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AP Confirms: Government Infrastructure Spending Does Not Create Jobs

Posted By Conn Carroll On January 11, 2010 @ 3:04 pm In Economics | Comments Disabled

The AP reports [1]:

Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Construction spending would be a key part of the Jobs for Main Street Act, a $75 billion second stimulus to revive the nation’s lethargic unemployment rate and improve the dismal job market for construction workers. The House approved the bill 217-212 last month after House Speaker Nancy Pelosi, D-Calif., worked the floor for an hour; the Senate is expected to consider it later in January.

AP’s analysis, which was reviewed by independent economists at five universities, showed that strategy hasn’t affected unemployment rates so far. And there’s concern it won’t work the second time.

The sad part is our federal government already knew that government infrastructure spending does not create any net new jobs. As Heritage’s Ronald Utt has documented [2] reports from the Congressional Budget Office, Department of Transportation, Congressional Research Service, and Government Accountability Office have all concluded that the net job impact of federal transportation spending is negligible and possibly negative. A 1993 CRS report must succinctly explains [3] why:

To the extent that financing new highways by reducing expenditures on other programs or by deficit finance and its impact on private consumption and investment, the net impact on the economy of highway construction in terms of both output and employment could be nullified or even negative.

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URL to article: http://blog.heritage.org/2010/01/11/ap-confirms-government-infrastructure-spending-does-not-create-jobs/

URLs in this post:

[1] AP reports: http://news.yahoo.com/s/ap/20100111/ap_on_bi_ge/us_stimulus_unemployment

[2] documented: http://www.heritage.org/Research/Budget/bg2121.cfm

[3] must succinctly explains: http://www.heritage.org/Research/Economy/bg2355.cfm

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