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Fri September 9, 2011
Earlier Stimulus Offers Lessons For A Second Round
President Obama called on legislators on Thursday to pass his American Jobs Act, which proposes billions of dollars in new spending on infrastructure.
"Building a world-class transportation system is part of what made us an economic superpower," Obama told a joint session of Congress.
It's difficult to say exactly how much additional infrastructure spending would take place if the president's plan is approved by Congress. But experts say examining how — and if — previous stimulus projects created jobs can help maximize results for this round.
A Shovel-Ready Bridge
Two and a half years ago, on Feb. 17, 2009, the Missouri transportation commission held a special session. The panel met outside, right along the Osage River in Tuscumbia, Mo.
Moments after Obama signed the American Recovery and Reinvestment Act that provided $840 billion in stimulus spending, the Missouri commission approved construction of a new bridge. Within 15 minutes, construction began.
"Our goal was to show that we could do that, that we could use the money quickly and get people working in Missouri," says Sally Oxenhandler, a spokeswoman for the Missouri Department of Transportation.
The bridge opened last month, she says, and for two years it employed 240 construction workers and suppliers.
Under the 2009 federal stimulus bill, $52 billion went to railways, highways, bridges and waterway projects. Proponents of such projects say it's an effective stimulus because construction workers spend money at local businesses that then hire more workers. That way, it has what economists call a "multiplier effect."
"[What] we demonstrated in 2009, 2010 and 2011 is not only did we create thousands of jobs in every corner of the country, but you also got a lasting benefit," says John Horsely, executive director of the American Association of State Highway and Transportation Officials.
But that lasting benefit comes in the roads themselves, not the jobs. Unlike teaching positions, construction jobs are temporary. Though the stimulus may have created jobs, it didn't drive down the unemployment in Missouri or nationally. In both cases, the jobless rate has since gone up.
Dan Rothschild managed a project at the Mercatus Center at George Mason University where he analyzed how the stimulus money was spent. He points to some inefficiencies in the last round of infrastructure spending.
In some cases, the stimulus funded projects that already had funding from another source, Rothschild says. In those situations, it just shifted money around without creating jobs.
"A lot of the things that people identified as being the more shovel-ready of the projects were ones that require relatively low levels of labor compared to the amount of capital that went into them," Rothschild says.
Strategies For Better Spending
That's not to say all or even most of the spending went to waste. Rothschild says the stimulus enabled some projects — especially at ports — that otherwise wouldn't have received funding.
Geoff Anderson, president and chief executive officer of the Smart Growth America nonprofit, says some projects create more jobs for the money. Work on public transit and repairs to existing roads, for example, generated 50 to 70 percent more jobs than work on new roads.
"We've got a happy intersection, in this case, between the things that created jobs in the short term [and] also the things that the economy needs in the long term," Anderson says.
By learning from what worked with the previous stimulus, Anderson says, the dollars can be used to create more jobs this time around.