Generally any sort of public works infrastructure spending is a boon for the economy. It creates jobs and stimulates the economy, while simultaneously improving infrastructure — which is in desperate need of updating.

However, this article from FiveThirtyEight.com argues that the timing for spending on infrastructure is particularly bad. With unemployment nearing a 50-year low, the economy could actually be too strong, and President Donald Trump’s talk of an infrastructure spending bill has economists and Fed members worried about the risk of the economy overheating. 

And you don’t have to look further than our own backyard to see why it might really be worrisome to construction companies, developers, homebuilders and the wider business community here in Iowa. 

We’ve been hosting a series of video roundtables with folks from the real estate and development world for our Annual Real Estate Magazine, and one overarching theme that has emerged is the costly effect of the shortage of construction workers and trade workers. Not only is our region’s unemployment in sub-3 percent territory, but the large data center projects have increased the demand for workers and subsequently made it even tougher to meet project deadlines and keep costs in check. 

So what would happen if the government poured trillions into new construction projects? I asked our final panel, which was focusing on housing, if an infrastructure bill would have an adverse effect in their world. The heads of panelists Kris Saddoris, Greg Wattier, Alexander Grgurich and Madeline Sturms nodded fast and furious in agreement. 

And it makes sense. With unemployment so low, there are only so many jobs that could be created by an infrastructure bill. Instead, FiveThirtyEight says, “the government would have to fill its construction crews by poaching private-sector workers, which could potentially create an inflation-generating war for scarce workers and neutralize many of the economic benefits commonly associated with large-scale government spending.” 

On the other side of the coin, however, the competition for limited resources could be good for workers in the short term, but perhaps not so good for business owners. Via FiveThirtyEight: “If the federal government has to vie with U.S. companies to hire qualified workers, it could start a bidding war, driving up pay and benefits. This is far from guaranteed, given how sluggish wage growth has been despite our tight labor market, but it can’t be ruled out.” 

But of course this could cause a long-term problem, too. “If pay did start to rise, odds are inflation would, too — which could prove self-defeating. Rising inflation would likely trigger an aggressive response from the Fed, which has an explicit mandate to keep inflation under control. That would mean faster interest-rate hikes as part of a concerted effort to blunt inflation and moderate those wage gains.” 

There’s no question this country has kicked the can down the road for a long time on our infrastructure, but in particular for Iowa and Greater Des Moines, exuberance for potential government spending on infrastructure might need to be tempered due to our uniquely low unemployment.