AP report: Stimulus for transportation has not changed unemployment rates
An Associated Press (AP) analysis found that the $20 billion spent in American Recovery and Reinvestment Act (ARRA) funds for transportation projects has had no effect on local unemployment rates. The White House, the Washington-based American Association of State Highway and Transportation Officials (AASHTO) and Smart Growth America (SGA) say the AP analysis is flawed.
The AP analysis, which is based on Transportation Department data on more than $21 billion in stimulus projects in every state and the District of Columbia, and the Labor Department’s monthly unemployment data, assessed the effects of road and bridge spending on local unemployment and construction employment, according to an AP report. The analysis did not try to measure results of the broader aid that also was in the ARRA, such as tax cuts, unemployment benefits or money for states.
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, even within the construction industry, which stood to benefit most from transportation money. “As a policy tool for creating jobs, this doesn’t seem to have much bite,” Emory University economist and ARRA supporter Thomas Smith told AP after reviewing 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.”
The report called into question the White House’s plan for a second stimulus package, the $75 billion Jobs for Main Street Act, which also would include more money for transportation infrastructure work. However, Transportation Secretary Ray LaHood wrote in his blog that the AP analysis is “comparing apples and oranges” by “referring to the ‘construction industry’ when transportation stimulus spending is only designed to help the transportation construction industry.” “You see, the highway and road construction industry totals about 258,000 jobs out of an overall national work force of 132 million jobs,” LaHood wrote. “That means only two-tenths of one percent of the American employment is in highway and road work. And, not only is transportation construction less than a percent of all employment, it’s also only a tiny sliver of the total construction picture.”
LaHood goes on to write that, along with putting tens of thousands back to work, ARRA’s transportation funds are making up for the shortfall in other public transportation spending. He writes that the Census Bureau reported that highway and street construction spending in November was 5.7 percent higher than one year ago, and other public transportation construction spending was up 18.8 percent from a year ago. “Overall public construction rose by $8.3 billion in November 2009 from November a year ago. All of that (more than all of that) was accounted for by highways, streets, and other public transportation construction projects, which rose by $9.2 billion,” LaHood wrote.
AASHTO says the AP analysis is flawed because it overlooks the 210,000 direct on-project transportation jobs the House Transportation and Infrastructure Committee determined were created by stimulus. “And it argues that the 6,333 highway recovery projects under construction in America, valued at $15.2 billion, have had ‘no effect on local unemployment and only barely helped the beleaguered construction industry,'” AASHTO said in a statement.
SGA also called the AP study flawed because it looked only at road and bridge spending and did not include the thousands of jobs SGA says were created by investment in public transportation. However, SGA goes on to say that the AP report supports the conclusion of SGA’s Center for Neighborhood Technology report “What We Learned from the Stimulus,” released in January, which shows that public transportation projects created twice as many jobs per dollar as traditional highway spending because they spend more money on labor — and more kinds of labor.