Monday, March 2, 2009

Math, Budgets, and the Stimulus Bill—Part 2

In yesterday's Kalamazoo Gazette (p. A4) was an article entitled, "Kalamazoo, Portage Seek Stimulus Funds" which was accompanied by a lengthy chart (not included on the web page). This chart listed projects from the website for the communities of Kalamazoo and Portage.

Portage's list included only 9 projects worth over $77 million, with the main one being the I-94 improvements between Oakland Drive and Portage Road, which accounted for $62.5 million. These nine projects were expected to produce 1860 jobs.

Kalamazoo, on the other hand, had a much longer and much broader array of projects. Without a single enormous project like Portage had, their list was worth only $69,539,100, but was projected to produce 4575 jobs.

How many jobs?!? As I was scanning the list, I noticed these examples (I cite three here, but there are other similar ones):

  • Mill and resurface Water Street: Cost—$51,000 Jobs—20
  • New and replacement fire hydrants: Cost—$260,000 Jobs—45
  • Burr Oak Court Street and streetscape improvements: Cost—$96,000 Jobs—35
These are among the smaller projects on the list, but here's the key thing to notice: What is the average cost per job? The reason this matters is because this is the maximum amount each worker will receive for a job that is not very permanent!

The three above examples are simple to divide:
  • Water Street: $2550 per job
  • Hydrants: $5778 per job
  • Burr Oak: $2743 per job
The most that any of those fire hydrant people are going to earn, on average, is $5778!? Considering that some of the cost will go for other-than-payroll expenses (e.g., the hydrants themselves), the average worker on that job will make substantially less.

The overall average for the 4575 Kalamazoo jobs was $15,200 per job. Much of this will go to costs other than payroll. Nearly all of these are one-time, short-term jobs that will end when the project is finished (please fight urge to point out how long government-run jobs take to complete). They are not going to contribute to long-term community job growth, but will merely be patches in the short-term. Furthermore, these jobs will not all be occurring simultaneously, so the gross number of unemployed will change, as a percentage of the workforce, relatively little. Many of these jobs will not pay big-bucks-per-hour, like most of us would want to receive; they will essentially be temporary work.

Please remember this when someone indicates to you that the stimulus bill will have a long-term positive impact on unemployment. It is not designed to do that.

No comments: