The CBOE Volatility Index (VIX) has surged more than ever before in recorded history as a result of the COVID-19 pandemic — even more than the 2008-2009 Great Recession. Recent economic estimates point towards substantial costs associated with the national shutdown and effective quarantine with a 34 percent decline in GDP between April and June of 2020, according to Goldman Sachs.
Moreover, one of the authors recently found that, while the average county will experience a 10 percent decline in their entire year’s worth GDP growth for a two-month shutdown, some may experience as much as an 18 percent decline. Lower income counties and those with a higher proportion of workers in non-tradables sectors are expected to experience more severe economic declines.
While the CARES Act might have been an important first-step for providing economic relief to small businesses, households, and certain sectors that have been disproportionately impacted by COVID-19, our country may need to take another step that directly confronts the magnitude of the workforce challenge that we are already beginning to see take shape: unemployment insurance claims surged by over 10 million in March — and even more are probably under-employed in their current jobs.
So, what if we could solve two problems with one policy?
We already know that our country’s infrastructure has been failing — for years. The American Society of Civil Engineers gave our infrastructure a D+ in 2017, and roughly $4.6 trillion of investment is needed to solve the problem. Rather than spending stimulus funds on pork, which economists widely concede will have little economic benefits during times of high uncertainty, we should invest our precious national resources on projects that will have a long-run payoff that will enable the industries and jobs of the future. This is particularly important given our race to 5G and leadership in the digital economy.
An infrastructure deal needs to have at least two important features.
First, rural communities have long been underutilized. Increasing empirical evidence points towards growing polarization in the quantity and quality of jobs across geographies, with rural communities falling behind. And yet, the cost of living is large and growing disproportionately in larger metropolitan areas, such as San Francisco and New York, which also have deteriorating infrastructures.
Why not invest in infrastructure that brings greater connectivity between rural and urban communities? For example, professors Chang-Tai Hsieh and Enrico Moretti found that restrictive housing market regulation was holding back productivity by 36 percent and suggested that the development of accessible and rapid public transportation (e.g., high speed rail) linking closely connected markets would have substantial economic benefits. Moreover, because COVID-19 has shown that a significant amount of work can be taken digitally, individuals would not need to travel between locations every day.
Second, our standard definition of infrastructure — roads and highways — is changing given the expansion of the digital economy, which has grown over four times as fast as the rest of the economy between 1998 to 2017, according to the Bureau of Economic Analysis. That means that some of the typical types of investments are not going to cut it. They might make a few people rich, but not the country. Infrastructure expert, Commissioner H. Brian Thompson, for example, has suggested the development of a National Highway Fiber System that embeds dark fiber and empty conduit along new highway construction so that the infrastructure can accommodate autonomous vehicles and ubiquitous internet access. This would simultaneously address a bipartisan concern about the digital divide.
One of the stark realities from the ongoing pandemic is that everyone is affected. Although we’re all going through the same storm, we’re not all in the same boat, as pastor Steven Furtick at Elevation Church eloquently put it, even non-retail and hospitality jobs are affected. For example, job posting for even professional, scientific, and technical services as of April 22 have declined by 19 percent, relative to last year, according to EMSI. That means there are going to be a lot of software engineers, consultants, lawyers, and other traditionally white-collar workers who have skills and time to offer following the pandemic.
A genuine infrastructure deal would help unify the parties, particularly as we begin to emerge out of a shared national crisis that we’ve all been in together. An infrastructure deal that focuses on digital investments, and not just the traditional brick-and-mortar roads, will not only create new and high-tech jobs that leverage the strengths of recently unemployed or underemployed workers, but also advance national security aims so that we set the standard for the emerging 5G infrastructure.
While the White House is working diligently to apply an all-of-government approach to COVID-19, Congress would be wise to build on the bipartisan legislation introduced by Sens. John Barrasso (R-Wyo.), Thomas Carper (D-Del.), Shelley Capito (R-W.Va.) and Benjamin Cardin (D-Md.), which flew through committee in July.
Bradley A. Blakeman was a deputy assistant to President George W. Bush from 2001 to 2004. A principal of the 1600 Group, a strategic communications firm, he is an adjunct professor of public policy and international affairs at Georgetown University and a frequent guest on Fox News and Fox Business.
Christos A. Makridis (Ph.D., Stanford University) serves as an Assistant Research Professor at Arizona State University, a Digital Fellow at the MIT Sloan Initiative on the Digital Economy, a Non-resident fellow at the Harvard Kennedy School of Government Cyber Security Initiative, a Non-resident fellow at the Baylor University Institute for Studies of Religion, and a Senior Adviser to Gallup.