Road projects don't help unemployment
Photo 
A $19.2 million widening project along SR-373 in Lewisburg, Tenn., is seen on Sunday, Jan. 10, 2010. Ten months into President Barack Obama's first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.
WASHINGTON — Ten months into President Barack Obama's first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.
Spend a lot or spend nothing at all, it didn't matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama's argument that more road money would address an "urgent need to accelerate job growth."
Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are "at the heart of our effort to accelerate job growth."
Construction spending would be a key part of the Jobs for Main Street Act, a $75 billion second stimulus to revive the nation's lethargic unemployment rate and improve the dismal job market for construction workers. The House approved the bill 217-212 last month after House Speaker Nancy Pelosi, D-Calif., worked the floor for an hour; the Senate is expected to consider it later in January.
AP's analysis, which was reviewed by independent economists at five universities, showed that strategy hasn't affected unemployment rates so far. And there's concern it won't work the second time. For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus like tax cuts, unemployment benefits or money for states.
"My bottom line is, I'd be skeptical about putting too much more money into a second stimulus until we've seen broader effects from the first stimulus," said Aaron Jackson, a Bentley University economist who reviewed AP's analysis.
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.
"As a policy tool for creating jobs, this doesn't seem to have much bite," said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP's analysis. "In terms of creating jobs, it doesn't seem like it's created very many. It may well be employing lots of people but those two things are very different."
Transportation spending is too small of a pebble to quickly create waves in the nation's $14 trillion economy. And starting a road project, even one considered "shovel ready," can take many months, meaning any modest effects of a second burst of transportation spending are unlikely to be felt for some time.
"It would be unlikely that even $20 billion spent all at once would be enough to move the needle of the huge decline we've seen, even in construction, much less the economy. The job destruction is way too big," said Kenneth D. Simonson, chief economist for the Associated General Contractors of America.
Few counties, for example, received more road money per capita than Marshall County, Tenn., about 90 minutes south of Nashville.
Obama's stimulus is paying the salaries of dozens of workers, but local officials said the unemployment rate continues to rise and is expected to top 20 percent soon. The new money for road projects isn't enough to offset the thousands of local jobs lost from the closing of manufacturing plants and automotive parts suppliers.
"The stimulus has not benefited the working-class people of Marshall County at all," said Isaac Zimmerle, a local contractor who has seen his construction business slowly dry up since 2008. That year, he built 30 homes. But prospects this year look grim.
Construction contractors like Zimmerle would seem to be in line to benefit from the stimulus spending. But money for road construction offers little relief to most contractors who don't work on transportation projects, a niche that requires expensive, heavy equipment that most residential and commercial builders don't own. Residential and commercial building make up the bulk of the nation's construction industry.
"The problem we're seeing is, unfortunately, when they put those projects out to bid, there are only a handful of companies able to compete for it," Zimmerle said.
The Obama administration has argued that it's unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all.
For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department's monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.
There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.
Despite the disconnect, Congress is moving quickly to give Obama the road money he requested. The Senate will soon consider a proposal that would direct nearly $28 billion more on roads and bridges, programs that are popular with politicians, lobbyists and voters. The overall price tag on the bill, which also would pay for water projects, school repairs and jobs for teachers, firefighters and police officers, would be $75 billion.
"We have a ton of need for repairing our national infrastructure and a ton of unemployed workers to do it. Marrying those two concepts strikes me as good stimulus and good policy," White House economic adviser Jared Bernstein said. "When you invest in this kind of infrastructure, you're creating good jobs for people who need them."
Highway projects have been the public face of the president's recovery efforts, providing the backdrop for news conferences with workers who owe their paychecks to the stimulus. But those anecdotes have not added up to a national trend and have not markedly improved the country's broad employment picture.
The stimulus has produced jobs. A growing body of economic evidence suggests that government programs, including Obama's $700 billion bank bailout program and his $787 billion stimulus, have helped ease the recession. A Rutgers University study on Friday, for instance, found that all stimulus efforts have slowed the rise in unemployment in many states.
But the 400-page stimulus law contains so many provisions — tax cuts, unemployment benefits, food stamps, state aid, military spending — economists agree that it's nearly impossible to determine what worked best and replicate it. It's also impossible to quantify exactly what effect the stimulus has had on job creation, although Obama points to estimates that credit the recovery program for creating or saving 1.6 million jobs.
Politically, singling out transportation for another round of spending is an easier sell than many of the other programs in the stimulus. The money can be spent quickly and provides a tangible payoff. Even some Republicans who have criticized the stimulus have said they want more transportation spending.
Spending money on roads also ripples through the economy better than other spending because it improves the nation's infrastructure, said Bernstein, the White House economist.
But that's a policy argument, not a stimulus argument, said Daniel Seiver, an economist at San Diego State University who reviewed AP's analysis.
