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From Site Selection magazine, September 2010

Signs of the Times

Mark Arend
Illustration by Bob Gravlee


f that green "Project Funded by the American Recovery and Reinvestment Act" sign on the side of the road is increasingly irksome, it's most likely because you sense deep down that whatever project it's associated with won't change much in the long term. It will keep some Transportation Department workers busy for a few weeks, but that's about it. Managing Editor Adam Bruns found the meaningful ARRA projects in terms of economic development in the course of researching his portion of the Global Infrastructure Report — the Cover Story of this issue. See the online version of the article for guides to such projects.

There is no shortage of plans that would bring about actual job growth and economic recovery, rather than mere signage. Perhaps the next Congress will find them of more interest than the present one. Back in the winter, for example, the Milken Institute released a study, Jobs for America: Investments and Policies for Economic Growth and Competitiveness, that is relevant here, given our discussion of infrastructure investment.

The report recommends investment of more than $425 billion in 10 project categories — highway and transit system, broadband infrastructure, onshore exploration and development/offshore drilling, drinking water and wastewater infrastructure, smart grid, nuclear energy, renewable energy (solar, wind, biofuels), NextGen air traffic control system, inland waterways and clean coal technology. But it also calls for an overhaul of the tax structure. Combined, the sky's the limit. The full report is accessible at

Here are the recommendations and their economic impact:

Tax changes:

  • If U.S. corporate income tax levels are reduced to match the current average of OECD countries (22 percent versus the current 35 percent in the U.S.), real GDP rises by 2.2 percent (or $375.5 billion) and 2.13 million jobs are created by 2019.
  • If the R&D tax credit is increased by 25 percent and made permanent, real GDP rises by 1.2 percent and 316,000 manufacturing jobs are created by 2019. The maximum impact is felt in 2017, when there are 510,000 jobs more than in a baseline scenario with no policy change.
  • Modernizing export controls on sales of commercially available technology products to certain countries increases real exports of goods and services by 1.9 percent and adds an additional 340,000 jobs by 2019

Infrastructure investment:

  • All projects combined would directly create more than 3.5 million construction- and R&D-related jobs, which in turn generate additional indirect impacts in the economy. Accounting for these ripple effects, the projects would produce nearly 11 million jobs, averaging 3.5 million annually across the three years.
  • An annual average of 327,089 manufacturing jobs are created, reviving one of the hardest-hit (but highest-paying) sectors of the economy.
  • The largest dollar investment is in the highway and transit system, at $225 billion, creating 6.2 million jobs, roughly 2 million per year.
  • Drinking water and wastewater infrastructure investments add 27,500 jobs for every $1 billion invested.
  • The three sustainability categories — smart grid, renewable energies and clean coal technology — have a combined investment projected at $32.1 billion. Together these projects have the capacity to add more than 1.5 million jobs over three years, or 576,100 per year.

These findings are conjecture; several months after they were put forth, they remain hypothetical. But one has to wonder what the economy would look like in late 2010 if something like this report's roadmap was in use. More to the point, how many site selectors would be choosing U.S. locations for new facilities rather than elsewhere, and how many jobs would those decisions create? Something to ponder next time a green-sign project has you stuck in traffic.

Till next time,

Mark Arend
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