.

Republicans love to ridicule infrastructure spending, whining that it produces only “temporary jobs”, and benefits only construction workers. As usual, they are wrong. They don’t believe this stuff. They want you to fall for it. More than nine million Americans work in the construction industry, including my husband, who is an ironworker. Of course, every construction job is temporary. What do you think happens when the building, bridge, or road is finished?

Construction workers work just like actors. They’re hired for a particular project. When the project ends, the company might have another project for them, or not. Perhaps they can find work with another company. If not, they collect unemployment compensation until another job comes along. Sometimes that happens in a few days; sometimes it takes a few months. They routinely have six, seven, or more employers in a single year. Most of them are only paid when they work. There are no paid sick days, vacation days, or holidays. When bad weather closes a job, they aren’t paid for that day. But when you string enough of those jobs together, you can have a career that supports a family with good wages and benefits.

The Keynesian economic theory is one of the few classic economic principles that is based in reality. It maintains that government should increase spending during a recession. It should buy more of the things that government normally buys.

Those things are new and repaired roads, bridges, dams, harbors, levees, tunnels, buildings, schools, parking garages, subways, railways, parks, sewers, stadiums, airports, and other public facilities. That spending creates jobs for construction companies and workers. Those projects create demand for the supplies, equipment, tools, and other materials that they need for those projects. It creates demand for the trucking companies to ship them and the warehouses to store them. That creates jobs in all of those industries. If the companies supplying the construction industry have enough work, they can spend some of their revenue to hire more employees or to upgrade their own facilities. See, more demand, more jobs.

Then all of those workers have paychecks that they can spend on groceries, clothing, furniture, cars, houses, utilities, entertainment, appliances, restaurants, vacations, and all sorts of things. That creates demand in those industries. And that creates jobs. If those companies have enough work, they can spend some of their revenue to hire more employees or to upgrade their own facilities. See, more demand, more jobs. And government gets its new stuff built and its old stuff fixed. See. Everybody wins.

If you work for any business that has ever sold anything to a construction company or a construction worker, then you have personally benefitted from stimulus spending.

Meanwhile, the construction industry is the single most dangerous occupation in the United States. Construction workers comprise only eight percent of the workforce, but suffer 22 percent of all work-related deaths. Please remember this the next time the republithugs try to eviscerate workplace health and safety rules.

Take this quiz to see how Republican state legislators spend their time, instead of creating jobs.

And remember.


For more information:

See where the stimulus money is going

High-Speed and Intercity Passenger Rail

U.S. Bureau of Labor Statistics: The Construction Industry

Labor Unions: Myths and Facts

Unemployment Compensation: Myths and Facts



Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s