ICYMI: ROOSEVELT INSTITUTE ANALYSIS: BUILD BACK BETTER INVESTMENTS WILL LEAD TO “FASTEST ECONOMIC GROWTH SEEN IN DECADES”

The American Rescue Plan Bolstered The Economy, But Greater Federal Investment Now Can Produce Sustained Growth And A Labor Market That Benefits Everyone

Authors Find That, By 2031, 28 Million More Workers Could Be Drawn Into The Labor Market Than Conventional Measures Suggest

The investments in the Build Back Better agenda could help the U.S. reach higher levels of employment than conventionally projected, according to a new analysis released today by the Roosevelt Institute. Combined with stimulus measures from earlier this year, the passing of Biden’s Build Back Better agenda would put the U.S. in position to deliver a historic economic boom that opens the economy for millions more workers, according to the authors. Not only would the investments in Biden’s Build Back Better agenda create millions of jobs and boost overall productivity — but they would do so by reducing long-standing racial and gender inequalities in the economy.

The analysis argues that the right economic policies could help the U.S. add 28 million more workers and reach an employment-population ratio of 68% by 2031 — 10 points higher than traditional estimates from the Congressional Budget Office. The authors arrive at the figure by constructing a new measure of potential employment — one that accounts not only for overall labor market conditions, but also employment rates across race, gender, education, and age.

KEY POINTS
  • “The extraordinary stimulus measures of the American Rescue Plan were vital in staving off economic disaster, but additional federal investment now can produce long-term growth and a tighter labor market that benefits everyone.”
    • With the right policy choices, and absent further upheaval from COVID variants, the coming years could be remembered as the rebirth of a dynamic, more egalitarian US economy—an extended period of wage gains and capacity-boosting investment, with new spending pushing against the productive potential of the economy.”
    • “The coming decade could see a historic boom—but only if we are prepared to manage it rather than fight it.”

Read the full brief and a fact sheet here.

The investments in President Biden’s full Build Back Better agenda will create millions of jobs and boost overall productivity: 

Investments in public infrastructure

  • S&P Global estimates that a $2 trillion investment in public infrastructure over 10 years would create 2.3 million jobs, grow personal income by $2,400, boost household spending by $3.5 trillion, and inject $5.7 trillion to the U.S economy — that’s 10 times what was lost during the Great Recession.

  • More than half of the millions of jobs created by infrastructure investments would go to blue collar workers without a college degree.

  • The time is right for a big investment — a $2 trillion infrastructure investment now could mean that each dollar spent will have a return of $2.70, according to S&P.

  • In 2017, the Georgetown University Center on Education and the Workforce estimated that a $1 trillion investment in infrastructure could create 11 million jobs.

“Infrastructure pays for itself if it’s done wisely. It’s the grease that keeps the economy moving along.”

 Beth Ann Bovino, Chief U.S. Economist at S&P Global

Investments in clean energy

  • Clean energy is the fastest growing industry in America — before the pandemic, clean energy jobs employed three times as many workers as the fossil fuel industry.

  • The clean energy investments in the American Jobs Plan would set the country on a path of achieving net-zero emissions economy-wide by 2050, according to S&P Global.

  • Tax credits in the American Jobs Plan would cut air pollution by up to 84% in just five years, and cut carbon dioxide to 76% below 2005 levels in ten years.

  • According to the Center for American Progress, President Biden’s plans would reduce annual carbon dioxide by an estimated 626 million metric tons while also reducing average electricity bills. CNBC reported that upgrading to more resilient electric grids would prevent widespread blackouts like the recent blackouts in Texas.

  • The tax credits in the American Jobs Plan would drive a 50% increase in renewable energy development.

  • The American Jobs Plan’s investments in cleaning up the nation’s electricity standard and industrial sector would target between 70-80% of the country’s total greenhouse gas emissions.

  • By itself, the American Jobs Plan’s power sector investments could double the share of clean electricity generation after 10 years.

“We need to do this or we’re never going to be able to hit decarbonization plans,”

— Nat Kreamer, Chief Executive Of Advanced Energy Economy

“The Biden-Harris administration’s infrastructure plan released today would accelerate climate innovation and bring the benefits of research & development, technology commercialization, and manufacturing to more communities across the country. The American Jobs Plan marks a shift to a federal innovation program focused on improving technologies to address the climate crisis and prioritizing diversity and equity. The plan would lay a foundation for an economy that works for everyone and can combat our pressing social, economic, and climate crises.”

