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

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 [email protected].

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