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Infrastructure woes could cost 3.5 million jobs by 2020: report

By Doug Palmer

WASHINGTON (Reuters) - Imagine a future of broken bridges, roads, sewer systems, power grids, airports and not enough money to fix them or to build new ones to serve an expanding population. What would that cost the United States in terms of lost jobs?

A study released on Tuesday by the American Society of Civil Engineers says the cost in terms of lost jobs would be 3.5 million by 2020. It also projected a cumulative loss of $3.1 trillion in economic output over the same period without $1.1 trillion in additional funding for infrastructure projects.

"The results show that deteriorating infrastructure, long known to be a public safety issue, has a cascading impact on the nation's economy, negatively affecting business productivity, gross domestic product, employment, personal income and international competitiveness," the report entitled, "Failure to Act," said.

The study prepared by the Economic Development Research Group, a private consulting and analytic firm, estimated the United States needs to spend $2.75 trillion to maintain and improve its infrastructure by 2020, or roughly 66 percent more than the $1.66 trillion in currently expected funding over that period.

"Overall, if the investment gap is not addressed throughout the nation's infrastructure sectors by 2020, the economy is expected to lose almost $1 trillion in business sales, resulting in a loss of almost 3.5 million jobs.

"Moreover, if current trends are not reversed, the cumulative cost to the U.S. economy from 2012 to 2020 will be more than $3.1 trillion in GDP and $1.1 trillion in total trade," the report said.

The engineers group recommended $157 billion of additional funding between now and 2020 to meet infrastructure repair and expansion needs, a substantial request especially at a time when lawmakers and the Obama administration are considering ways to slow the growth of U.S. debt.

"Public and private investment and new, innovative strategies are needed to repair, rebuild and revitalize the nation's transportation system," Janet Kavinoky, executive director of transportation and infrastructure for the U.S. Chamber of Commerce, said in a statement accompanying the report.

The study projected the biggest funding gap, $877 billion, for highway and other surface transportation projects needed by 2020. But it also saw funding shortfalls of $629 billion for new electricity generation and transmission, $95 billion for airports, $42 billion for water and sewage and $14 billion for inland waterway and marine ports.

The biggest job losses were seen in retail, construction, medical, business services and the food and drink industry.

Funding for highway projects depends on the federal gasoline tax, which has not been raised in 20 years and is seen as an increasingly ineffective way of raising revenue as automobile fuel efficiency rises.

The report said deteriorating infrastructure would hurt U.S. productivity and international competitiveness in various ways, such as longer travel times and higher costs for water and energy.

"Goods will be more expensive to produce and more expensive to transport to retail shelves for households or to business customers. Business-related travel, as well as commuting and personal travel, will also become more expensive," the report said.

The study projected the funding gap for infrastructure projects to swell to $4.7 trillion by 2040, resulting in nearly 7 million lost jobs.

(Reporting by Doug Palmer)

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