The passage of the Bipartisan Infrastructure Investment and Jobs Act (IIJA) has significantly impacted the US economy, particularly in the construction and infrastructure sectors. As we look toward 2025, the effects of this federal investment are becoming increasingly evident, with substantial implications for employment, economic growth, and infrastructure development.
Economic and Employment Impact
In 2024, the IIJA has continued to drive economic growth and job creation. According to Moody's Analytics, the Act is expected to have added approximately 600,000 jobs in 2024, with projections of 800,000 additional jobs by 20251. This job growth is largely concentrated in sectors related to infrastructure, such as construction, transportation, and energy.
The construction industry, in particular, has seen a notable increase in employment. The influx of federal funding has supported over 40,000 projects across the country, boosting construction employment significantly2. By the end of 2025, it is estimated that the IIJA will have resulted in 872,000 new jobs, with over half of these in the construction sector3.
Sectoral Investments and Challenges
Infrastructure Projects
The IIJA has allocated substantial funds to various infrastructure projects, including:
- Roads and Bridges: $110 billion has been earmarked for improvements, addressing the poor condition of one in five roads and major highways, as well as 45,000 bridges3.
- Public Transit: A historic $39 billion investment aims to modernize public transportation systems, marking the largest federal investment in this area in 50 years3.
- Broadband and Energy: Significant investments are also being made in broadband expansion and clean energy infrastructure, which are crucial for modernizing the nation's infrastructure and addressing climate change14.
Challenges
Despite these positive developments, the implementation of the IIJA faces several challenges:
- Inflation and Costs: Inflationary pressures have eroded some of the purchasing power of the federal investment, with construction costs remaining high due to increased prices for materials and labor shortages5.
- Labor Shortages: The construction industry continues to struggle with a shortage of skilled workers, which poses a risk to the timely completion of infrastructure projects5. This shortage is exacerbated by the high demand for labor driven by the surge in federally funded projects.
Long-term Economic Benefits
The IIJA is expected to have lasting economic benefits by improving the nation's infrastructure, enhancing productivity, and boosting economic resilience. Investments are strategically directed towards states with the most critical infrastructure needs, particularly those with lower household incomes, to ensure equitable economic growth46. This approach aims to reverse historical underinvestment trends and support long-term economic development.
Conclusion
The federal infrastructure investment through the IIJA is transforming the US economic landscape by creating jobs, modernizing infrastructure, and addressing long-standing economic disparities. While challenges such as inflation and labor shortages persist, the overall impact of these investments is poised to strengthen the US economy and improve the quality of life for millions of Americans in the coming years. As we move into 2025, continued focus on efficient implementation and addressing workforce challenges will be crucial to maximizing the benefits of this historic investment.
Citations:
[1] https://www.jec.senate.gov/public/_cache/files/d1342923-d8e8-4c82-b1ea-6818a9253e25/econ-benefits-of-bipartisan-infra-deal-fact-sheet.pdf
[2] https://www.moodys.com/web/en/us/insights/resources/macroeconomic-consequences-of-the-infrastructure-investment-and-jobs-act-and-build-back-better-framework.pdf
[3] https://www.constructiondive.com/news/infrastructure-law-progress-year-two/699961/
[4] https://www.peopleready.com/the-infrastructure-investment-and-jobs-act-impact-on-construction-staffing/
[5] https://www.spglobal.com/ratings/en/research/articles/240514-record-u-s-infrastructure-spending-is-colliding-with-higher-construction-costs-and-other-hurdles-13104338
[6] https://home.treasury.gov/news/press-releases/jy1909
[7] https://home.treasury.gov/news/featured-stories/infrastructure-investment-in-the-united-states