The importance of President Obama’s Labor Day call for congressional action soon on a front-loaded, six-year reauthorization of the federal highway and transit improvement programs is underscored by new research that shows the programs’ importance to the U.S. economy, according to the American Road & Transportation Builders Association (ARTBA).
The report said money invested this year in transportation construction industry employment and purchases will generate more than $380 billion in U.S. economic activity—nearly three percent of the nation’s Gross Domestic Product (GDP). That’s larger than the annual GDP of 160 nations ranked by the International Monetary Fund, including oil-rich Saudi Arabia ($370 billion) and Kuwait ($111 billion).
The report, “The U.S. Transportation Construction Industry Profile,” released by the Transportation Development Foundation of ARTBA, shows the annual value of domestic transportation construction will surpass $120 billion this year. This ranks it larger than industry sectors like auto repair and maintenance ($116.8 billion), farming ($97.5 billion) and coal mining ($29.8 billion), to name a few.
Alison Premo Black, ARTBA senior economist and the report’s author, found transportation construction supports 3.4 million American jobs—1.7 million directly involved in construction and related activities and 1.7 million jobs sustained by transportation construction industry employee, firm and agency spending throughout the U.S. economy.
She cautioned that thousands of these jobs could be in jeopardy if Congress fails to take action soon on a multi-year surface transportation program investment bill.
The last multi-year transportation law expired a year ago Oct. 1. Federal highway and transit aid to the states has been sustained over the past year by four short-term extensions and economic stimulus funding.
Utilizing U.S. Census Bureau “County Business Patterns” data and the U.S. Commerce
Department’s Regional Input-Output Modeling System (RIMS II), Premo Black found the transportation construction industry’s largest economic impact is in the state of California, where it generates or sustains more than 354,000 jobs. California’s followed by New York (286,449), Texas (276,276), Florida (196,087), Pennsylvania (148,669), Illinois (129,014), Georgia (106,658), Ohio (104,310), Washington (100,384) and New Jersey (97,036).
Black said transportation construction activity generates $159.3 billion annually in direct and induced U.S. wages. These workers, she said, will contribute an estimated $13.1 billion in federal and state payroll taxes this year. But that is not the end of the story.
“What is often overlooked is that the work the transportation construction industry performs results in the nation’s longest-lived capital assets,” Black pointed out. “And transportation infrastructure makes all kinds of other economic activity possible.”
“Tourism, manufacturing, transportation and warehousing, agriculture, forestry, general construction, mining, retailing and wholesaling are all wholly dependent on the work done by the U.S. transportation construction industry,” Black said. “These, what I call dependent industries, employ nearly 80 million American, who collectively earn more than $2.8 trillion each year and pay over $233 billion in state and federal payroll taxes.”
Black is an economics doctoral candidate at The George Washington University in the Nation’s Capital. She holds an M.A. in International Economics and Latin American Studies from the Johns Hopkins School of Advanced International Studies.