Federal Transit Administration Distorts Economic Benefits of TIGER Grants

Recently Politifact Georgia gave the Federal Transit Administration (FTA) a “Pants on Fire” ranking—the worst ranking possible—because of the claim that the Atlanta Streetcar will create more than 5,600 jobs. This is the second dubious claim related to the Streetcar project. About six months ago U.S. Representative John Lewis of Atlanta claimed the Streetcar will create 1,399 jobs.

According to the article,

The [Federal Transit Administration] press release trumpeted reasons why the streetcar is good for Atlanta, including this one:

“[T]he project is expected to create an estimated 930 jobs during construction and more than 5,600 jobs over the next 20 years.”

The [agency] cited figures in the grant proposal that won the streetcar more than $47 million in federal money.

Experts and civil servants came up with the numbers and vetted them, so Lewis’ staff thought they were safe to use.

They weren’t. We ruled Lewis’ claim False. Those jobs weren’t actual positions. They were “job years.”

“Job years” means one job lasting for one year. So if a single position lasts five years, it counts as five “job years.”

Since the FTA’s recent press release uses the same numbers, its statement has similar problems

The FTA said its 5,600 jobs figure includes the 930 construction jobs, plus those needed to run the streetcar and positions created when new residences and businesses pop up along the route. The agency got its numbers from Atlanta’s grant application.

The FTA’s press release portrays the construction jobs estimate accurately. It will take about one year to build the streetcar, so for this phase of the project, one job year does equal one actual job.

But that doesn’t mean 930 people are projected to build the streetcar line, and the jobs aren’t all for locals.

This is the construction phase’s “total employment” figure, which means the number of people who would be employed for construction, plus two other types of jobs created by the project: those to make materials such as steel to construct the line, and those created when workers spend their earnings on a new stereo or a package of cheese puffs.

Planners expect to employ 467 workers for streetcar construction. The rest would be making steel, cheese puffs and the like — often outside the Atlanta area.

How do we rule on the FTA?

In fact, it will take an estimated 467 jobs to construct the line, plus 23 jobs that last 20 years or longer to run the streetcar. Experts think the remaining 4,600 jobs will be for those who produce materials needed to build the line or products workers purchase with their earnings, as well as employees of new businesses the streetcar brings to surrounding neighborhoods.

This means that when the Federal Transit Administration announced the streetcar project would “create an estimated 930 jobs during construction,” totaling more than 5,600 over the next 20 years, it gave a misleadingly high impression of the actual positions needed to construct and run it.

Pants on Fire.

I also question whether the 4,600 number is accurate. Recently bus service was discontinued on this corridor because ridership was so low. I fail to understand how this line will create 4,600 related jobs when many of these new jobs are related to businesses that the Streetcar may bring to surrounding neighborhoods. If nobody rides the Streetcar, the economic multiplier of job creation will be much lower.

The job-years measurement was created by the Department of Commerce for research settings. However the Department of Transportation encouraged applicants to use the job-years number in the Tiger Grant Application process. While job years may be appropriate in a research setting, using the term in a grant process where politicians and everyday citizens may confuse the term seems a bad idea. This concept in the application was what tripped up Rep. Lewis.

The biggest problem is DOT using the term in its press releases. The Department clearly knows better. Its Economists certainly would have told its Communications staff that job years are not jobs. But I think the Department may have more sinister intentions. According to PolitiFact Georgia, “Experts and civil servants came up with numbers and vetted them.” This suggests that the experts were pressured to distort the numbers for political gain. While bureaucrats may not be known for speed or efficiency, they are typically very knowledgeable in their fields. Perhaps the top political staff at DOT applied pressure to create this misleading press release. Regardless, the government has a responsibility to report accurate statistics. The General Accountability Office and the Office of the Inspector General periodically review DOT’s reports but they are designed to spot hidden bias not outright lies. This may be the start of a potentially dangerous trend. For the integrity of the DOT, this “creative use of numbers” needs to stop.