The trouble with Democrats’ infrastructure job promises
Their $1 trillion construction spending plan is supposed to create 15 million jobs. Don’t count on it.
In 2011, the unemployment rate for construction workers hovered around 15 percent, while the overall unemployment rate was around 9 percent. So there were plenty of unemployed workers who would jump at a chance for a job rebuilding a road or fixing up a school. That’s not the case today: The unemployment rate for construction workers has plummeted to around 5 percent, while the overall unemployment rate is 4.7 percent. Those numbers are near what economists consider “full employment”—any lower, and inflation could start to rise. In fact, in the construction industry itself, experts are more worried about a shortage of workers than a surplus.
.. Second, if the Democrats’ infrastructure proposal does provide a huge stimulus to the economy, its effects would likely be offset—deliberately—by the Federal Reserve. In 2011, the Fed had set interest rates at essentially 0 percent. If the government had launched a major infrastructure plan, the Federal Reserve would surely have welcomed it—in fact, Ben Bernanke, then the chair of the Fed, had been imploring Congress to do more to stimulate the economy.
.. That doesn’t mean a trillion-dollar infrastructure plan is a bad idea. There are good structural reasons to rebuild America’s roads, bridges and airports. And it’s possible that a future economic crisis will cause millions of construction workers to lose their jobs, forcing the Fed to drop its interest rate back to zero.