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How Infrastructure Investments Support the U.S. Economy: Employment, Productivity and Growth

A January 2009 study by the Alliance for American Manufacturing (AAM) outlines how investment in the nation's infrastructure is the most effective approach to creating new jobs. The study claims that roughly 18,000 new jobs would be created for every $1 billion in new infrastructure spending on the nation's transportation, energy, water systems, and public schools.

The report, undertaken for AAM by a team of researchers at the University of Massachusetts-Amherst's Political Economy Research Institute (PERI), found that at least 2.6 million new jobs could be created by increased spending in a "high-end" scenario of $148 billion per year (including $93 billion in public investment). While the construction and service industries will see the vast majority of job creation, manufacturing, which has been devastated by the current economic crisis, would also benefit from such an infrastructure stimulus, seeing an increase of 252,000 jobs nationally.

The benefits for manufacturing would be felt throughout the economy, with new jobs created in such industries as fabricated metals (38,000), concrete and cement (21,000), glass-rubber-plastics (15,000), steel (9,000), and wood products (8,200).

The report further notes that manufacturing employment gains from such an infrastructure program could be improved significantly if the percentage of U.S.-made material inputs were increased. Simply put, a higher share of domestically produced supplies would have a significant impact in terms of generating new manufacturing jobs. Utilizing 100% domestically produced inputs for infrastructure projects would yield a total of 77,000 additional jobs nationally. Manufacturing would account for a significant 69,000 of that increase, a 33% jump in total manufacturing jobs generated.

The report's authors, James Heintz, Robert Pollin, and Heidi Garrett-Peltier of the University of Massachusetts-Amherst's Political Economy Research Institute (PERI), noted, "Public investment makes substantial contributions in terms of employment, economic growth, trade competitiveness, and essential services to the U.S. population. Such investments can also become a key driver in building a clean-energy economy."

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