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What Is President Obama Shoveling Us? Shovel-Ready Jobs Are Stuck In The Dirt

by John S. Wilson | 2:27 pm, October 6th, 2011

» 45 comments

What should be troubling for the Obama administration is that in most states the unemployment rate has actually increased between January 2009, when President Obama entered office, through August 2011, according to the Bureau of Labor Statistics. Of course, there has never been a silver bullet for unemployment. But the administration’s focus on shovel-ready jobs, in both the stimulus and now the American Jobs Act , should give us pause. Let’s break down why shovel-ready jobs were a focus in the first place, why more weren’t produced, and what it takes to make them a reality.

(1) Why was infrastructure spending a focus of the Recovery Act for the administration?
Sound economics. There is a well-known theory that spending tends to have a multiplier effect: one dollar of spending creates more than one dollar gain in the economy, or in Gross Domestic Productivity (GDP). According to Moody’s Analytics, every dollar of infrastructure spending creates, at minimum $1.59 in GDP growth. By comparison, tax cuts, which were heavily endorsed by the GOP and accounted for over a third of the Recovery Act, is the exact opposite – creating only 29 cents for every dollar reduced. In other words, for every dollar a family saves in taxes they are liable to only spend a little over a quarter.

(2) Why didn’t the investments in shovel-ready jobs create, well, more jobs?
The GOP would say infrastructure spending doesn’t really work and this was clearly and economic boondoggle borne out by the lack of employment created. Democrats and supporters of the Recovery Act, on the other hand, say the stimulus was far too small from the beginning and, as was noted above, the ratio of stimulative spending (e.g., on infrastructure) to non-stimulative tax cuts was so skewed the stimulus was destined to fail. And they have proof from Nobel Prize winning economist Paul Krugman, who said, before the stimulus was even rolled out no less, “To close a gap of more than $2 trillion [in lost economic productivity] — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.”

(3) What is the process of applying for shovel-ready job funding?
Here’s an example of what the process looks like: 3-4 step application process that takes into account applicant eligibility, all required documentation has been submitted, all mandatory requirements have been satisfied, and the proposed project meet the government’s threshold. Applications then go through a merit review that takes into account implementation plan 1-2 years out and also 3-5 years out, as well technical expertise, training capabilities, and experience of key leadership. This process was fast-tracked for approved projects that didn’t need an environmental approval, so it could happen in 30-60 days.

But that’s before you get to an even bigger problem. President Obama forgot the lesson he learned last fall: there really aren’t any shovel-ready jobs. In a wide-ranging interview with the New York Times in October 2010 the president acknowledged that “there’s no such thing as shovel-ready projects” in the world of public works. A lot has changed between last year and now but that theory doesn’t seem to be one of them. And apparently Pres. Obama received a reminder when he recently visited an outdated bridge that is a prime candidate for some shovel-ready jobs. Only problem? “[T]the bridge is still in the preliminary engineering and environmental clear phase, in the best-case scenario, workers wouldn’t be hired until 2013 or 2015,” according to the Cincinatti Enquirer.

However, The Huffington Post reports that it’s not so much a matter of there not being any shovel-ready jobs, it’s that those states with the potential to create jobs aren’t getting the funding to create them. Officials from transportation agencies in Arizona, Nevada, and North Carolina say that there are projects that either don’t need environmental approval or have already received it, that are ready to go. Arizona and Nevada are just waiting on funding –- nearly $650 million worth.

Three hard hit areas -– Georgia, Washington, D.C., and Michigan -– that averaged over 9% unemployment and were awarded a bunch of money, over $21 billion collectively, actually only received, $13.1 billion, a 38% decrease. Where did that money go? It never left the Treasury.

But at least those areas received some money, plenty of others did not due to the byzantine regulatory process.

John Wilson is a health policy analyst in Maryland, and also a staffwriter for The Loop 21. He frequently writes about health policy, education policy, and politics. You may reach him at john@policydiary.com.

American Jobs Act, barack obama, Paul Krugman, Recovery Act, Shovel Ready Jobs

Pablo

Obama jokes about ‘shovel-ready projects’

Hilarious! Almost as funny as green jobs.
Guest

Is that really Obama holding a shovel or did they photo shop it? I dont think he’s ever held a shovel in his life.
Concerned Citizen

Wow I saw the headline and actually thought Mediate was doing an article critical of Obama but low and behold its some policy wonk trying to put the blame everywhere but on Obama.
Concerned Citizen

Just like Michelle shops at target lol.
http://awordorthree.com A Word or Three

I learned a lot reading this. You make economics clear and simple; great writing. Thanks!
Anonymous

