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Infrastructure report: now is the time to invest in roads and rails

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US government report urges putting idled construction industry people and resources to work on a more globally competitive transportation system.

A struggling economy is never good news for anyone. However, it does provide a window to initiate projects at lower costs, while offering opportunities to idled resources, such as the construction industry. As the economy picks up steam, available resources will be scarfed up into new private sector projects.

The Obama administration has just released a cost/benefit analysis of $50 billion worth planned and proposed infrastructure investments in public transportation and road projects, as well as air traffic control system upgrades, which states that the United States is falling behind other developed countries in these areas. The report even urges more investment in freight rail systems that will help US firms more readily compete in the global marketplace. "The Department of Transportation estimates that population growth, economic development, and trade will almost double the demand for rail freight transportation by 2035."

The report, produced by the Department of the Treasury and the Council of Economic Advisers, cites research that concludes that "well designed infrastructure investments can raise economic growth, productivity, and land values, while also providing significant positive spillovers to areas such as economic development, energy efficiency, public health and manufacturing." Most new jobs would be created in the construction sector.

The report also urges the creation of a "National Infrastructure Bank" that would weigh the value of investments in infrastructure projects.

The report also observes that costs are favorable for such projects in light of current economic conditions. There is a significant pool of underutilized talent and resources that could be tapped to play a part in infrastructure investment. "Since December 2007, the construction industry has lost 25 percent of its total payroll jobs, dropping from 7.5 million to 5.6 million employees," the report observes. "In August 2010, the unemployment rate for construction workers stood at 17 percent."

The report also observes that "Americans’ satisfaction with public transit system, when compared to public satisfaction with public transit systems around the world, ranks 25th out of 32 OECD nations. While our nation has historically favored road building over public transit, we rank only 17th out of 32 -- in the middle of the pack -- with respect to our satisfaction with our roads and highways."

The challenge, as noted in the report, is that these investments are applied in the right places, where they can deliver the maximum benefit. "Selecting projects that have the highest payoff is critically important, as is providing opportunities for the private sector to invest in public infrastructure. Given the significant needs for greater investment, the federal government cannot, and should not, be expected to be the sole source of additional investment funds."

A range of business and labor groups, including the US Chamber of Commerce and AFL-CIO, have been urging greater investment in the transportation system, the report notes.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure