Partly Cloudy78° WeatherPartly Cloudy78° Weather

Stimulus job creation: a numbers game

Traffic moves along U.S. 19 over one of the flyovers. The goal of the project is to have traffic move smoothly on the major artery.

SCOTT KEELER | Times

Traffic moves along U.S. 19 over one of the flyovers. The goal of the project is to have traffic move smoothly on the major artery.

The public wanted pop from the federal stimulus, and the Florida Department of Transportation gave it to them.

In fact sheets for the press and public, the agency trumpeted the news:

A project to improve U.S. 19 for 2.6 miles in central Pinellas County would support 5,800 jobs.

That's a worker for almost every 3 feet of the construction zone.

The promise underscored how the stimulus could help save local jobs.

It's also a serious exaggeration.

Florida and other states rely on a Federal Highway Administration formula to estimate the number of jobs created by projects that use the federal stimulus. It assumes 28,000 jobs for every $1 billion spent.

The U.S. 19 project was originally slated to cost nearly $210 million, which would have worked out to 5,800 jobs using that formula. But as costs plummeted by millions, the job total was never revised.

Economists and transportation experts also criticize the job-counting formula itself, calling it a flawed gauge for a single project.

It allows the same job to be counted multiple times. It doesn't account for products or materials that come from out of state or out of the country, and it assumes a multiplier effect of money trickling elsewhere into the economy.

That federal formula is being used across the country to tout big job gains from stimulus projects.

In Florida, transportation officials claim 37,000 jobs from highway building will be created or saved from stimulus projects, using that same questionable rule.

"It's a drastic mistake," said Stephen Fuller, an economist who testified to Congress in January for the stimulus on behalf of Associated General Contractors.

The numbers of jobs spurred by the stimulus has provoked national debate on government spending among skeptical Republicans and supportive Democrats.

But even the White House — which has been criticized for inflating job creation numbers — uses a more conservative method to estimate job prospects on stimulus-related projects.

All this number-crunching matters because the stimulus is a divisive political issue, with some saying it is essential to the economic recovery and others saying it is an ineffective use of tax money.

How one equals four

Though spokeswoman Kris Carson initially said the department considered the 5,800-job projection legitimate, the agency reduced the forecast to 4,400 jobs last week after the St. Petersburg Times questioned its accuracy. Carson said the reduction was due to lower costs for land acquisition, which dropped the project's price tag to $157.3 million.

The state also doesn't disclose a key job-counting caveat in the project fact sheet.

In calculating jobs, the Federal Highway Administration's formula counts them in "job years," an economic measure of what it takes to support a job for one year.

One worker who spends the entire four years on the U.S. 19 project is actually counted as four jobs.

"You basically have to start by dividing by four," Fuller said.

That would put the revised 4,400-job total to 1,100 jobs.

It's still more boots on the ground than the contractor expects when work begins in December.

The U.S. 19 project is part of a decades-long effort to ease congestion in Pinellas County by building an elevated, limited-access highway with fewer traffic lights.

Hubbard Construction, the company that won the state contract to do the work, will have 150 to 200 workers and subcontractors on site at any given time, estimated Allan Fadullon, construction manager for its Tampa office. He noted that count doesn't include people working off site.

The basis for job claims on the U.S. 19 project also is out of line with top White House economists. Its Council of Economic Advisers estimates that it takes $92,000 to pay for a job for one year — almost three times more than federal transportation formula.

Using that White House standard, the U.S. 19 project would need $404.8 million to support 4,400 jobs, far above its budget.

Council of Economic Advisers chairwoman Christina Romer told the Times she was unaware of how federal transportation officials were calculating stimulus-related jobs, but that White House advisers wanted to be conservative and "very careful."

"One of the things we discovered when we came in as someone taking account of the economy and how the individual agencies calculated (jobs) . . . we did come across exactly that tension that you're finding," Romer said.

Nonetheless, the co-leader on the stimulus program for the U.S. Department of Transportation defended its formula as a "golden rule" for estimating job gains.

Joel Szabat, deputy assistant secretary for transportation planning, emphasized that actual job counts will soon have to be reported on transportation projects to better gauge the accuracy of estimates.

Szabat said the White House estimate and his agency's are "apples and oranges." The White House measures jobs across various industries, while the transportation agency focuses on highways and bridges.

"We're counting different things and a different snapshot in time," said Szabat.

Florida stands by the numbers, too.

"It's the best planning tool we have at this point to estimate jobs," said state transportation spokesman Dick Kane.

Trickle-down errors?

The federal transportation rule assumes that nearly two jobs are "induced" elsewhere in the economy for every job directly working to rebuild the highway.

Those are businesses where workers spend their paychecks: The restaurants, dry cleaners and retailers who get extra cash to support their payrolls.

On a national level, the federal formula — including induced jobs — makes sense because it reflects broad trends, said Fuller and Stephen Reich, who directs the transportation and economic analysis section at the Center for Urban Transportation at the University of South Florida.

"It's a way to hang your hat on something and be responsive to people who want some sense of scale of what it's going to do," Reich said.

But local projects don't have that same scope. Money goes out of the county, the state or even the United States, depending on where suppliers are.

For example, Reich's center studied plans to build an elevated toll road on Gandy Boulevard in Tampa that showed local businesses would lose $1.1 million during construction. However, 486 jobs would be needed annually for the three-year project.

Or 1,458 jobs using the federal "job year" estimate.

Jobs pick up

Even a top lobbyist didn't know whether the 5,800-job estimate was right.

Bob Burleson, president of the Florida Transportation Builders Association, said he couldn't explain how the formula works, or how accurate the count was.

But he's certain it will create significant job gains, from the asphalt layers to the Chipotle Mexican Grill feeding the hungry workers on Gulf-to-Bay Boulevard near U.S. 19.

"It will be a big job for them. It will put a lot of additional people to work for them," Burleson said of the contractor.

Fadullon, the contractor, said the new project will supports lots of jobs, but he chuckled at questions about the state's lofty job projection. High expectations accompanied a $34 million Hubbard contract at Tampa International Airport for drainage and taxiway work, he said.

"When we picked up the airport project, people made a beeline thinking it offered 200, 300 jobs," Fadullon said.

He expects to employ a fraction of that number.

For Hubbard, the $103 million contract for its portion of the U.S. 19 project is the company's largest ever.

A year ago, the company had 200 employees at its Tampa office.

By March, that number had dwindled to 40, Fadullon said.

With the U.S. 19 and other projects, the company hopes to surge back to 200 workers by next year.

Times researcher Caryn Baird contributed to this report. David DeCamp can be reached at ddecamp@sptimes.com or (727) 893-8779.

5,800

The initial promise of jobs supported by the four-year, 2.6-mile construction project on U.S. 19

4,400

The state's first revision, due to cheaper land costs

1,100

Number of jobs to be supported per year, based on economists' review.

200

Number of construction workers at the site at any given time

$157.3M

Total cost of the U.S. 19 project

$44M

Stimulus funds for the project

Tracking
the stimulus

For more information on the federal economic stimulus — such as tracking local and state projects and where the funds are going —
visit recovery.gov.

The Florida Department of Transportation tracks transportation projects related to the stimulus at www.dot.state.fl.us/planning/
economicstimulus.

Stimulus job creation: a numbers game 10/02/09 [Last modified: Sunday, October 4, 2009 10:29am]

© 2014 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...