President Joe Biden has proposed a sweeping change to how officials — and, ultimately, average Americans — define infrastructure. The bulk of his $2.3 trillion infrastructure proposal is oriented towards health care and caregiving rather than highways and airports. Defining infrastructure to include big, labor-intensive industries like home health services is a key step to making the American Jobs Plan actually live up to its title.
Traditional infrastructure jobs in fields like construction and logistics would boost employment prospects for some workers, but could also risk leaving behind many of the people whose livelihoods vanished during the pandemic. A growing body of research on the American labor market finds that job losses disproportionately fell on women, less-educated people, nonwhite and low-income workers, particularly in service sectors like leisure and hospitality.
With a wider interpretation of infrastructure, the American Jobs Plan creates jobs across a wider swath of sectors, boosting the employment prospects for many of those hit hardest over the past 15 months.
“The real idea behind the American Jobs Plan and the companion American Families Plan is about lifting long-term economic growth… and making sure the benefits of that growth go largely to lower- and middle-income households,” said Mark Zandi, chief economist at Moody’s Analytics.
“There’s a lot of discussion about what constitutes infrastructure. I happen to think that this new version of the definition is much more forward looking. It spends a lot of time thinking about what the requirements are for jobs of the future, and it's very purposeful in its thinking,” said Nicole Smith, chief economist at the McCourt School of Public Policy at Georgetown University’s Center on Education and the Workforce.
Through the end of 2023, Moody’s calculated that the employment picture will improve, projecting a 4.4 percent unemployment rate for most of next year and all of 2023. This anticipated labor market rebound, however, would take place with or without the American Jobs Plan. Instead, the momentum in the next couple of years comes from the $1.8 trillion American Rescue Plan passed earlier this year.
But starting in 2024, the American Jobs Plan would start doing the heavy lifting. Over the course of that year, Moody’s estimated that the legislation would bring the unemployment rate down to 3.5 percent — the pre-pandemic, decades-low baseline and a remarkable benchmark to achieve a mere four years after Covid-19 decimated the global economy.
By the end of 2024, Moody’s estimates that the American Jobs Plan will have generated 2.1 million new jobs above what the economy would otherwise create (and a total of nearly 2.7 million through the end of the decade). Without the infrastructure plan, though, Moody’s finds that unemployment barely budges, dropping only incrementally to 4.3 percent by the end of 2024.
According to Zandi, 440,000 of these new jobs will be construction jobs. An additional 380,000 manufacturing jobs will be created, along with a total of 340,000 in transportation, distribution and wholesale trade.
“The majority of these jobs will go to someone with high school or some college. There are a huge amount of good-paying, middle-skill jobs,” Smith said. But historically, she pointed out, “They tend to be predominantly for men.”
Biden’s infrastructure proposal aims to change that. “It makes it much more inclusive and offers opportunity for more diversity,” Smith said.
The American Jobs Plan has earmarked $400 billion to caregiving for disabled and elderly Americans through channels such as expanding Medicaid’s long-term care services and home-care services. Moody’s projects that this will lead to 370,000 new health and social assistance jobs.
“Any attention to eldercare and attention to our children by definition is shining the spotlight on women. These roles in taking care of our elders and our children are traditionally, disproportionately held by women,” Smith said, noting how women’s labor force participation plunged as restrictions and lockdowns dragged on for months.
Expanding the definition of infrastructure to cover this sector will have a multiplier effect, economists say.
“From a job-creation perspective, spending on this kind of care might be a ‘twofer,’ ” said Gary Burtless, a labor economist at the Brookings Institution.
In addition to the development of a few hundred thousand jobs in this sector, Burtless said that by creating both the jobs and the funding streams for working-age Americans to pay for caregiving, potentially millions of people with elderly or disabled loved ones could come off the sidelines.
“It may free them up to join the workforce, assuming that their caregiving responsibilities now keep them at home rather than looking for or holding a paid job,” Burtless said.
“It’s really an indirect attempt at getting women back to work,” Smith said of the push to build caregiving into the idea of infrastructure. “I think it’s a purposeful way of trying to figure out what, specifically, is holding back full participation in our economy,” she said. “Some of that has to be our social responsibility.”