Many aspects of the physical infrastructure in the United States are in need of major upgrades. Roadway congestion costs billions in lost time and fuel each year, and nearly one fourth of U.S. bridges are considered structurally deficient or functionally obsolete. Other problems abound.
The American Society of Civil Engineers (ASCE) publishes “The Report Card for America’s Infrastructure” every four years. The ASCE looks at 15 national infrastructure categories and assigns a grade on a scale from A (excellent) through F (failing). Grades are based on capacity, condition, funding, future need, operation and maintenance, public safety, resilience, and innovation. The most recent (2013) report indicates an overall grade for U.S. infrastructure of D+, with a range of B- for solid waste to D- for inland waterways and levees. The categories examined and grades assigned by the ASCE include aviation (D), bridges (C+), dams (D), drinking water (D), energy (D+), hazardous waste (D), inland waterways (D-), levees (D-), ports (C), public parks and recreation (C-), rail (C+), roads (D), schools (D), solid waste (B-), transit (D), and wastewater (D).
There were a few improvements and no categories declined relative to the prior report, but the overall results are clearly troubling. Moreover, the ASCE estimates that to address these issues would require an investment of $3.6 trillion by 2020. Another layer of additional cost comes from the effect the infrastructure shortcomings have on businesses and individuals. The ASCE estimates that underinvestment in infrastructure costs households and businesses $130 billion per year in emergency repairs, vehicle operating costs, and travel delays.
Even beyond these measurable costs are the effects on efficiency and inventory management. Many manufacturing firms use precise scheduling of deliveries of needed inputs to their processes to reduce costs such as warehousing and financing on work in progress. If a company cannot rely on predictable logistics due to traffic congestion, delays at ports, or other problems, overall output and productivity suffer.
Quality of life can be negatively affected as well. Traffic congestion is often cited as a major source of frustration for commuters, as well as a primary culprit in mobile source pollution. Insufficient water supplies have obvious consequences for production and livability, and the benefits of parks and recreation facilities are well documented.
Public safety is obviously a major concern with many of these infrastructure problems. Levee failures can cause catastrophic flooding. There have been collapses of major interstate highway bridges in recent years resulting in fatalities. Railway bridges considered barely safe (and definitely outdated and inefficient) carry hundreds of trains per day, including those with passengers. A breakdown in the disposal of hazardous waste could cause major harm. Letting disrepair worsen can cause tragic loss of life.
The essential issue is the fact that much of America’s infrastructure dates to spending decades ago, either as a part of the public works programs during the Great Depression or in the 1950s and 1960s (when most of the interstate highway system was originally constructed). Since that time, population and economic growth have greatly enhanced the need for infrastructure, but investments have not kept pace. In fact, public infrastructure spending as a share of GDP is far lower in the United States than in many other nations, and is about half the European level.
Looking beyond purely physical infrastructure, I have written extensively recently about the court system (which is in need of expansion) and its essential role in the framework of U.S. economic activity. Moreover, one could even argue that the quality of the workforce and the underlying education system that supports it are also elements of the infrastructure for business growth, and the United States has work to do in that arena as well.
It will not be easy to do what needs to be done. Trillions of dollars will need to be devoted to the tasks at hand. Dealing with some of these issues will lead to notable temporary dislocations such as traffic detours and narrow lanes while work is completed. Even after approved and funded, many of the needed projects will take years to complete because they are massive in scope.
Efforts to improve infrastructure are essential to long-term prosperity, and the degree to which current problems are dealt with will affect future economic performance. The methods used to pay for the required investments (such as tax increases or spending cuts in other areas) could also dampen or improve the overall economic outlook depending on how they are structured. Meaningful improvement will also require bipartisan efforts in Washington, which is a major challenge in today’s environment. The longer we put off dealing with these looming problems, the more difficult and intractable they will become.
