Harry Potter fans know that when the scar on Harry’s forehead starts to burn, it means Lord Voldemort, his archenemy, is near.
Something similar happens to me when I write about job creation and government stimulus — federal or state. Is there any economic subject that triggers so much statistical agony?
My head starting pounding again after reading the news release from Gov. Mark Dayton’s office about a proposed $1 billion bonding bill.
As proof of the potential jobs benefit, the release cited data from economist Stephen Fuller of George Mason University arguing that, “at a time of unemployed workers and excess production capacity, each $1 billion of spending on nonresidential construction would support approximately 28,500 jobs…”
Fuller’s data was also used by MPR to truth-squad statements from then-gubernatorial candidate Margaret Anderson Kelliher.
The problem is Fuller presented that research on behalf of the Associated General Contractors of America — the lobbying group for the nation’s civil and heavy construction companies, the firms that would benefit directly from the spending.
That doesn’t mean he’s wrong. But knowing that he’s testifying on behalf of thousands of construction firms and advocating for passage of the bill puts the research in a very different light.
Despite a bunch of different government and independent stimulus accountability sites, you’d be hard pressed to find a definitive answer on jobs created / maintained.
What we do have now is reliable data from the Bureau of Labor Statistics on construction jobs before the recession and since the federal stimulus was signed. Let’s look at that.
Here’s a chart showing construction employment in Minnesota (click for a larger view).
(chart comes via Federal Reserve Bank of St. Louis)
There were 116,300 Minnesota construction jobs in December 2007, when the recession began , 98,200 jobs in February 2009 when the federal stimulus was signed into law and 91,100 jobs when the recovery officially began four months later in June 2009.
The preliminary estimate for December 2010: 82,700 jobs.
Here’s another graph produced by the St. Louis Fed showing construction earnings in Minnesota (click for a larger view)
These are millions of dollars in quarterly earnings. The charts shows a stimulus bump — a positive — but then the total earnings resumed their slide.
OK, so let’s take a look at BLS data for jobs in heavy and civil construction in Minnesota. That’s the category you’d expect to see benefit from those “shovel ready” projects. These are annual averages (the 2010 average uses preliminary data for December 2010).
Yes, there was a bump in 2010 but it’s about 1,300 jobs.
I realize this won’t end the stimulus / jobs debate.
But if you’re looking for evidence that the federal stimulus worked when it came to creating jobs in Minnesota, there’s not much to hang your hat on now that we have real job stats to examine.
Yes there was a temporary bump up in earnings, and yes there was a small increase in civil engineering jobs, but neither was sufficient to reverse the fortunes of the construction industry — the epicenter of the economic downturn.
“It could have been worse” seems to be about the best argument you can make.
Take a look at the data I’ve put up and tell me where I’m wrong. Better yet, tell us where you’ve found the best data on the effects of the federal stimulus, or government economic stimulus programs generally.
Post something below or contact me directly at MinnEcon.