 Arjun Krishnaswami, Climate Policy Lead with the National Resources Defense Council

Investments in care for children, the elderly, and the disabled 

  • Investing in care work, just like investing in physical infrastructure and clean energy, boosts the economy and creates new jobs.

  • Going big on care infrastructure investments could support the creation of 3 million new jobs.

  • Social care investments have the potential to generate twice as many jobs as infrastructure spending and 50% more jobs than green energy development.

  • Investing in the care economy, in turn, produces widespread benefits in the restaurant and retail sectors as caregivers spend their disposable income.

  • Increasing access to child care will help women return to their own careers. An investment of 2% of GDP in the care industry has the potential to reduce the gender gap in employment by half in the United States.

  • A lack of affordable child care has become a barrier to work for many parents, especially mothers. Equal access to high-quality child care and preschool would increase GDP by $551 billion by allowing more parents to seek and keep their jobs.

  • Access to affordable child care could increase the lifetime earnings for women with two children by about $94,000. It would also boost the collective lifetime earnings of a cohort of 1.3 million women by $130 billion.

“Public investment in care would allow millions of family caregivers who have left the labor market, reduced their hours, or lost their jobs in 2020 to return to work, strengthening overall economic activity and ensuring that a generation of women’s labor market gains do not disappear.”

— Time’s Up

nvestments in paid family and medical leave

  • Family and medical leave programs will strengthen the health of workers and solidify our economic growth.

  • Research suggests there are several ways in which paid medical leave has an effect on health outcomes, including improved health management, earlier treatment, greater healthcare utilization, reduced financial stress, and enhanced return-to-work supports.

  • Mothers are 20-50% less likely to separate from the labor force five years after giving birth if they have access to paid leave.

  • Women with access to paid leave are 40% more likely to return to work after giving birth than those without access to leave.

  • Workers and their families lose $22.5 billion in wages each year due to a lack of paid family and medical leave.

  • Surveys from California’s pioneering paid family leave (PFL) program show employers reporting either a “positive effect” or “no noticeable effect” on productivity (89%), profitability/performance (91%), turnover (96%), and employee morale (99%).

  • According to Maya Rossin-Slater, assistant professor of economics at the University of California, Santa Barbara, expanding access to paid family leave “reduces disparities in leave-taking between low and high socioeconomic groups, and does so without damaging these women’s later labor market prospects.

“Paid parental leave at the state and local level improves child health and development and maternal well-being while causing minimal negative impacts on employers, and paid leave at the federal level could help children from all backgrounds, curb the growth in inequality, and boost long-term U.S. economic growth and stability.”

 Washington Center for Equitable Growth

Investments in universal pre-kindergarten

  • Universal pre-k will improve children’s development, help parents return to the workforce, and boost the economy.

  • A study from the Washington Center of Equitable Growth found that a universal preschool program would generate economic benefits surpassing the costs of the program within eight years. By 2050, the economic benefits would total $304.7 billion.

    • That includes $81.6 billion in government budget benefits, $108.4 billion in increased compensation of workers, and $114.7 billion in reduced costs to individual people from better health and less crime and child abuse.

    • The same study found that by 2050, universal pre-k would yield $8.90 in benefits for every $1 invested.

“[Universal pre-k] would boost educational achievement, improve economic growth rates, and raise standards of living across the income spectrum. It also would strengthen the economy’s competitiveness long into the future while simultaneously easing a host of fiscal, social, and health problems.”

— Washington Center for Equitable Growth

Investments in free community college

  • Free community college will increase access to college for millions of Americans, particularly Black and brown students, providing a pathway to education to students who would otherwise be deterred from going to college by the prospect of going into debt.

  • Investing in free community college could increase college enrollment by 26%, and increase degree completions by 20%.

  • The benefits of free community college would be particularly felt by students of color — making community college free leads to a 47% perfect enrollment increase for Black men, a 51% increase for Black women, a 40% increase for Latino men, and a 52% increase for Latina women.

  • Free community college can pay for itself. The American Families Plan’s investments in community college could yield a total of $371.4 billion in additional tax revenue, and deliver private after-tax earnings of $866.7 billion after 11 years.

“I feel quite confident that ultimately this program will pay for itself. It will raise incomes and also raise underlying productivity which would [in turn] raise incomes and corporate profit. That’s the closest thing to a win-win.”

 Former Economic Advisor to President Clinton, Robert Shapiro

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