The Infrastructure Bill: President Biden’s Quiet Fight For American Housing

All Rights: zimmytws/

Biden’s Infrastructure bill is being debated in Washington. Make that debated, and debated, and debated. The bill has become a Rorschach test for Democrats and Republicans, who each see something different. Does a line item look like vitally needed Infrastructure? Or does it look like political pork? Infrastructure is indeed in the eye of the beholder. Still, the debate is getting a lot of politicians to reconsider what “infrastructure” actually means.

Politicians generally agree that roads, trains, and airports are Infrastructure. And they agree that Infrastructure often requires government funding. Not just in the US, but other nations as well have deep government involvement in building out Infrastructure.

Of course, a business might build a road or two on their own property, or a few businesses could get together to build a bridge or two to make it easier to move goods in and out of a city. But beyond that, they’re not interested. Infrastructure projects are just too expensive, and few companies have business interests in every city or every state.

Difficult as it may be to believe today, the government once spent considerable time and effort thinking about the future and funding the right Infrastructure to support economic development. A century ago, the Federal government realized that America’s poorest regions had the worst infrastructure. Improve the infrastructure and you just might lift an entire region out of poverty.

The Tennessee Valley Authority (TVA) is a great example. In the 1930s, half of Tennessee was swamp and untamed wetlands. Paved roads were few and far between. With virtually non-existing Infrastructure, corporations were reluctant to invest in the area, and well-paid jobs were scarce. The TVA was formed to fix all that. Dams were built to generate power. Swamps were drained. Millions of acres of new farmland became available and cheap hydroelectricity attracted new industry. It took time, but the TVA slowly erased the image of Tennessee residents as barefoot hillbillies.

We should also consider President Eisenhower’s 1956 Federal Highway Act. This was the most expensive building project in the history of the USA. In today’s dollars, the Federal Highway Act cost $500 billion. That’s in the same ballpark as Biden’s Infrastructure plan.

Eisenhower was the Supreme Commander of Allied forces in WW II. He spent considerable time in Germany and was impressed by their highway system, the Autobahn. Germans could drive faster and more safely than their US counterparts. Eisenhower realized that the lack of good roads was holding back the US economy. Big but underdeveloped states like California, Texas, and Florida could grow dramatically with a better road system.

The Highway Act added 41,000 miles of high-quality paved roads and tens of thousands of bridges. California, one of America’s most car-dependent states, grew from 10 million residents in 1950 to 40 million today. Analysis of the project shows that every $1 invested in the Highway Act delivered $6 in economic benefit. Infrastructure spending doesn’t just develop the economy, it pays for itself.

While most of Biden’s Infrastructure bill will fund roads, bridges, power stations, we also need to invest in innovative ideas that ensure future economic growth. Biden’s most innovative investment idea could be… low-income housing. Huh? Housing? What has that got to do with the economy? Housing may be important, but it’s usually considered a social issue. Not an economic issue. And certainly not infrastructure!

The TVA and the Highway Act were both visionary and successful! But at that time they had their detractors. Some could not see the value of projects that take decades to complete. Others say business issues should be handled solely by businesses. And, of course, we have individuals who see any big government projects as pure socialism. This brings us back to housing.

America has been dealing with a low-income housing crisis for at least 50 years. America built a lot of homes and luxury apartments, but young workers just entering the workforce need low-income housing. They can’t afford much, and they probably need to pay off student loans and start saving money if they want to have children. Compared to 1990, twice as many adults 25 to 34 years old share their living space with roommates, and nearly twice as many live with their parents. Young and entry-level workers have had a declining standard of living for decades.

You might say, “That’s unfortunate, but housing is not really an economic issue or an Infrastructure issue. Young workers are just making the wrong choices. Wrong college degree, wrong job, wrong place to live.” Maybe. But if this is a national trend… and it is… then how will your company get the people you need if those people cannot afford to live anywhere near your business?

It’s not just about the workers that you personally hire. Every worker in a factory or corporation depends on other workers. For example, teachers and daycare workers to look after the children of employees. For workers to be fully focused on their work, they need nearby supermarkets, and restaurants when they have to work overtime. And an army of other workers to provide basic services. Without that, you’re going to need to pay workers a lot more, especially couples and single mothers.

If you don’t think it takes that much time to manage household responsibilities, you need to understand how much the workforce has changed. Back in 1960, only 25% of family households had dual incomes. Today, dual-income earners are 50% to 60% of all households. Today’s families order take-out or eat out much more often. They also use more cleaning services, babysitters, 24 x 7 pharmacies, urgent care, and other “support services”. These services in turn need a LOT of entry-level workers. No low-income housing means no support workers. Ultimately that means no workers for all of the factory and office jobs we’re supposed to create with the Infrastructure bill.

Some readers may think this is too theoretical. Of course, talented young workers will continue to go to college, and build up crippling school loan debt, for a chance to get a high-paying job at a big corporation. Maybe, but not for much longer. The Great Resignation, a massive wave of resignations in just about every industry, will roll on for years to come. The COVID pandemic did not create today’s job market, but it did make it a bit worse and it gave a lot of employees a chance to think about what matters to them. Employees no longer agree with Employers about the future of work. Or how housing should work.

If we look at San Francisco, we may be able to see the future of housing in America. San Francisco has grown dramatically. SF’s “silicon valley” attracted high-tech companies that paid staggering compensation. It made SF the city with 3rd largest number of billionaires. All of that successful capitalism pushed up the cost of housing, by as much as 500% over the last 30 years. That’s good for retirees who want to sell their homes and move out of the area, but what about workers who want to move in?

Other cities may currently have more affordable housing than San Francisco, but they are on the same path as SF… building very little low-income housing. And it’s understandable. If a real estate developer has an opportunity to build on a piece of land, low-income housing is usually the least profitable option. Not just in the US, but in virtually every nation on earth. If you want low-income housing, you need some sort of support form of government support.

San Francisco shows us what happens when low-income housing is in short supply. In SF even highly paid professionals cannot afford housing. One study showed that only 30% of doctors can afford a house. Perhaps doctors could afford housing if they would settle for something less desirable? But if you are a doctor, why not just leave and set up shop somewhere else? What about first responders? Only 2.4% can buy a house. Only 0.7% of teachers and 0.1% of restaurant workers can buy a house. That’s pretty much an invitation to move somewhere else.

That’s why Biden’s Infrastructure bill includes $300 billion for low-income housing. There’s a pretty good argument for building the housing we need to ensure that the US workforce can grow. And history tells us that it is also a good investment. As the Great Resignation continues, issues like housing could determine which parts of America will prosper and which won’t.

What do you think? Do you consider housing as vital a part of our Infrastructure and roads or bridges? Is housing important, but not quite as important as other Infrastructure, or is putting housing in the Infrastructure bill government over-reach?

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