Rebuilding America – Literally! It’s Really Simple
By Shlomo Maital
It has been six years since America’s recession began, at the end of 2007, and as New York Times columnist Floyd Norris notes, the U.S. still has fewer jobs than it did then.
The answer is simple. The U.S. labor-intensive construction industry has not recovered. In the spring of 2006 construction employment was 7,476,000; today, it is 5,851,000. Nearly 1.7 million jobs were lost in construction. This has deeply hurt the U.S. economy’s recovery, because construction jobs pay quite well, and underpin a lot of consumer spending. The housing bubble not only claimed financial victims, from sub-prime mortgages and related assets; it threw many workers out of a job and has not brought them back. Construction is a major, perhaps the main, drag on the recovery.
The solution is really simple. America’s infrastructure is ragged. The interstate highway system was built in the 1950’s, 60 years ago, under President Eisenhower. It needs investment. American airports are old, incredibly crowded (see the photo), and need renewal. Been to JFK lately? Thousands of American bridges are rusting and crumbling and need replacement. Many roads inside cities have huge potholes. Schools need new modern buildings.
If government spending were increased and focused on infrastructure investment, the construction industry could recover and lead a general economic recovery. This in turn would help the rest of the world, too. Such spending is not wasteful, nor harmful, even if it temporarily increased the budget deficit, because it has been proven that infrastructure investment pays a high rate of return. Will it work? China proves it does. China massively invested in construction and investment, when its economic growth flagged during the global economic crisis, building railroads and highways, and quickly restored its rapid growth.
But alas, it is unlikely to happen. There is a Republican-Democrat budget compromise on the table that may avert another U.S. government shutdown, but it includes very small restoration of cuts made under the previous ‘sequestration’ legislation. And it won’t help construction one bit.
America needs rebuilding – its infrastructure, and its society and political system as well. It has the resources to do it. But does it have the will? It seems not.