Road projects don't help unemployment

[alienlovechild 75]

WASHINGTON (AP) -- 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.

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 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.

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."

http://hosted.ap.org/dynamic/stories/U/US_...EMPLATE=DEFAULT

[slim 1,533]

My little brother - in 5th grade - could've told them that.

[NickD 203]

My little brother - in 5th grade - could've told them that.

Or my one year old granddaughter. What we really need is mass transit so people can travel cheaply from town to town to find no jobs. Did they ever think about bringing our jobs back from Asian countries? Those jobs used to be here. How about building cheap to the consumer mass transit systems to China?

[Ali G. 37]

Well you need to ask yourself what sort of projects are they conducting? The DC area is growing and in desperate need of new highways and public transport but all I see is road resurfacing. Anyone who has tried driving around here peak time understand perfectly well what i am talking about. One guess which party is blocking the approvals and funds required for such massive and substantial quality of life improvements and job creating projects. Blocking investing in America. My conservative friends back home thought I was lying when I told them this and just couldn't believe it. They thought I must be confused the two parties.

[PhiLandShiR 18]

Or my one year old granddaughter. What we really need is mass transit so people can travel cheaply from town to town to find no jobs. Did they ever think about bringing our jobs back from Asian countries? Those jobs used to be here. How about building cheap to the consumer mass transit systems to China?

I think a great idea would be to install a mono-rail down the middle of the interstate. The land is already owned and the space between the lanes is just wasted. Plus, being raised would allow for terminals to be built in the existing exchanges without ripping up the roads.

-Phil

[mawilson 2,133]

One guess which party is blocking the approvals and funds required for such massive and substantial quality of life improvements and job creating projects.

The Republican-Democrat Regime party?

[Niels Bohr 72]

Bringing jobs back to the US rules...

1. De-regulate minimum wage so we can compete with production based in India and China, and the south Pacific.

With 1000% inflation and $1/hr is most sufficient to bring companies from India and China back to the America.

[Mr. Big Dog 10,747]

The funds allocated to the Tampa Bay area will start to create jobs starting later this year. That's because these are projects that are long term investments rather than immediate job creators. As a quick job creation tool, transportation projects don't do much good. As a mid term job creation tool and a long term investment they are sorely needed.

[Nina~ 431]

The funds allocated to the Tampa Bay area will start to create jobs starting later this year. That's because these are projects that are long term investments rather than immediate job creators. As a quick job creation tool, transportation projects don't do much good. As a mid term job creation tool and a long term investment they are sorely needed.

Investing in a country's infrastructure helps the economy a great deal. It not only helps in employment in the long run, but also facilitates trade and defense.

[Niels Bohr 72]

Decrease municipalities from the great effort of financing a road project.

Investing in a country's infrastructure helps the economy a great deal. It not only helps in employment in the long run, but also facilitates trade and defense.

[Ali G. 37]

The Republican-Democrat Regime party?

Yeah they are both as bad as each other. Look at DC, which is democrat run. They have a hell of a lot of money yet the east part of the city looks like a third world country. Heck, the roads around the whitehouse and capital have more potholes than a dirt road.

I know in my area, the Repubs do not want to increase fuel levies to pay for road projects. Instead, they prefer we idle in traffic for 2 hours. One would think these economic geniuses would conduct a study to figure out the productivity and money lost (basically burned up) idling in traffic.

I had a look at my sat nav's total trip meter the other day and was shocked to see that I had spent 74 hours idling. No kidding..

[Craneman 2]

Still have $400M+ project being held up by politics, over a year now.

We get the go and 2,000 jobs are created tomorrow, not a penny of government money involved, but then that is the politics end of it.

[Niels Bohr 72]

Not as bad as Cambodia. International donors gives billions, but none of it gets to the people. The corrupted political official takes all of it leaving beggers with sick kids on the streets without any pants on.

Still have $400M+ project being held up by politics, over a year now.

We get the go and 2,000 jobs are created tomorrow, not a penny of government money involved, but then that is the politics end of it.

[Craneman 2]

Not as bad as Cambodia. International donors gives billions, but none of it gets to the people. The corrupted political official takes all of it leaving beggers with sick kids on the streets without any pants on.

What the hell does Cambodia have to do with job creation in the U.S.

Is you head stuck, Again?

[Niels Bohr 72]

I'm surprised you can't make an analogy of how good we still have it.

What the hell does Cambodia have to do with job creation in the U.S.

Is you head stuck, Again?