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The White House

Highway Spending from Recovery Act Expected to Create or Save 150,000 Jobs By End of 2010.

Office of the Press Secretary
March 3, 2009

Highway Spending from Recovery Act Expected to Create or Save 150,000 Jobs By End of 2010.

• Many of these jobs will pay well above the national average.

The American Reinvestment and Recovery Act is expected to create or save 3.5 million jobs by the end of next year. Some of these jobs will come from direct spending by the Federal government to improve the nation’s roads, bridges, schools, and other parts of our national infrastructure.
One such investment calls for spending $28 billion on highway construction. This money will be allocated to states across the nation, helping to partly offset the job losses that have occurred throughout the country.

Using the same economic model that predicted the overall job growth, we find that this particular investment will lead to 150,000 jobs saved or created by the end of 2010.

It is also worth noting that jobs in highway construction tend to pay better than average. The typical, or median hourly wage for all jobs in the economy was $15.10 in 2007 according to the most recent data from the Bureau of Labor Statistics. But for workers in the highway industry, the typical hourly wage was $18.31, a premium of over $3 per hour over the economy-wide median wage.

Looking more closely at different types of jobs within the industry helps to explain the difference. The median wage of blue collar, or production workers—folks who do jobs like welding and mixing—comes to about $16 per hour in highway construction compared to about $13.50 in the overall economy.

There are two sources by which these jobs come about. First, there is the direct impact of building new roads and fixing old ones, leading to employment for persons who, in the absence of this investment, would be out of work. This effect is responsible for just under two-thirds of the jobs, about 95,000.

The second effect is an indirect one. It refers to the economic activity generated when these new workers spend more than they would have otherwise. For example, someone who gets a job fixing a road through the Recovery Act might buy more groceries or more apparel, and this leads to more activity by grocers and retailers. This effect explains about 55,000 of these jobs.
Finally, note that we say these 150,000 jobs would be "saved or created." In some cases, current employees on highway crews or in other sectors where these workers spend money will avoid layoffs due to these investments. Had the Recovery Act not passed, they would have become unemployed. Other jobs will be newly created providing a new job slot that did not exist before.

Analysis by Jared Bernstein