Infrastructure, energy investments urgently needed to create U.S. jobs
Americans have started early voting in one of the most contentious elections in our nation’s history. But despite a deep partisan divide, two worries appear to be top-of-mind for voters across the political spectrum — large-scale unemployment and the COVID-19 pandemic. The two problems are intertwined, of course, since the coronavirus crisis has plunged the U.S. economy into a major recession.
The latest federal data show that a massive 12.6 million Americans are officially unemployed. Overall, however, more than 30 million Americans — disproportionately women, Black and Latinx workers — have been impacted. Some have stopped looking for work because of COVID-19. Others face shorter work hours and an uncertain future.
Compounding these troubles have been massive and historic forest fires in the Western United States along with one of the most active hurricane seasons on record — evidence of the growing costs of climate change reaching a tipping point.
When the pandemic finally ends, the nation will face a long, difficult recovery. But there are steps Washington should take now to start rebuilding. The first would be to pass a comprehensive relief bill like the Heroes Act, which passed the House in May. Congress needs to approve such a fourth, multi-trillion-dollar relief effort. The nation cannot afford to wait for help until after the inauguration.
However, to jumpstart U.S. job creation Congress must act now — and do so through much-needed public investments. According to our research at the Economic Policy Institute (EPI), the key to a meaningful recovery would be a series of federal investments in clean energy and energy efficiency along with broad improvements to our nation’s infrastructure.
A robust energy and infrastructure program could create millions of good-paying jobs, with nearly half of that new employment coming in manufacturing and construction — two industries that support high wages and benefits for non-college-educated workers. Both manufacturing and construction employ more of these workers than the low-wage service industries that have been decimated by the COVID-19 depression. Boosting employment in such key sectors could directly attack the root causes of current income inequality, and also raise the share of workers employed in high-wage, unionized industries.
For too long, many in Congress have overlooked manufacturing’s potential as a strong middle-class job generator. But tough times call for a serious rethink. Congress needs to step up to the plate and embrace a robust, $2 trillion package of investments in climate and energy infrastructure — potentially along the lines of the plan recently proposed by Democratic nominee Joe Biden. But that’s not all. Congress must also overhaul America’s problematic trade practices, including an overvalued U.S. dollar that has become a key driver of the nation’s chronic trade deficits.
America’s endlessly growing trade deficit is a serious problem. It’s the single greatest reason for the loss of 5 million U.S. manufacturing jobs and more than 91,000 manufacturing establishments over the past two decades. There are certainly other factors involved in this decline, including failed trade deals, tax code changes that encourage offshoring and massive, state-subsidized production in countries like China. But currency misalignment is the great, overarching problem.
The U.S. dollar has been rising substantially since 2014, greatly hurting America’s export competitiveness. Economists recognize that the dollar’s rise is being driven by excessive overseas investor demand for America’s financial assets, including stocks and government securities. That has sent the dollar soaring — and made U.S. exports progressively more expensive while also making imports cheaper. The result has been increased offshoring and job loss in important industries.
The good news is that Congress has the power to control excess overseas demand for dollar assets. Helpfully, the most direct method — taxing foreign capital inflows — has already been introduced in bipartisan legislation proposed by Sens. Tammy Baldwin (D-Wisc.) and Josh Hawley (R-Mo.). Their bill would empower the Federal Reserve to tax foreign purchases of U.S. stocks, bonds and other assets — gradually returning the dollar to a competitive, trade-balancing level.
Congress needs to roll up its sleeves and pass this currency realignment legislation. That would begin the process of leveling the playing field for America’s manufacturers. It would also set the stage for subsequent investments in the U.S. economy through a comprehensive package of clean energy and infrastructure projects.
Americans already know that the nation needs to repair crumbling roads and bridges. But there are also overdue upgrades for transit systems, water works and municipal power grids. Such modernization is essential — particularly when the United States is looking to counter China’s fast-rising prominence in renewable technologies like wind turbines, solar panels, electric vehicles and lithium-ion batteries. Also, investments in clean energy infrastructure would generate the largest share of new employment in U.S. manufacturing — even more reason to improve the dollar’s competitiveness and help America’s manufacturers compete in these important industries.
Our research found that a $2 trillion, four-year program of investments in infrastructure and renewable energy could generate between 6.9 and 12.9 million new U.S. jobs from 2020 to 2024, including job creation in all 50 states.
With tens of millions of workers still unemployed, under-employed or facing hardship, Congress must think outside the box to start reversing the pandemic’s devastating economic impact. Expanding exports and rebalancing trade through currency realignment would set the stage for much-needed investments in infrastructure and clean energy. These are the keys to generating millions of good-paying jobs in a challenging 21st century economy — and there’s little time to waste.
Zane Mokhiber is a data analyst at the Economic Policy Institute (EPI), where his research encompasses wage, manufacturing, economic growth, among other topics. Follow him on Twitter @ZaneMokhiber. Daniel Perez is a research assistant at EPI. Follow him on Twitter @DannPerr. Robert E. Scott is a senior economist at EPI. Follow him on Twitter @RobScott_epi.
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