Stimulus: $28 billion Creates 65,110 jobs

Bob Poole’s most recent edition of Surface Transportation Innovations newsletter (No. 93, July 2011) reminded me of this study from the General Accountability Office (June 2011) throwing a lot of cold water on the hyped-up promise creating jobs through the Stimulus Program. Almost all the transportation allotment has been obligated ($45 billion out of the total original Stimulus (Recovery Act) budget of $800 billion). About $28 billion actually has been spent. So, how many jobs were created? That’s a tricky number, but, according to GAO:

“The Recovery Act helped fund transportation jobs, but long-term benefits are unclear. For example, according to recipient reported data, transportation projects supported between approximately 31,460 and 65,110 full-time equivalents (FTE) quarterly from October 2009 through March 2011. Officials reported other benefits, including improved coordination among federal, state, and local officials.”

Note that the language of the report says jobs were “supported,” not created. That’s a much better way to characterize the spending and more honest than the rhetoric surrounding the initial claims of job creation from the stimulus program. These aren’t jobs “created” as much as they are supported by propping up spending (many of which are projects with dubious benefit to productivity and economic efficiency).

But, the bottom line is this: 65,110 jobs does not amount to much for $28 billion spent. Even if we include a standard rule of thumb multiplier of 2 (or even three), a back of the envelope estimate of jobs created would be about 200,000 (or about $430,000 per job).

Interestingly, this estimated number of jobs supported is also far below the more recent job creation potential estimates provided by the U.S. Department of Transportation suggesting that a billion dollars of federal and state/local spending on transportation would support 27,800 jobs.