Employment Impacts of Highway Infrastructure Investment

For many years the Federal Highway Administration (FHWA) has periodically estimated the employment impacts of highway capital expenditures. FHWA is in the process of updating the estimated impact of Federal-aid highway expenditure to reflect changes in economic climate relative to 2007, labor productivity, and changes in consumers' rate of saving. These changes will exert downward pressure on the highway construction employment relative to the 2007 estimate of 27,800 jobs per $1 billion of Federal-Aid highway capital expenditure. Since the release of FHWA's estimate for 2007, three significant analyses have been conducted reflecting more recent economic data.

The White House has issued state-by-state estimates of the employment impact of the American Jobs Act at http://www.whitehouse.gov/blog/2011/09/09/american-jobs-act-state-state. Estimates are provided for the highway and transit investment funded by the proposed Act, based on a multiplier which predicts that $1 billion in Federal highway and transit investment supports 13,000 jobs. Therefore the $50 billion of transportation infrastructure investment in the American Jobs Act would support 650,000 job-years of employment.

The National Economic Council produced a report estimating the employment impact of a lapse in the federal program for road, bridge and transit, which is available at http://fastlane.dot.gov/2011/09/the-clock-is-ticking.html

The Council of Economic Advisers produced a report estimating the employment impact of highway construction expenditures under the American Recovery and Reinvestment Act of 2009. This is available at http://www.whitehouse.gov/administration/eop/cea/estimate-of-job-creation/

The employment impacts of highway infrastructure investment do not remain constant over time. Increases in construction materials prices and wages over time will tend to reduce the number of jobs supported by each $1 billion invested. Other factors such as changes in worker productivity and consumer's typical rate of savings will also affect the average number of jobs supported.