(LOS ANGELES) Changes to U.S. economic and tax policies can add 2.9 million jobs by 2019, while more than 3.5 million jobs can be created in each of the next three years by supporting investment in 10 key infrastructure project categories, according to Jobs for America: Investments and Policies for Economic Growth and Competitiveness, released today by the Milken Institute.
The study 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 first outlines the potential growth in jobs and GDP that would result from changes to economic and tax policies and the second calculates the impact that $425.6 billion in infrastructure investments would have on job creation and the economy.
"With unemployment at 10 percent, the question on the minds of all policymakers is how to create jobs," said Ross DeVol, Executive Director of Economic Research at the Milken Institute and lead author of the study. "Our report provides tools that they can use to weigh the options and make the policy and investment decisions that we need to get back to growth and back to work."
The policy changes analyzed — decreasing corporate tax rates, increasing the R&D tax credit and making it permanent, and modernizing export controls on certain products — would significantly add jobs and grow the economy. Within five years, two thirds of the total impacts would be felt. However, the full impact of these policy changes unfolds over a decade, making them medium- to long-term job-growth measures.
For more immediate job growth, the report looks at various infrastructure investments that total $425.6 billion across 10 project categories. The investment amounts are primarily derived from government sources and industry reports, while allocations are based on government agency estimates for prioritized infrastructure improvements, including backlogged projects that are currently unfunded.
The report aims to provide analysis and measure economic impact to assist policymakers who are looking at a variety of approaches to spur job creation and economic growth. The research was supported by funding from the National Association of Manufacturers.
Among the findings:
Tax changes
- If U.S. corporate income tax levels are reduced to match the current average of OECD countries (22 percent versus. the current 35 percent in the U.S.), real GDP rises by 2.2 percent (or $375.5 billion) and 2.13 million jobs are created by 2019.
- If the R&D tax credit is increased by 25 percent and made permanent, real GDP rises by 1.2 percent (or $206.3 billion) and 316,000 manufacturing jobs are created by 2019. The maximum impact is felt in 2017, when there are 510,000 jobs more than in a baseline scenario with no policy change.
- Modernizing export controls on sales of commercially available technology products to certain countries increases real exports of goods and services by 1.9 percent (or $56.6 billion) and adds an additional 340,000 jobs by 2019 (160,000 of these are in manufacturing).
Infrastructure investment
- All projects combined would directly create more than 3.5 million construction- and R&D-related jobs, which in turn generate additional indirect impacts in the economy. Accounting for these ripple effects, the projects would produce nearly 11 million jobs, averaging 3.5 million annually across the three years.
- An annual average of 327,089 manufacturing jobs are created, reviving one of the hardest-hit (but highest-paying) sectors of the economy.
- The largest proposed dollar investment is in the highway and transit system, at $225 billion, creating a total of 6.2 million jobs, roughly 2 million per year.
- Drinking water and wastewater infrastructure investments adds 27,500 jobs for every $1 billion invested.
- The three sustainability categories — smart grid, renewable energies and clean coal technology — have a combined investment projected at $32.1 billion. Together these projects have the capacity to add more than 1.5 million jobs over three years, or 576,100 per year.
The 10 infrastructure project categories analyzed in the report are:
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- Highway and transit system
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- Broadband Infrastructure
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- Onshore exploration and development/Offshore drilling
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- Drinking water and wastewater infrastructure
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- Smart grid
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- Nuclear energy
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- Renewable energy (solar, wind, biofuels)
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- NextGen air traffic control system
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- Inland waterways
- Clean coal technology
The full report is available at www.milkeninstitute.org . A data website with the outcomes of the policy simulations and data sets for the investment in each of the project categories is available at www.milkeninstitute.org/jobsforamerica. An interactive investment model allows the user to input an investment amount in each category and calculate the projected jobs, wages and output.