Unpacking the Economic Benefits of Highway Investment

All Roads Lead to Prosperity

The current state of political and economic affairs in the United States has generated a great deal of talk about investment in our nation’s infrastructure. There are many direct and indirect economic benefits that come from this type of investment, particularly if that investment is made in our roads and highways. Now more than ever, it’s crucial that we consider and advocate for investment in our highway infrastructure.

Roadwork is Good Work

The first and most immediate benefit is direct job creation. In a study by The Federal Highway Administration, an agency within the U.S. Department of Transportation categorizes job creation in three ways. A direct job is a job created by the actual government expenditure and the wages paid for from the funds for the project. Indirect jobs are the jobs created by expenditures the suppliers make to produce materials used for the project. The cost of this would be included in the cost of the materials. An induced job is the job created elsewhere in the economy as increases in income from the direct government spending lead to additional increases in spending by workers and firms.

An analysis by Standard & Poor’s (S&P) from 2014 found that an infrastructure investment of $1.3 billion could add 29,000 jobs to the construction sector, alone. And the effects would extend beyond just construction jobs to include related businesses including manufacturing in related business sectors. But the economic benefits of investing in highway infrastructure go far beyond just the jobs created in the construction industry. The additional infrastructure could have the effect of bolstering other commercial sectors, as well.

Accelerating Economic Growth

The Rand Corporation, a nonprofit research and analysis firm, points out that there are a number of reasons the economy benefits from this type of investment. For one, it streamlines logistics for many companies giving them broader access to suppliers and a quicker avenue for getting products to market which means they can keep leaner inventories and more easily execute just-in-time production. New highway infrastructure also benefits workers who can expand their pool of potential employers since new roads and highways can transport them to jobs at farther distances.

Roughly nine out of 10 jobs created by investment in highway infrastructure are middle-class jobs. This typically results in economic benefits for retail and service businesses as it is almost immediately reinvested into goods and services like food and clothing, automotive and household expenses to name a few. Investing in our nation’s roads and highways is more beneficial than it seems at first glance. But, it’s one of the best ways to strengthen our national, as well as our regional economies and to put people back to work.