The highway and transit portion of the Senate-passed $1-trillion infrastructure package would provide a significant lift to the U.S. economy and create more than 250,000 jobs, a new analysis has found.
The study’s Sept 22 release comes just days before the Sept. 27 target that House Speaker Nancy Pelosi (D-Calif.) has set for a floor vote on the bill, the Infrastructure Investment and Jobs Act, or IIJA.
The analysis, conducted by IHS Markit and commissioned by the American Road & Transportation Builders Association, says that the IIJA’s $153.7 billion in additional highway and transit funding would generate an estimated $488 billion toward the U.S. Gross Domestic Product by 2027.
Measured another way, it says that each dollar of the bill’s highway, bridge and transit funding increases would produce as much as $3.60 in increased economic activity.
Unsurprisingly, the construction industry would be a major beneficiary of the IIJA’s increased highway-transit funding, the report indicates. It finds that construction would account for 48% of the total estimated jobs created by the bill.
Construction would account for between 25% and 30% of the IIJA highway-transit boosts' estimated total increases in sales, contribution to GDP and labor wages or income.
One cautionary note: the study only looks at aspects of the highway, bridge and transit sections of the IIJA, which also includes funding for a wide range of other infrastructure sectors, including water, the electric grid and broadband, for example.
Alison Premo Black, ARTBA senior vice president and chief economist, also points out that the report only assesses the impacts of the IIJA bill's proposed increases in highway and funding, and not the entire federal highway and transit programs. Nor does the study cover the impact of nonfederal highway and transit funding, she said via email.
Highway and Transit Increases
In all, the IIJA, which the Senate approved on Aug. 10, includes $550 billion in new federal funding—"new" referring to increases over the current baseline amounts. That includes $110 billion in new dollars for highways and bridges, $66 billion for passenger and freight rail and $39 billion for public transit.
The IHS Markit report estimates that the IIJA would boost highway and bridge funding by $19 billion in 2022—the bill’s initial year—rising to a nearly $25-billion increase in 2026.
Because of how federal construction funding tends to ramp up over projects' multi-year lives, the annual increases in actual outlays would travel a gradual path, starting at $3.2 billion in 2022 and climbing to $20.3 billion in 2026. For transit, outlays would show an increase of $4.2 billion in 2022, growing to $8.6 billion in 2026, according to the study.
ARTBA's Black said in a statement, "The conclusions of the report further quantify the positive economic benefits of federal highway and transit investment."
She adds, "This is a program that impacts every community in America and would provide benefits to every state economy and household."
The report does include a state-by-state breakdown of the IIJA highway-transit hikes' estimated economic impact.
For example, it finds that the states expected to see the largest positive economic impacts—in GDP—from IIJA highway and bridge funding are Texas ($5.37 billion), California ($5.06 billion), Florida ($2.61 billion), New York ($2.31 billion) and Pennsylvania ($2.26 billion).
For public transit funding, the states with the largest estimated positive economic impacts are: New York ($4.41 billion), California ($3.85 billion), Illinois and New Jersey, (tied at $1.75 billion) and Texas ($1.33 billion).