The continued high unemployment
rates announced in the past few weeks for the nation (9.8%) and the state
(12.2%) have increased the calls for additional targeted job creation measures.
A range of strategies are being put forward this week– tax credits for private
sector job creation, another round of infrastructure investments, even
government as the employer of last resort.
I’ve been engaged since earlier
this year in tracking the job impacts of the Stimulus in California. In
crafting any further employment initiatives, it is important to examine
California’s Stimulus activities. Chief among these lessons are the following
five:
1. The job numbers announced for
Stimulus job creation in California are meaningless: Last week, Governor Schwarzenegger reported 100,000 jobs saved or created in California from the $5.3
billion in federal stimulus funds that state agencies have spent.
These job creation numbers are meaningless,
for many reasons. Among these reasons: (i) the numbers include a job that lasts
one day on par with a job of longer tenure-the figures do not take into account
duration, (ii) the numbers mix jobs on projects funded by the Stimulus, with
jobs on projects in which Stimulus funding is only a part, and (iii) the
numbers allow government departments to take credit for private sector jobs in
which they have partial connection.
The Stimulus was launched with
promises of transparency and accountability; but, with the exception of a few
state departments, so far has lacked any rigor of analysis.
2.Infrastructure projects are
moving forward and creating decent-paying jobs, though the number of these jobs are limited, as
infrastructure projects are becoming increasingly capital intensive: The
infrastructure projects have moved forward very professionally in California.
Despite the furloughs and attacks on state government in 2009, the California
bureaucracies have undertaken the Stimulus infrastructure funding, with
capability, and very little political and wasteful spending. This is
particularly true of Caltrans and its range of highway and transit projects.
These projects are likely to be the main legacy of the Stimulus, and greatest
value in long term growth.
At the same time, infrastructure
projects have become increasingly capital intensive, and are not large job
generators. A recent report on the $800 million I-215 widening in San
Bernardino (including $128 million in Stimulus funds) estimates that the
project will directly employ 450-600 construction workers for each of the four
years of construction. Beyond the construction jobs are the engineering,
environmental, construction management and program management jobs associated
with infrastructure projects, that probably total at least an additional fifty
percent of the construction jobs. This combined job creation is significant,
but not large in terms of the region’s unemployment or the project budget.
3. Green jobs have been created
as weatherization and alternative energy projects are subsidized by the
Stimulus, but the number of green jobs remains very small: The Stimulus
contains a variety of categories for alternative energy projects, including
$4.5 billion for repair of federal buildings to increase energy efficiency, $5
billion for a Weatherization Assistant Program, and $6.3 billion for Energy
Efficiency and Conservation Grants. These funds have subsidized local and state
energy efficiency programs and jobs, though even with the subsidies the number
of jobs has been small. In
particular, green jobs, such as solar panel installer and wind turbine
technician, much heralded, have not taken off-there are fewer than 200 of each
in the Bay Area. Weatherization has been the biggest green job generator in the
Bay Area, but even here the number of weatherization auditors and specialists
is under 400.
4. Transfer payments can provide
a safety net, but at not significant job generators: The Stimulus contains
funds for a variety of transfer payments, particularly Food Stamps, that strengthen
the safety net, but are not significant job generators.
5. The cutback in state and
local budgets have undermined the Stimulus’ impact in California: A significant
portion of Stimulus funds in California have gone to backfilling project cuts
by state and local governments. The $19.9 billion Prop 1B transportation bond,
enacted by the voters in 2006, has been slowed in implementation, as have the
other state infrastructure bonds for water, flood control and housing enacted
in 2006. Stimulus funds have gone to moving projects forward that otherwise
were in abeyance or stalled.
The experience of the Stimulus should
help inform any future government actions. The architects of the Stimulus have
proved to be correct in several key structural elements, particularly administering
funds through the established state bureaucracies, rather than creating a new government
entity; and in not rushing to spend the money too rapidly.
There is a further lesson relevant to
the future, one emphasized by Gay Cobb, the director of the Oakland Private
Industry Council, who has more than two decades of experience in job training.
Cobb points to the generally
positive results of the direct job creation for summer youth and to a lesser
extent, year-round youth, in the Stimulus. While not a major part of the
Stimulus, this direct job
creation, unlike most previous government job creation programs, included placement in the private sector firms.
Job creation was not limited only to public sector and non-profits, and private
firms received subsidy of all or a majority of wages (usually capped at $10/hr, and at 100 hours per participant
for the summer). This job creation in most cases has provided valuable work
experience, as well as income. It
should be continued in some form year-round and for the next summer.