Susan Walsh/AP Photo
President Joe Biden speaks about his infrastructure program during a virtual meeting from the South Court Auditorium at the White House complex, August 11, 2021.
The Build Back Better legislation now working its way through the budget reconciliation process does many important things, but let’s not lose sight of the job creation benefits. Even after a partial and intermittent recovery, the U.S. economy currently has 5.3 million fewer jobs than in the last pre-pandemic month of February 2020.
Our friends at the Economic Policy Institute have done a comprehensive study of the combined impact of the bipartisan infrastructure bill plus the larger reconciliation package based on Biden’s Build Back Better. They find that the two, taken together, will directly create upward of four million new jobs.
Of the direct job creation, 556,000 new jobs would be created yearly in manufacturing; 312,000 in construction industries; 763,000 in climate-related jobs, including electric-vehicle infrastructure and federal procurement of clean technologies, public transit, power infrastructure, climate resilience, agriculture and forestry innovations, environmental remediation, and scientific research and development; and 1.2 million in the caregiving professions. So there is a powerful synergy between the social investment that the economy needs and the complementary gains in job creation.
Since these federal outlays come with wage standards (and manufacturing and construction jobs already pay well above median wage), these public investments also have major benefits in the form of higher worker pay. Build Back Better not only creates upward of four million new jobs; it creates good jobs.
This is especially important in the caregiving occupations, where earnings have been a disgrace. By dramatically increasing public investments in universal pre-K, child care, home care, and other forms of elder care, government both enables workers to gain more skills that command higher pay and provides leverage for government standards to raise earnings directly.
EPI’s analysis also provides a very useful comparison between Biden’s Build Back Better as revised by budget reconciliation, and the much-touted bipartisan infrastructure bill, now known as the Infrastructure Investment and Jobs Act. That act, with a much lower price tag of $548 billion in new money, creates only 772,000 new jobs per year, or just 19 percent of the combined total. Build Back Better, investing $3.5 trillion, creates the lion’s share—3.2 million new jobs per year.
Build Back Better provides an array of complementary gains that will benefit citizens of red states along with blue ones.
This is the benefit of going big. Before these deals are done, Congress may shave the total figure and shift some of it to spending disguised as tax cuts, such as the refundable Child Tax Credit. But the order of magnitude will not change much, and it is monumental.
As we’ve seen from reports of jobs going begging, workers now have increased bargaining power to turn down lousy jobs with low pay. That dynamic, in turn, has raised prevailing wages, even without a higher statutory minimum wage.
When the federal government creates another four million good jobs via direct public spending, that will increase worker bargaining power and earnings even more. This four-million-job figure does not even take into account multiplier effects, as the public investment helps underwrite and stimulate new economic activity in the private sector, making the likely real total well in excess of five million new jobs.
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It has long been established by social science research that increases in early-childhood education pay dividends several times over in the form of improved prospects of lifetime earnings and reduced need for social services and reduced entanglement with the criminal justice system. But similar kinds of multiplier benefits result from other areas of public investment. As the EPI analysis points out,
Spending on infrastructure yields immediate benefits due to the labor- and capital-intensive demands of these investment projects, and it continues to yield economic dividends for years to come by allowing people, goods, and ideas to move around more efficiently. Estimates of the longer-term economic impacts of infrastructure spending find returns on investment range from 17 to 73% as businesses more efficiently reach markets, workers access more job opportunities, and families find it easier to access quality education and health care.
Build Back Better provides an array of complementary gains that will benefit citizens of red states along with blue ones, Trump voters as well as Biden voters. There was a time when both parties recognized the benefits of this scale of public investment, from the original 1944 GI Bill to the Eisenhower-sponsored interstate highway system, as late as ARPA-E, intended to increase U.S. capacity in renewable energy, and created in 2007 under George W. Bush.
No longer. Though the bipartisan infrastructure bill pointed in the right direction, it is a pittance compared with the need. It would be a miracle if even one of the Republican co-sponsors voted for Build Back Better, which thankfully can be enacted with 50 Democratic votes.
