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Jobs for America: Investments and Policies for Economic Growth and Competitiveness

Ross DeVol and Perry Wong
With Armen Bedroussian, Anita Charuworn,
Anusuya Chatterjee, Candice Flor Hynek,
Kevin Klowden and Benjamin Yeo

Jan 01, 2009

Click here for the Executive Summary.

The United States has lost 7.2 million jobs since December 2007, and the nation's jobless rate is expected to remain stubbornly high if no additional investment is injected into the economy.

Jobs for America: Investments and Policies for Economic Growth and Competitiveness analyzes two different approaches to how the United States can retain and create new jobs - one on the policy side and the other on the investment side.

The Milken Institute set out to evaluate the impact of changing certain economic and tax policies that currently impede the nation's ability to compete. Among the findings:

* Reducing U.S. corporate income tax rates to the current average of OECD countries (from the current 35 percent to 22 percent) stimulates growth. By 2019, real GDP rises by 2.2 percent (or $375.55 billion) and 2.13 million jobs are created.

* Increasing the R&D tax credit by 25 percent and making it permanent enhances American innovation. By 2019, real GDP rises by 1.2 percent (or $206.3 billion) and 316,000 manufacturing jobs are created.

* Modernizing export controls on commercially available technology products for some countries would allow U.S. firms to capture increased international market share. In this scenario, real exports of goods and services rise by 1.9 percent (or $56.6 billion), and 340,000 jobs are added by 2019 (160,000 of them in the manufacturing sector).

It has become painfully apparent that U.S. infrastructure, once the envy of the world, is now strained and aging. Modernizing in multiple areas represents an opportunity to create thousands of jobs and jumpstart the economy in the near term.

Jobs for America analyzes the potential effects of 10 different infrastructure projects: highway and transit projects; broadband; offshore drilling and onshore exploration and development of oil and natural gas resources; drinking water and wastewater infrastructure; the smart grid; nuclear energy; renewable energy; the NextGen air traffic control system; inland waterways; and clean coal. For every $1 billion invested in these projects, slightly more than 25,000 jobs are created.

Looking at impacts over a three-year period, all the projects combined will create 3.4 million construction- and R&D-related jobs, which will generate an estimated $147 billion in earnings. Accounting for ripple effects across other sectors, the total impact will add up to 10.7 million jobs, $420.6 billion in earnings, and $1.4 trillion in output.

The Milken Institute analyzed the economic impacts on an individual project basis so that policymakers can make informed decisions about where to allocate resources. These investment proposals utilize a mix of public funding, public-private partnerships, and other types of government-provided incentives such as loan guarantees.

This research was supported by funding from the National Association of Manufacturers.

Click here to view the outcomes of the policy simulations and various infrastructure investments. An interactive tool allows you to input an investment amount in each infrastructure category and calculate the projected jobs, wages and output produced.