Stimulus Potholes

East Coast, National
Monday, January 11, 2010
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Men at work. Or not... (Courtesy Fremont.gov)

In a blistering report published today, the AP contends that the roughly $20 billion in the American Recovery and Reinvestment Act, né the Stimulus, dedicated to road and infrastructure spending did nothing to help create jobs over the past 10 months. The news is particularly damning because the House has proposed another $28 billion in road work in its latest jobs package, and in light of this news, those critical infrastructure projects—which are easily pegged as pork to begin will—could become the next health care debate. To wit:

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed. [...] Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

And yet the White House and even a few economists in the article have begun to push back. Ken Simonson, chief economist for the Association of General Contractors, points out that road work only accounts for 5 percent of the construction economy, a sector in desperate need as it is, and calls the AP’s assumptions “flawed.” “It is virtually impossible to measure the impact of $4 billion by looking at overall employment figures for an industry experiencing a $137 billion drop in activity—especially when only one in twenty construction workers stand to benefit from those stimulus funds,” Simonson says. Meanwhile, conservatives declared “Toldya so!”

Locally, things may be a little better, where the Bloomberg administration has fought for New York’s (more than?) fair share of the stimulus pie. Marc LaVorgna, a spokesman, told us in an email today that the city will receive roughly $1 billion over the next two years, which will account for roughly 1/20th of the annual $10 billion spent on infrastructure, no small amount. And, according to the city’s numbers, it’s doing a good deal to keep people employed as well. “We submitted reports to the federal government based on their requirements and its done quarterly,” LaVorgna wrote. “The last report showed 28,526 jobs were created or retained through stimulus funding.” Lucky us.

One Response to “Stimulus Potholes”

  1. Paul Nelson - StructureHub says:

    If there were no other explanation for the apparent ineffectiveness of stimulus funds on employment numbers, the AP report would indeed be damning.

    But it is worth noting that the number of jobs “created” were negligible, the number of jobs preserved may be where the value of the stimulus funds really exists. I’m not confident that this is the case, but perhaps it accounts for something!

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