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Do stimulus jobs create other jobs?

Marketplace Staff Jun 12, 2009

Do stimulus jobs create other jobs?

Marketplace Staff Jun 12, 2009


Bill Radke: This week, the Obama administration announced accelerated stimulus spending that it says will save or create 600,000 jobs in the next hundred days. But how do you calculate that number of jobs? Tamara Keith tries to figure that out by revisiting a stimulus project she first told us about last month. It’s the very first road project to start construction as part of the stimulus package — a repaving project on a mile-long stretch of road in suburban Washington, D.C.

Tamara Keith: About 20 people now working on the New Hampshire Avenue repaving project would be jobless if not for stimulus money. But can workers at the asphalt plant supplying that project count their jobs as a stimulus success, too?

This week, dignitaries in suits and hard hats cut through a big red ribbon to mark the official opening of the Independence Construction Materials plant in Jessup, Md. The plant is already shipping asphalt to stimulus projects, but it almost wasn’t built.

Ross Myers is CEO of American Infrastructure, the parent company for the asphalt firm. Last fall, when it became clear the economy was a wreck, he thought hard about putting the plant on hold.

Ross Myers: And we decided to go ahead, cause it was going to provide jobs for our people. And we’re happy to say that we actually have quite a nice backlog for it.

And Myers thanks the stimulus money for that backlog. While it only takes six people to operate the plant, nearly 100 will be working in the asphalt supply chain. Company executives can’t say exactly how many of those jobs are truly stimulus jobs. And therein lies the challenge.

Christina Romer: You’re getting at exactly the difficulty in my life, because I’m the one that’s supposed to come up with numbers on that.

Christina Romer is Chair of the President’s Council of Economic Advisers. She says the administration will receive quarterly reports from agencies about where their stimulus money is going. But they won’t include indirect impacts.

Romer: They surely won’t have information on the sandwich shop where the workers went and got their sandwiches. They won’t have information on once you hired these workers and they now had income and went out and bought things, we won’t have numbers on that.

But there’s no simple formula for calculating that.

Peter Morici is an economist at the University of Maryland. Looking at data on Government employment and construction jobs, he’s just not buying the Obama administration’s claims of job creation.

Peter Morici: You can find some workers around the country that owe their employment to the stimulus package — 150,000 will be hard to identify and certainly going forward over the next hundred days another 600,000. That’s going to take some magic to accomplish.

He says the jobs that are created, like those supplying asphalt to stimulus projects will be temporary. The folks at Independence Construction Materials realize that but they’re hoping the economy picks up before the stimulus work runs out.

In Washington, I’m Tamara Keith for Marketplace.

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