This commentary was originally published by the Federal Reserve Bank of Richmond
The new administration has signaled its intent to propose an infrastructure program. That is good. We need investment in our country’s infrastructure. Our roads and bridges are long overdue for repairs. We lag behind other countries in high-speed transit and the shift to renewable energy. We have far too many schools and hospitals that need updating. And too many students in small towns and inner cities have been set back by their lack of broadband, worsening the educational disparities that existed even before the Covid-19 pandemic.
Supporters of a large infrastructure bill also point to the potential to create millions of jobs—a critical priority, given there are currently 9.6 million fewer jobs in our economy than there were a year ago. Jobs were also the focus of the 2009 infrastructure bill, passed at a time when the housing market had crumbled, the rust belt was in turmoil, and millions of manufacturing and construction workers were on the streets. But are the people who are out of work today the same ones ready and able to work as wind turbine technicians, cement masons, or fiber optic line workers?
In the near term, the answer is probably no.
The U.S. economy doesn’t have enough production workers or skilled tradespeople. That was true before the pandemic, and it remains true today. As I talk with community and business leaders throughout the Richmond Fed’s Fifth District, this is a constant refrain. In Hickory, North Carolina, furniture manufacturers are struggling to hire enough staff to meet demand. In South Carolina’s PeeDee region, I’ve heard from companies that can’t find enough welders and maintenance technicians. With the housing market so robust, carpenters, plumbers, and electricians are scarce. Truckers are hard to find anywhere.
That’s a big shift from the last downturn. This time, home construction and renovation are booming. Many manufacturers are prospering, as consumers spend money they would have spent on travel or restaurants on appliances and patio furniture.
This time, the unemployed are disproportionally personal contact service workers like restaurant servers, retail clerks and housekeepers. These jobs require a very different skill set and occur in a very different environment than manufacturing and construction jobs. It’s easy to see why someone would be unable—or unwilling—to move from waiting tables in an urban restaurant to working the third shift at a manufacturing plant far outside the city. And one can imagine why someone would hesitate to take the time to acquire the skills they need for such work. Maybe they’re getting by on the support they’ve received from fiscal and forbearance programs, have reduced their own spending, and are hoping that the proximity of a vaccine will bring back their former jobs. Maybe they are worried infrastructure jobs won’t last beyond the pandemic, or beyond the coming legislation.
In so many ways, including racial inequality, educational attainment and child care, the pandemic has laid bare preexisting problems. And we see it again: We have to recognize that we have underinvested in our infrastructure workforce as much as we have underinvested in infrastructure. Companies have cut back on training. Schools have cut back on technical pathways. Parents and guidance counselors, aware that many of these sectors have been challenged, have been pointing students elsewhere. The decline in immigration has reduced the number of first generation skilled tradespeople.
We need to address this underinvestment. The coming infrastructure bill needs to include funding for significant efforts to create more infrastructure workers. It should also focus its investments in areas where employment can be sustained once the stimulus spending has been completed. Examples of initiatives that could make a difference include:
- Additional sources of funding for certificate programs. For example, students can’t use Pell Grants to pay for workforce training or credential programs. The same is true for many state scholarship programs funded by lotteries. But certificate programs, generally offered at community colleges, are a relatively low-cost way to quickly train the next generation of infrastructure workers—we need to make it easier for students to pay for them and for community colleges to offer them. I was encouraged by Virginia’s recent move to use $30 million in CARES Act funding to provide scholarships for credential programs in high-demand fields such as skilled trades.
- Supporting apprenticeship programs. While a growing number of employers have developed apprenticeship programs in recent years, they are still relatively rare in the United States. But they offer numerous benefits to both workers and employers, as Fifth District firms such as Rolls-Royce Crosspointe, Bosch and BMW have found.
- Relaxing legal immigration constraints for skilled tradespeople. Not only can these workers help us deliver on necessary infrastructure projects, but they can also help us grow our workforce—and thus our economy—at a time when demographic trends are otherwise working against us.
- Breaking licensing bottlenecks. For example, even before the pandemic, many states were facing training and testing backlogs for commercial drivers, a relatively well-paying occupation for a worker without a college degree. The closure or limited hours of state motor vehicle departments has only made the problem worse.
These are only a few of the possible levers, and the solutions may differ by state or by the needed skills. But for our country to get the full benefit of an increased investment in infrastructure, we need to fully take on—in concert—an increased investment in our workforce.
Tom Barkin is the president of the Federal Reserve Bank of Richmond.