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Why leaders look to infrastructure spending in recessions

David Brancaccio, Rose Conlon, and Erika Soderstrom May 29, 2020
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The on-ramp to the Golden Gate Bridge in San Francisco was built as part of the Works Progress Administration during the Great Depression. Justin Sullivan/Getty Images
COVID-19

Why leaders look to infrastructure spending in recessions

David Brancaccio, Rose Conlon, and Erika Soderstrom May 29, 2020
Heard on:
The on-ramp to the Golden Gate Bridge in San Francisco was built as part of the Works Progress Administration during the Great Depression. Justin Sullivan/Getty Images
HTML EMBED:
COPY

New York Gov. Andrew Cuomo on Wednesday called for major infrastructure spending in the New York City area as a way to jump start the region’s economy, which has been badly battered by the COVID-19 pandemic. Cuomo asked President Donald Trump to approve projects that would build a train to LaGuardia airport, expand the Second Avenue Subway and build a second set of tunnels under the Hudson River.

It’s not the first time leaders have turned to big infrastructure projects to spur growth during an economic downturn. During the Great Depression, the government employed millions of Americans through New Deal programs like the Works Progress Administration and the Public Works Administration that built roads, bridges and dams still around today.

So, with interest rates so low, could infrastructure investment help pull us out of the coronavirus crisis?

“The Keynesian-style folks would say [that] as the economy moves towards a recession — and all signs point towards a relatively sustained one — the government stepping in, stimulating demand in the marketplace, in particular for the purchase of everything from steel to concrete to actually employing folks, could be extremely helpful,” said Adie Tomer, a fellow at the Brookings Institution, in an interview with “Marketplace Morning Report” host David Brancaccio.

“But it really depends on what we’re building, where we’re building it, and at what point of the economic cycle we’re trying to execute that spending,” he added.

That’s because infrastructure isn’t a perfect answer to our current economic woes.  Big construction projects wouldn’t likely provide the same kinds of jobs that were lost during COVID-19 lockdowns — jobs that were, more often than not, done by women.

“One of the challenges of thinking of infrastructure as supercharging the economy during this current recession is that folks working in retail and hospitality and other kind of leisure activities, they’re the folks that are really struggling right now. But they’re not necessarily best suited to take on construction and other infrastructure-related occupations,” Tomer said.

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COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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