January 5, 2020
Activities: Economic Development, Public Works, Transportation
Geography:
Demographics:
Annual ROI: 0.0%
Image source: Pixabay
America’s $18 trillion economy relies on a vast network of infrastructure from roads and bridges to freight rail and ports to electrical grids and internet provision. But the systems currently in place were built decades ago, and rising maintenance costs are causing these systems to fall into disrepair while holding economic performance back.
Many bridges are structurally deficient and antiquated drinking water and wastewater systems pose risks to public health. Meanwhile, Americans’ international peers enjoy more efficient and reliable services, and their public investment in infrastructure is on average nearly double that of the United States.
How big is this problem? According to a recent study by the Brookings Institution, it scales the hundreds of millions of dollars, but creates enormous economic opportunity for the United States.
Despite the importance of infrastructure, the U.S. has not spent enough for decades to maintain and improve it. It accounts for about 2.5 percent of the economy, compared to about 3.9 percent spent in Canada, Australia and South Korea, 5 percent for Europe and 9-12 percent in China. The McKinsey Global Institute estimates that the U.S. must spend at least $150 billion more a year on infrastructure through 2020 to meet its needs. This would add about 1.5 percent to annual economic growth and create at least 1.8 million jobs.
Concrete, steel and fiber-optic cable are the essential building blocks of the economy. Infrastructure enables trade, powers businesses, connects workers to their jobs, creates opportunities for struggling communities and protects the nation from an increasingly unpredictable natural environment. From private investment in telecommunication systems, broadband networks, freight railroads, energy projects and pipelines, to publicly spending on transportation, water, buildings and parks, infrastructure is the backbone of a healthy economy.
It also supports workers, providing millions of jobs each year in building and maintenance. A Brookings Institution analysis Bureau of Labor Statistics data reveals that 14 million people have jobs in fields directly related to infrastructure. From locomotive engineers and electrical power line installers, to truck drivers and airline pilots, to construction laborers and meter readers, infrastructure jobs account for nearly 11 percent of the nation’s workforce, offering employment opportunities that have low barriers of entry and are projected to grow over the next decade.
Important national goals also depend on it. The economy needs reliable infrastructure to connect supply chains and efficiently move goods and services across borders. Infrastructure connects households across metropolitan areas to higher quality opportunities for employment, healthcare and education. Clean energy and public transit can reduce greenhouse gases. This same economic logic applies to broadband networks, water systems and energy production and distribution.
Big demographic and cultural changes, such as the aging and diversification of our society, shrinking households and domestic migration, underscore the need for new transportation and telecommunications to connect people and communities. The percentage of licensed drivers among the young is the lowest in three decades, as more of them use public transit and many others use new services for sharing cars and bikes. The prototypical family of the suburban era, a married couple with school-age children, now represents only 20 percent of households, down from over 40 percent in 1970. Some 55 percent of millennials say living close to public transportation is important to them, according to a recent survey by the Urban Land Institute.
Yet unlike Western Europe and parts of Asia, the United States still has a growing population. We’ve added 25 million people in the past 10 years. This tremendous growth, concentrated in the 50 largest metropolitan areas, will place new demands on already overtaxed infrastructure. Metropolitan areas must be ready to adapt not only to serve millions of new customers but also to help poorer residents, many of whom are jobless, have the best chance possible to find work.
A recent Brookings analysis found that only a quarter of jobs in low-skill and middle-skill industries can be reached within 90 minutes by a typical metropolitan commuter. Successful cities will be those that connect workers to jobs and close the digital divide between high-income and low-income neighborhoods. The White House notes that broadband speeds have doubled since 2009 and that more than four out of five people now have high-speed wireless broadband, adoption rates for low-income and minority households remains low (about 43 and 56 percent, respectively.)
Our economy is changing as fast as our society. Over 83 percent of world economic growth in the next five years is expected to occur outside the United States, and because of rapid globalization, it will be concentrated in cities. This offers an unprecedented opportunity for American businesses to export more goods and services and to create high-quality jobs at home. It also amplifies the importance of our seaports, air hubs, freight rail, border crossings and truck routes, which move $51 billion worth of goods quickly and efficiently each day in the complex supply chains of the modern economy.
The diverse energy boom also disrupts our infrastructure. Natural gas needs new truck, pipeline and rail networks. Rooftop solar panels have rattled electric utilities, which are scrambling to find ways to incorporate and store the energy they produce while keeping the grid operating. At the same time, finding the money to pay for the development of a smart electricity grid and for clean energy presents challenges, as hundreds of thousands of small and large projects are projected to come online in coming decades.
Read Full Story