IIJA continues to support record construction levels.
Major market growth evident across multiple indicators.
At the midpoint of the five-year Infrastructure Investment and Jobs Act (IIJA), the resulting federal investment is continuing to fuel record levels of highway and bridge construction — despite early supply chain issues and the rise of material and labor costs. Also known as the Bipartisan Infrastructure Law (BIL), the act has helped to support significant increases in major indicators including contract awards, highway and bridge contractor employment, and construction activity.
The $265 million effort to replace the 1,295-foot I-95 northbound section of the Providence Viaduct Bridge — which carries over 220,000 vehicles a day over numerous local roads and highway ramps — was largely benefited by federal highway funds.
Early growth drivers vs. long-term impacts.
A recent analysis by the American Road & Transportation Builders Association (ARTBA) suggests there is still a lot of IIJA funding on the horizon. At the IIJA halfway point, nearly 80 percent of all available funding had yet to be spent. This is due to the fact that many projects supported by discretionary grants and the new formula bridge program had yet to enter the construction phase.
Most obligations and outlays to date are from core highway formula funds, which enter the market quickly, driving significant growth. Other incremental funding sources are expected to have a longer-term impact.
Key statistics to consider include:
- More than 70,000 new formula-project commitments have been made under the IIJA. The 31,090 number for FY 2023 was 14% higher than FY 2021, the final year of the previous five-year federal FAST Act authorization. Volume growth has occurred across projects of all sizes.
- Highway and bridge contract awards for state and local governments experienced record growth in 2022 in both value (27%) and number (14%). The 9% and 4% growth in 2023 still exceeded typical 4% and 1% growth rates.
- On a seasonally-adjusted basis, the highway, street and bridge construction industry added nearly 40,000 jobs (+11%) over the first half of the IIJA.
- Industry employment surpassed record levels in 2023 and has since continued rising on a year-over-year basis.
- While typical growth in Value Put in Place (VPIP) averages 4% per year, this rose 10% in 2022 and a record 18% in 2023. Spend-out of funds and related construction activity are expected to continue rising throughout the life of IIJA.
The effects of inflation and other factors.
Supply chain issues and other pandemic-related challenges led to spikes in material and labor costs well before IIJA was enacted. Abnormal cost increases for materials persisted through the first year of IIJA but have since moderated, whereas labor costs have continued rising atypically. While there is no single price index that can provide a universal inflation adjustment for construction activity, ARTBA estimates positive real growth to be about 6% to 8% per year.
Midway through the IIJA, the national infrastructure construction market has achieved new records, despite macroeconomic challenges. IIJA-supported projects have been initiated in nearly every US county — while nearly 80 percent of total IIJA funding remains to be spent.
For more information on the IIJA, including more extensive details about the program’s scope and impact on the state and national level, visit the Highway Dashboard page in the Market Intelligence section of the ARTBA website.