As usual, over regulation slows progress.
http://pulse.yahoo.com/_FSPIVAFYI672OH5NOKVRTEZA4U MadCharles

He’s shoveling his Hope and Change Yes We Can to the jackasses that voted for him… sucks for you.. Welcome President Teabagger 2013
Anonymous

if it is him, it’s the first manual work he’s even done i would bet.
TruDat

Looks like Obama digging the Democrat Party’s grave.
Anonymous

,..awesome..,
my best friend’s mom makes $77 an hour on the computer. She has been out of job for 9 months but last month her check was $7487 just working on the computer for a few hours. Read about it here CashSharp.com
Chris

John…the GOP was against infrastructure spending because it would have involved borrowing money. The GOP approach has always been to stimulate private sector spending with less regulation and tax cuts.

Also, it was reported but no on seemed to care at the time, that the influx of money from the first stimulus overwhelmed the departments in charge of distributing it. They couldn’t process the money fast enough along with their normal budget spending. BO didn’t take that into account since he doesn’t really understand how government works (slowly…). I do commend him for realizing the problem with red tape and trying to reduce that…however, then you get things like Solyndra….

This idea of the government as “stimulator” sounds good in theory, but only works if it can be quickly executed. And government is too large to do that other than to maybe send out checks to everyone.
Anonymous

Doesn’t Obama look real manly in that photo? Behold that look of determination as he takes a scoop of loose soil from that pile! And the clenched jaw too! Such vigor and coordination!
Michelle

Liar in Chief is at it again:

President Obama used the story of a Boston teacher to push his jobs bill Thursday, even though the teacher has a job.

At the beginning of his White House news conference, President Obama told a story of how he recently met Robert Baroz of Wellesley, an English teacher in the city.

“I
had a chance to meet a young man named Robert Baroz. He’s an English
teacher in Boston who came to the White House a few weeks ago. He’s got
two decades of teaching experience. He’s got a Master’s Degree. He’s got
an outstanding track record of helping his students make huge gains in
reading and writing,” the president said.

“In the last few years,
he’s received three pink slips because of budget cuts. Why wouldn’t we
want to pass a bill that puts somebody like Robert back in the classroom
teaching our kids?”

But, Baroz is working in the Boston Public Schools this year as a middle school English teacher.

On the D.O.E.’s web site, he writes that he’s also employed part-time as an English instructor at Mass Bay Community College.
Agfa_10

First time I see him working
TPRTR

Looks like a 13 year old girl trying to shovel!
Anonymous

OMG!
Do you know that Obama got a couple blisters from digging all that dirt? And he did it all for you too! It WAS NOT some cheesy photo-op!
Anonymous

More like he’s building a foundation for the success of us 99%ers!
Viva la OWSers!
Wake up America

Obama is shoveling CACA!
Anonymous

There is a good reason why all that spending on infrastructure didn’t and doesn’t work.

All of the construction jobs are short-term. You build a road, and once the road is finished, the jobs vanish.

Leftists think that this is “job creation.” Actually, all it is is payoffs to Obama’s union cronies and their thugs.

And that’s why the whole crappy experiment failed.

It is as simple as that.
Nancillarypeloslinton

Thanks to Obama’s resurrecting the pretense of Keynesian economic stimulus, that theory will be buried for about another generation or two until the next crisis. Barack Obama sent $Trillions of American taxpayer dollars to American & European banks and to Wall Street. All that money that could have actually created jobs was spent to payoff Barack Obama’s campaign contributors. Anybody looking for a job can rest assured that Barack Obama took more campaign money from Wall Street and the Bankers than any other American Presidential candidate in history. Barack Obama personally destroyed our economy to enrich himself and all the rest of his connected buddies like BFF George Soros who is a convicted Inside Trader.
Anonymous

He’s never held a job in his life, either.
http://policydiary.com/ John S. Wilson

I wouldn’t say that. Of course, the administration deserves blame. After all, the buck has to stop somewhere. I more so point out that the Obama administration was right on policy but wrong on politics and implementation.
http://policydiary.com/ John S. Wilson

Thanks. I appreciate you reading.
http://policydiary.com/ John S. Wilson

OK, let’s accept your premise that’s why the GOP was against infrastructure spending (I disagree, but we’ll tackle that later). I don’t think any economist, whether conservative or otherwise, would agree that tax cuts are stimulative. And if you’re offering them at a time when you already have a big deficit, it makes no sense. If your goal is to stimulate and turn the economy around then the best bet is to choose the most stimulative option, even if you have to borrow the money. When the economy turns around you can pay down the debt. If the economy is in a malaise for years you’re paying for it anyway in lost productivity.
Anonymous