"Infrastructure spending does have a long-term payoff, but in terms of an immediate impact on construction jobs it doesn't seem to be showing up," Seiver said. "A program like this may be justified but it's not going to have an immediate effect of putting people back to work."
Jan 13, 2010 at 5:25 p.m.
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"leftest liberal illusionist"
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LOL What, am I a political magician?
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"sorry you have failed miserably at the want-a-be elitist, with super powers of knowing what a person meant to say..."
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Oh, don't feel sorry for me. I guess I'd rather fail at attempting to read minds than fail at attempting to construct a sentence.
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"you never fail to lower the bar with every posting."
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Fail, fail, fail, blah, blah, blah...
Hey, buddy, performing magic is harder than it looks. I still haven't figured out how to make you disappear, for starters.
Jan 13, 2010 at 10:06 a.m.
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leftest liberal illusionist, sorry you have failed miserably at the want-a-be elitist, with super powers of knowing what a person meant to say...you never fail to lower the bar with every posting.
Jan 12, 2010 at 7:25 p.m.
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You're free to delude yourself as you please.
Jan 12, 2010 at 7:14 p.m.
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Keep dribbling princess, your wrong again as usual.
Jan 12, 2010 at 6:25 p.m.
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"inconvenienttruth declares a cause and effect where one was never stated...and demands answers"
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I have?
A cause and effect situation can only exist when it is stated as such?
I think that what I've actually done is observed a likely correlation between your reference to "that Keynesian philosophy," which IMMEDIATELY followed your mentioning of "4.1 million jobs lost in a single year," and have given you multiple chances to clarify your comments... if that correlation was not intended, or was misinterpreted, that is.
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"Perhaps if inconvenienttruth read what was written"
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I have.
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"without non-inferred meanings---(perhaps based on her own inadequacies?), there would be less confusion."
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I have personal "inadequacies" in relation to Keynesian economics? Uh...talk about confusion.
Perhaps if you'd choose to have the courage to state your opinions directly rather than demurely, one would not be left to infer anything in your posts. Wishful thinking, I know.
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"This country lost more than 4.1 jobs despite the use Keynesian economics in 2009"
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If Keynesian economics didn't cause those 4.1 million+ job losses, then what did?
When I asked you, "So your dismissive reference to 'that Keynesian philosophy', which IMMEDIATELY followed your mentioning of '4.1 million jobs lost in a single year', was totally unrelated?", your response should have been, "No, you were right, they were intentionally related."
This, in contrast with the reality that this country didn't lose more jobs than it did because of the use of Keynesian economics in 2009.
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"the same philosophy touted by posters on these very blogs as the only way to stem the increase of unemployment"
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I can't speak as to the "only way", but studies have shown that the ARR Act did indeed stem the increase of unemployment in most states.
But ignore that. Let's focus on the other "posters on these very blogs."
Jan 12, 2010 at 4:29 p.m.
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The pontificating princess from Mom's basement with dictionary under arm declares a cause and effect where one was never stated...and demands answers; wonders never cease.
Perhaps if princess read what was written, without non-inferred meanings---(perhaps based on her own inadequacies?), there would be less confusion.
As she has proven the inability, I will explain slowly. This country lost more than 4.1 jobs despite the use Keynesian economics in 2009; the same philosophy touted by posters on these very blogs as the only way to stem the increase of unemployment...the very same reasoning used by the current administration.
To re-hash for the princess; if you believe the revisionists approach measuring the jobs is a misguided, perhaps you also think 4.1 million jobs lost in a single year is also not bad...bring on more of that Keynesian philosophy.
Jan 12, 2010 at 4 p.m.
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Actually, Zoom, it's a small $350 billion error; Obama asked Bush to request the second half of the funds, so that he could be prepared on day one if they were needed. It's just as much Obama's TARP as it is Bush's.
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"Obama and Bush have teamed up to get the money released. Bush has agreed to request the funding, and Obama will lobby for it by arguing that he will 'rebrand' the program and make better use of the money."
http://abcnews.go.com/GMA/Economy/story?...
Jan 12, 2010 at 3:54 p.m.
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You apparently did miss it, crafty.
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"copying sources and not citing the site."
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What site? Rutgers?
So you don't just need to be told what the study is about and who did the study, but you need a link, too?
Good thing I'm so dependable. Someone has to be, around here.
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http://www.heldrich.rutgers.edu/Publicat...
"Is the Stimulus Landing in the Neediest Communities?", by William M. Rodgers III, chief economist of Rutgers University’s John J. Heldrich Center for Workforce Development in New Brunswick.
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Anything else you're too lazy to do for yourself?
Jan 12, 2010 at 3:52 p.m.
