Dems' budget proposals are a shot at progress on wages and climate

Dems' budget proposals are a shot at progress on wages and climate
© Greg Nash

After a lot of ups and downs, the Senate finally passed the Infrastructure Investment and Jobs Act (IIJA) last week. According to Moody’s Analytics, the bill could create roughly 650,000 jobs. Many of these would be good-paying jobs, with excellent wages and benefits, especially for non-college-educated workers in manufacturing and construction. 

We at the Economic Policy Institute agree with this assessment — and believe these new jobs will pay substantially more than positions in service industries, especially for women as well as Black, Hispanic, and other workers of color.

These jobs are urgently needed. Wage inequality in the United States has been growing since the late 1970s, and there’s a critical need to create new middle-class employment. In particular, failed international economic policies — including those which led to growing trade deficits that displaced more than 5 million manufacturing jobs since 1998 — can explain a significant share of growing wage inequality. As a result, millions of Americans who have lost productive jobs have simply been forced into lower-paying service industry positions.


The nation is at a crossroads, though, and it’s not just the job market that needs fixing. America’s infrastructure is in poor shape, too. 

In its latest 2021 Infrastructure Report Card, the American Society of Civil Engineers estimates that the U.S. infrastructure investment gap will increase to $2.59 trillion over the next decade. Clearly, an infrastructure package is needed, but the IIJA — which will increase planned investment spending by about $550 billion over the next five years — will only cover about one-fifth of the nation’s overall infrastructure needs. And if that’s not enough, Washington must also invest hundreds of billions of dollars per year, as part of the expected global need for $2 trillion per year over the next three decades to address climate change and to eliminate carbon emissions. However, the IIJA barely scrapes the surface of these needs — even though it makes some sensible investments in electric vehicle charging stations and updates to the nation’s power grid.

It’s certainly helpful that the IIJA could create 650,000 jobs — something that would help to spur an economic recovery. But there’s a far larger number to consider as well. There are still 18.1 million U.S. workers who have been adversely impacted by the COVID recession. As the Economic Policy Institute estimates, that translates to an additional 6.6 million to 9.1 million jobs needed to restore the economy to the relatively full employment seen in February 2020 — before the pandemic started. 

Also complicating factors are some additional headwinds. As the nation heads into the fall season, resurgent pandemic concerns are hitting at the same time that extended unemployment benefits are being eliminated for millions of workers. The loss of these benefits will undoubtedly rob the economy of pivotal consumer spending. In the face of surging delta variant infections, a potential downturn in consumer spending and potential layoffs, it’s clear that the economy is skating through perilous territory.

For all these reasons, it is critical for Congress to complete its work on a $3.5 trillion budget reconciliation bill. The budget resolution, which sets spending limits for that package, was also approved by the Senate last week and will fund critically needed investments, including both climate initiatives and social and human infrastructure. But details remain to be worked out by House and Senate committees this fall. Much of that spending would be focused on universal childcare, pre-kindergarten education, vocational training, and expanded care for families, Medicare programs and the elderly. 

The IIJA represents an important first step in building a more just, productive, and sustainable society. But passage of a full spending plan included in the reconciliation bill is essential to ensure a full recovery and a growing economy with broadly shared prosperity for all workers. It’s imperative that Congress act now to make these needed investments.

Robert E. Scott is a senior economist with the Economic Policy Institute (EPI). Follow him at @RobScott_epi

Editor's Note: This piece was updated to reflect Washington must invest hundreds of millions of dollars to meet a $2 trillion per year global estimate to address climate change and carbon emissions.