This Triangle Business Journal article touts the job “creation” in North Carolina’s DOT courtesy of the federal “stimulus” spending.
The nearly $1 billion in federal “recovery” funds that the North Carolina Department of Transportation received earlier this year stimulated significant growth in jobs and payroll last month, NCDOT data show.
A total of 3,449 employees worked on stimulus-funded construction projects for the NCDOT in August – a 59 percent leap from the 2,170 employees who got stimulus work in July.
Great news, right? Not so fast.
As I’ve discussed before, government spending can not create jobs. Government can not create anything. It must first take money out of the productive sector of the economy (either through taxes or borrowing) in order to spend it. Government projects also divert scarce labor and resources away from private, productive uses.
The Journal article merely touts the seen effects of government spending, i.e. gains in government jobs. The true measure is to observe the unseen effects as well – jobs lost or not produced in the private, productive sector.
Some basic, back-of-the-envelope calculations can shed some light on the bigger picture regarding government “stimulus”‘ spending in NC. According to the Journal article:
NCDOT has received a total of $838 million in federal stimulus funds, including $735 million for road and bridge projects. The Federal Highway Administration estimates that every $1 million spent on transportation creates 30 jobs.
According to these estimates, $838 million in spending should have created 838 x 30 = 25,140 jobs.
Additionally, let’s not forget former governor Easley’s state ‘stimulus plan’ in which he fast-tracked $744 million in state construction projects back in January:
Gov. Mike Easley announced Moday the Council of State approved his plan to fast-track more than $744.15 million in capital improvement projects to keep North Carolina’s economy moving. This action means 29 important education and public safety projects will move ahead and create 26,000 jobs to stimulate the state economy.
So between the fed and state stimuli, North Carolina should be drowning in a total of 26,000 + 25,140 = 51,140 new jobs.
According to the NC State Employment Security Commission, however, since January North Carolina has lost a total of 105,600 jobs. More specifically, the state has lost 16,000 construction jobs – the very type of jobs targeted by the stimulus spending. The number of construction jobs in the state has shrank by roughly 8% since all of this government construction spending began.
When you go by one of those construction sites sporting one of those nifty signs talking about “jobs now”, remember that those jobs come at a cost. The cost is dispersed, unseen job losses throughout the state and jobs that won’t be created in the future because the government has consumed scarce resources no longer available for productive investment.