Setting the Record Straight: Recovery Act Investments in Highways & Transit

Posted on by Karina

Today, the Associated Press released an analysis of the American Recovery and Reinvestment Act on the impact of the highway and transit investments. These investments are creating and saving jobs as planned, but the AP focused instead on local overall unemployment rates. By doing so, the AP ignored the jobs created and saved by the Recovery Act, ignored the fact that the Recovery Act has offset cuts in state and local infrastructure spending, and ignored that unemployment would be worse without these critical investments. According to data reported by the House Transportation & Infrastructure Committee, through November 30, the highway and transit investments in the Recovery Act have:

Created or saved 250,000 direct, on-project jobs through highway transit formula program funds and resulted in $1.3 billion in payroll expenditures.

Created or saved 760,000 direct, indirect, and induced jobs.

Financed 8,587 highway and transit projects totaling $19.7 billion (57 percent of the Recovery Act highway and transit investment) on which work has begun; another 2,717 projects are out to bid.

And there is more to come, with nearly 30 percent more in Recovery Act investments in highway and transit, which will go out by June.

Chairmen James L. Oberstar, Committee on Transportation and Infrastructure, and Peter A. DeFazio, Subcommittee on Highways and Transit, took exception to the Associated Press report issuing a joint statement:

The AP analysis of the impact of road projects on unemployment flies in the face of hard data collected monthly by the House Committee on Transportation and Infrastructure. According to submissions that we received from states, metropolitan planning organizations, and public transit agencies, 8,587 highway and transit projects are under construction in all 50 states, three territories, and the District of Columbia, totaling $19.7 billion, as of November 30, 2009. These projects have created or sustained more than 250,000 direct, on-project jobs, with payroll expenditures of $1.3 billion.

Furthermore, these statistics do not include indirect and induced jobs in the supply chain, such as positions that produce construction materials or manufacture equipment. The impact of these jobs is not limited to a single state or local community. For example, the Virginia Railway Express in Northern Virginia used Recovery Act funds to purchase 15 locomotives manufactured in Boise, Idaho. VRE will begin receiving the new locomotives later this summer. While this local decision creates jobs in Virginia, the impact is also felt in Idaho and throughout the country's vast supply chain. When you include these indirect and induced jobs, the Committee calculates that total employment from transportation investments under the Recovery Act reaches over 760,000.

Finally, the AP article criticizes these investments for not making a big enough dent in our economic troubles. Transportation investments make up only six percent of the overall Recovery package, and are not enough by themselves to overcome the high unemployment in the private sector. However, to dismiss them as having no effect at all is like saying it is a waste of time to feed a homeless family because that one act does not cure poverty.

The highway and transit investments in the Recovery Act have created hundreds of thousands of jobs and returned a sense of worth and hope to hundreds of thousands of American families. AP should spend less time looking at unrelated numbers, and more time looking at the effect this legislation is having on real people.

New Highway, Transit, and Clean Water Data

Of the $34.3 billion provided for highway and transit formula programs under the Recovery Act, $24.8 billion, or 72 percent, has been put out to bid on 11,304 projects, as of November 30, 2009. Within this total, 9,542 projects (totaling $21.4 billion) are under contract (62 percent). Across the nation, work has begun on 8,587 projects totaling $19.7 billion — that is 57 percent of the total available highway and transit formula funds.

These highway and transit projects have created or sustained more than 250,000 direct, on-project jobs. Total employment from these projects, which includes direct, indirect, and induced jobs, reaches over 760,000.

The figures also show that, despite a slow start, states are moving on their clean water investments under the Recovery Act. The latest totals indicate that projects representing 89 percent of the national total under the Act are now out to bid, and projects representing 49 percent of the total are under contract or under construction.

When all programs are counted, federal, state, and local agencies administering programs within the Committee's jurisdiction under the Recovery Act have announced 15,598 transportation and other infrastructure projects totaling $46 billion. This represents 72 percent of the $64.1 billion total funds available.

Other experts have also weighed in:
Ken Simonson, economist for the Associated General Contractors of America:

As we cautioned the story's two authors in advance, the fundamental assumptions in today's Associated Press story are flawed. It is virtually impossible to measure the impact of $4 billion by looking at overall employment figures for an industry experiencing a $137 billion drop in activity — especially when only one in twenty construction workers stand to benefit from those stimulus funds.

Charles Gallagher, an asphalt company owner, speaking for the American Road and Transportation Builders Association:

Many contractors across the nation have been able to sustain, if not add to, their work force.

Mark Zandi, Chief Economist and co-founder of Moody's

Infrastructure spending has very high returns and it's very worthwhile for governments to invest in. Because we've underinvested, a lot of our infrastructure is old and [constitutes] a threat; some of it is crumbling.

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