Business as Usual Won't Get the Job Done

September 28, 2010

Business as usual won’t get the job done—or quickly create jobs. But a targeted and carefully structured infrastructure investment plan will quickly create jobs and help stimulate the economy.

That’s how Dr. William Buechner, vice president for economics and research at the American Road & Transportation Builders Association (ARTBA) sees it.  It’s a view shared by a dozen other scholars in an October 24 letter to the Federal Reserve Chairman and Secretary of Commerce.

Prior to joining the transportation construction industry’s voice in nation’s capital, Beuchner served almost two decades as a lead economist for the Congressional Joint Economic Committee. He earned his doctorate in economics at Harvard University where he served as a research associate with the late John Kenneth Galbraith. With his unique blend of industry and government experience, he knows how federal funds can be quickly put to work, notes ARTBA.

Here are the facts from the letter, as reported by ARTBA:

"Thousands of transportation construction projects appropriate for a stimulus program are ready to go. We are talking about ‘no-plan’ road, bridge, rail and runway improvement projects.  This includes work like milling, resurfacing, and overlays, safety striping, guardrail and sound wall installations, signage repair and replacement and investments in new lighting and safety appurtenances.

"Bridge investments could play a large role in an economic recovery and jobs program.  The backlog of needed work is enormous.  Bridge deck repairs, sealing, resurfacing and preservation work can be put into motion quickly.  So could accelerated bridge inspection, scraping and painting programs.

"The state transportation departments have identified more than 3,000 projects totaling about $18 billion that could be under construction within 60 to 90 days after enactment of economic recovery legislation. We believe thousands of additional projects like those just described awaiting funding by local governments.

"There are two triggers to job creation in transportation construction.  As soon as funding legislation is enacted, material and equipment suppliers begin gearing up to build inventory to meet the impending demand.  And immediately following the award of a contract, weeks before construction begins, contractors begin staffing up, conducting training, purchasing or leasing equipment, purchasing materials, and reactivating or expanding quarries, asphalt and cement plants.

"All of these activities create up-front jobs.

"And that’s exactly why transportation investment has been used in the past to speed recovery and create jobs.

"During the severe 1982 recession, for example, President Reagan increased the federal gas tax by five cents per gallon and expanded federal highway investment more than 50 percent to provide an economic stimulus. That action helped boost employment in the construction industry between 1982 and 1985 by almost 700,000 jobs.

"To get the maximum, quick-start job creation impact from transportation investment stimulus, we would recommend the following:

  1. The program should incorporate 100 percent federal financing, with no required state match;
  2. It should include a "maintenance of effort" requirement on states, so the impact is not lost to substitution of funds;
  3. States should be required to let projects before a time certain or the funds would be made available to others;
  4. Give states the flexibility to amend their STIPs to accelerate work; and,
  5. Investments should be allowed on off-system projects.

On October 24, eleven leading scholars wrote to Treasury Secretary Paulson and Federal Reserve Chairman Bernanke saying, "We project that there are $15-20 billion worth of transportation projects that could be put out to bid in the next 30 days, leading to contractors on site in 60-90 days—and generating a considerable flow of money back into the economy."

These industry leaders include: Carlos Arboleda, University of Illinois at Urbana-Champaign; Lansford Bell, Clemson University; Nicola Chiara, Columbia University; Paul Chinowsky, University of Colorado at Boulder; Michael Garvin, Virginia Tech; Witold Henisz, Wharton School University of Pennsylvania; Raymond Levitt, Stanford University; John Nelson, University of Wisconsin at Madison; Ryan Orr, Stanford University; Charles Skipper, Medical University of South Carolina; Antonio Vives, Stanford University.