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Again, if your words have been so "twisted", what then is "that Keynesian philosophy" in reference to, specifically, in your post?
Better hurry; it's your last chance to speak up before resigning yourself to your rightful place of indignant obfuscation and/or outright silence.
: )
Jan 11, 2010 at 10:48 p.m.
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The dolt is back out in force.
Jan 11, 2010 at 10:05 p.m.
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"A growing body of economic evidence suggests that government programs, including Obama's $700 billion bank bailout program and his $787 billion stimulus, have helped ease the recession."
Small $700 billion error there. The $700 billion bank bailout (TARP) was passes in October 2008. You know, before the election.
Jan 11, 2010 at 9:21 p.m.
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did i miss it? because i haven't seen anybody "put in their place" so far.
i wish people would quit copying sources and not citing the site.
can't they think for themselves? don't they have any thoughts of their own?
Jan 11, 2010 at 8:03 p.m.
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Oh...
So your dismissive reference to "that Keynesian philosophy", which IMMEDIATELY followed your mentioning of "4.1 million jobs lost in a single year", was totally unrelated?
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What then is "that Keynesian philosophy" in reference to, specifically, in your post?
Better hurry, or you're about to be put in your place (again) by a "dictionary boy from Mom's basement"!
: )
Jan 11, 2010 at 6:57 p.m.
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"4.1 million jobs were lost directly due to the Stimulus?"
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Only a dictionary boy from Mom's basement twists statements this badly.
Jan 11, 2010 at 6:54 p.m.
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"4.1 million jobs lost in a single year is also not bad...bring on more of that Keynesian philosophy."
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4.1 million jobs were lost directly due to the Stimulus? I'd love to see your proof of that.
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In the mean time, "A growing body of economic evidence suggests that government programs, including Obama's $700 billion bank bailout program and his $787 billion stimulus, have helped ease the recession. A Rutgers University study on Friday, for instance, found that all stimulus efforts have slowed the rise in unemployment in many states."
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That government is unable to create jobs on a substantial scale does not negate the positive effect the ARR Act has had on our economy.
Jan 11, 2010 at 5:40 p.m.
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Understand the Libs are looking at another stimulus plan. Lets stimulate them out of their nice, comfy jobs in Washington and give some new blood a chance to correct what they have made worse.
Jan 11, 2010 at 4:44 p.m.
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I love leftest revisionism...
Words from Obama about the stimulus at the time:
-"I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jumpstart job creation"
-" That's why we need to put money in the pockets of the American people, create new jobs"
-" I am confident will save or create at least three million jobs"
-" the overwhelming majority of the jobs created will be in the private sector"
-"we will put Americans to work in new jobs that pay well"
But if you believe the revisionists approach measuring the jobs is a misguided, perhaps you also think 4.1 million jobs lost in a single year is also not bad...bring on more of that Keynesian philosophy.
Jan 11, 2010 at 3:38 p.m.
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Measuring the stimulus in "actual jobs" is a misguided approach from the beginning -- very few stimulus dollars were targeted at supporting anything like a year-round full-time position. The entire basis from the beginning was replacing the lost aggregate demand in the economy -- people buying stuff -- with another source of income worth a significant percentage of what people were NOT buying in terms of goods and services. Instead of a hamburger, it was feeding the economy with an IV. A different source but food nonetheless. Now we've reached the point where the limitations of the stimulus -- which should have been doubled or tripled in the first place -- have become apparent. The obvious conclusion is that we need to further stimulate the economy. Retrenching now is Hooverism and will only plunge the US back into a double-dip recession before the slightest recovery in employment.
Jan 11, 2010 at 1:45 p.m.
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Haha, what you saw is not what you got. And believe me, I do feel awful for all the unemployed, but I'm sorry to say the country got what it deserved in this guy. Who really believed that he would be able to 'change' anything for the better. He is just a good talker with no substance. And lately he doesn't even sound good. Every weekend it seems someone from his admin. says something stupid they have to retract or explain. The terrorist who was an 'isolated' and 'alleged' terrorist and now is part of Al Qaeda. The party crashers fiasco. I mean it's one thing after another. Can't wait til 2012 to kick him out!
Jan 11, 2010 at 9:31 a.m.
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And the great "change" has come to pass. Did anyone really expect this "change"? It just sounded better coming from Obama. How do all of you Obama worshippers like it so far? And now he wants more money to create jobs. I thought thats what the first 700 billion was supposed to do. A billion here and a billion there what do they care. They are set for life with great pensions and health care for life. I do hope we don't see much more change I am not sure we can afford it.
Jan 11, 2010 at 8:08 a.m.
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"road projects don't help unemployment"....
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Of course not since most of the money was funnelled to political cronies instead of for construction.
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Ten or twenty billion here and there doesn't go far on a national scale in 21st century infrastructure.
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