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January 20, 2010

Stimulus Absurdity: Letter to the WSJ Argues that Stimulus 'Saved' Thousands of Jobs

Stimulus Absurdity: Letter to the WSJ Argues that Stimulus 'Saved' Thousands of Jobs

Yesterday, I came across this letter to the editor in the Wall Street Journal. In the letter, the head of the American Road & Transportation Builders Association argued that the President’s stimulus package saved thousands of road jobs. He argued that the federal stimulus money stepped in for the state dollars that were used for funding roads. He argues that the federal money offset losses from state revenues dropping, and propped up the transportation projects saving thousands of construction jobs.

One segment from the article that I took extreme exception to was:

“Yet directly because of the stimulus, overall investment in highway, bridge and transit projects was up 12% through November 2009. That means hundreds of thousands of Americans were able to hold jobs over the past 10 months that otherwise would have been lost, and many more were created where market conditions made them possible.”

So we spent 12% more on transportation projects? That increase in spending should have led to an increase in jobs right?

Yet, according to the BLS, the number of unemployed construction workers went from 1.4 million to over 2 million in the year 2009, while all of the Obama stimulus was being paid out. The unemployment rate among construction workers as of December 2009 was 23% (up from 14% in December 2008).

Does 23% unemployment amongst a sector show that the government is saving jobs? Does this show jobs are being “created?”

With 23% unemployed at 2 million, this means the industry has about 8 million workers. How are we to determine if the remaining 6 million jobs were affected by federal stimulus, especially if every project has some federal money in it. Let's face the facts that the stimulus plan isn't saving jobs, but it's doing a good job delivering pork for politicians.

Don't let the report confuse you with the sector entitled “transportation and utilities” where the unemployment rate went from 6% to 9% and about 120,000 jobs were lost. This seems to be tied mostly towards utilities and private transport companies (such as taxi cabs). I would hate to think that the government would spend tens of billions of dollars on an industry that has less than half a million workers unemployed.

In my experience with people who have received stimulus money, the government has told these individuals they must use the money or lose it before the end of the fiscal year. This would mean that most of the stimulus money has already been spent (some may have been successfully deferred). So, if we blindly ignore the fact that construction unemployment has surged despite an increase in spending, and we believe that the stimulus saves jobs, unemployment should surge in the coming months as the stimulus money runs out (most economists are saying it will last until the end of Q2 at the latest).

As it turns out not only did we fail to achieve simple mathematics, the White House was counting jobs created in Congressional districts that didn’t exist.

Just because we spend more money, doesn't necessarily mean we create more jobs.

So, if the President asks for another stimulus in his State of the Union address on January 27th, will you approve of it?


bweger7 said...

I take exception with your statistics. The American Road & Transportation Builders Association's numbers are reflective of "ROAD" construction workers, while your statistics reflect on all construction workers, which include "home and building" construction jobs. The 23% is reflectrive of the fact that we are not building as many homes or other construction projects. You need to take a few things into consideration before you go and make a post. - bFw

Jeremy said...

The article above refers to an increase in homebuilding for 5 straight months from March to August 2009. Also, home construction jumped 9% in December.

BFW, are you suggesting that we are building more houses with fewer jobs.

New housing construction crashed in '08 and moved sideways in '09. The employment follows the construction.

Any other theories?

Adam said...

You could make the argument that without the stimulus, more jobs would have been lost, thus, "saving" them.

bweger7 said...

The BLS figures that you used in your argument do not tell the whole story. The Bureau of Labor Statistics’ figure of 23% includes a whole host of jobs. Your little “Blog” makes it seems as if it is 23% of road construction workers that are unemployed. I think you should go back and find better statistics that clearly make your point . - BFW

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