There’s a great idea for Jester’s new business !! Green Shovels !!
Anonymous

Obama Uses Shovel To Hide Solyndra Emails !!
Anonymous

Multiple ObamaGasm !!
Anonymous

I Got Blisters On Me Fingers !!
Anonymous

I hope that aids infested pimp washes that shovel off with muriatic acid, better yet throw it in the burn barrel and jump in behind it.
Nancillarypeloslinton

Note to ‘The Occupiers. Barack Obama will be way too busy campaigning from now until the elections to bring you more misery and corruption so you’re SOL until Herman Cain steps in to fix the country for 2012. To quote Joe Biden: “Have a nice day”
Chris

What if the economy doesn’t turn around…or takes years to do so? You just keep printing money? Not that there aren’t some short term benefits to devaluing the currency, but in the long run high unemployment and inflated prices of goods is a recipe for disaster. It’s just not that simple to expect government spending to be the answer.

And you still didn’t address the basic issue and that’s that the government can’t implement job programs fast enough to be effective. This isn’t the 1930′s when the government was much smaller. Even so, there’s quite a bit of evidence that government intervention during that depression was actually ineffective. Te economy didn’t really turn around until WWII…but certainly everyone was “happier” to at least have a government job instead of none.

Appreciate your response.
http://policydiary.com/ John S. Wilson

I don’t think the currency is being devalued currently. Inflation is still very low and even though our debt rating took a hit it had a neglible effect on our Treasuries. But I don’t want to stray too far from your main point. You raise an excellent question, What do we do if the economy doesn’t turn around?

I think first we have to look at what’s going well, and what’s not going so well. Corporate profits are great; one of the highest levels they’ve ever been at. However, consumer demand is low, and because worker productivity is high corporations have little to no reason to hire. That’s a double whammy.
The good thing is that more and more people are paying off their debt. The bad thing is that they’re still pessimistic about a recovery. Right now our GDP is at a similar level to where it was in 2007 yet we’re creating all that productivity with 9 million less private sector jobs. That’s extremely efficient. In fact, too efficient – hence our job problem.

So all that to say increasing consumer confidence and focusing on measures that are proven stimulators with a good multiplier effect are the best bets. Which measures should we use? That’s a matter of opinion. What’s politically feasible is an even bigger question mark.

I appreciate your response as well. We can always disagree respectfully and hopefully learn something along the way. You’ve made some really good
points.
Anonymous

I smell dookie!.. oh its obama.
Pablo

How can you tell the policy was right if it didn’t work?
Pablo

I don’t think any economist, whether conservative or otherwise, would agree that tax cuts are stimulative.

If that’s the case, why did Congress put $288 billion of them in the stimulus? No economists thought that would be stimulative?
http://policydiary.com/ John S. Wilson

Because Obama caved and put it in there because he thought it would earn him GOP votes. Also, the GOP clearly prefers tax cuts over pretty much any other policy. Hence the no new tax pledge they’ve almost all mostly signed, and their asking for even more tax cuts as part of the debt ceiling debate.

In the article I point out how stimulative tax cuts are, roughly .29 on the dollar. Infrastructure is pretty much 5 times as stimulative at 1.59. Based on this which would you choose if you were a politician?
redstatekate

Mr. Wilson – Do turtle tunnels, analyses of exotic ants, and development of interactive dance programs really count as infrastructure spending?

If the stimulus had actually been focused on infrastructure improvement and not Democrats’ (and some Republicans as well) pet projects, perhaps it would have worked a little better. The buck ultimately stops with Obama – he let the Dems in Congress write the bill. Plus, he clearly set the expectations for the stimulus’ effect WAY too high.
Bettymoriarity

Ahhhh..poor has to do some work. His wittle hands are probably red and chaffed.
Bettymoriarity

He’s digging his own grave. Way to go!!!
TbagsRstupid

yeah – and I can get there by transporter

Scottie…
GluttonsMamasMama

He’s got a weak stance. I could tell he hasn’t done this much before.
caconservative

Holly Christ, is that Obimbo with a shovel in his hand?!! Christ, that’s going to turn into another multi-million dollar vacation to help him to recover! And Moo- chelle will have to go shopping for vacation cloths!!
Anonymous

“yeah – and I can get there by transporter.”

Have you contacted Captain Kirk or Luke Skywalker for their opinion?
Canadian

President Obama told Apple today that this is not what he meant by “Shovel-ready Jobs”
Anonymous

Almost every state had shovel ready jobs ready to go during the last stimulus but the money never came from Washington. Where did the money go ? Is Obama going to rip the tax payers off again ? How stupid can the tax payers be ? Fool me once, shame on you, fool me twice shame on me.