At the Clinton Global Initiative (CGI) – America yesterday the AFL-CIO announced a $10 billion commitment to invest in America’s infrastructure. This commitment puts labor’s money where their mouth is.
This initiative will help create mechanisms to finance infrastructure projects. Over the next 5 years at least $10 billion will be raised to invest in infrastructure projects– beginning with investment specifically geared toward retrofitting large commercial buildings to be energy efficient. The money will be recruited from pension funds, state and federal governments, beginning with union pension funds.
Retrofitting Buildings — How It Pays Off
Initially $20 million will come from union pension funds to invest in pilot programs retrofitting large public and commercial buildings for energy efficiency. The union money covers the cost of the work. They get the money back over the long term by receiving the difference between the building’s current utility bills and the lower utility costs that result from the retrofitting. So along with creating jobs, reducing our dependence on foreign (and Koch) energy sources and helping get America moving again, the pension funds and other financing entities will be paid back directly from the resulting savings on utility bills.
Because the labor organization is willing to make a long-term investment, they can finance this work where other entities will not. It is called “patient capital.” For an investment of patient capital, you need non-exorbitant but predictable returns. This reduction in utility bills provides just that. This is the first time anyone willing to put enough money in this to get projects like this going. As other investors see the success that results they will join to finance future projects.
This project means public buildings can be retrofitted now, without the governments having to come up with any money. Because this is very labor-intensive work it will create many construction jobs.
Other infrastructure projects will follow the initial building-retrofit effort.
The CGI Process
This is a great commitment to be announced at CGI because it fits the CGI model. It is practical, gets something done that is important to do, brings labor, business and government together to solve problems and is completely scalable so if it works it can be rapidly and dramatically expanded.
AFT President Randi Weingarten and AFL-CIO Building and Construction Trades President Mark Ayers announced the project here at CGI-America, with President Clinton explaining to the assembled audience how it will have such a positive impact. Clinton explained that China spends 9% of income on infrastructure, US only 3%.
Investment in infrastructure gets Americans back to work and enhances energy independence, so it is good economics. We don’t have the same capacity to amass significant amounts of capital required for these kinds of investments. AFL-CIO investing at least $10 billion from pension funds into America’s infrastructure projects that are competitive and energy efficient, bringes utuilities, labor, government, investors and business groups together.
In addition, AFL-CIO will train 40,000 apprentices as well as 100,000 mid-career construction workers to do this.
Clinton said Rich Trumka couldn’t be here, they started talking about this last January, Trumka will report on the progress at the September CGI in New York.