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DOT Economist Warns: Transportation Spending Not Economic Quick Fix

September 16, 2008

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U.S. Department of Transportation Chief Economist Jack Wells Tuesday wrote about transportation spending on the DOT's blog, particularly with regards to job creation and short-term economic growth.


"Whenever the economy hits a rough spot, politicians often say that we need to spend more on transportation infrastructure to create jobs," Wells writes. "They often cite numbers like "47,500 jobs are created for every billion dollars spent on infrastructure." However, he says, that figure is outdated and misleading. That number comes from a study done in 1997, he says, and is also based on a federal investment of $1 billion plus matching funds of $250 million in state spending.

Also, he writes, "It's really more correct to say that the billion dollars 'supports' ... jobs because the actual number of new jobs created depends on how much unemployment there is when the highway spending starts."

Moreover, he added, "it takes a long time for these jobs to be created. Infrastructure construction requires a long series of steps to plan, design, get environmental clearance on and construct infrastructure projects. Only about 27 percent of the funds, on average, are actually spent ('outlayed') in the first year, while another 41 percent are spent in the second year."

Pete K. Rahn, president of the American Association of State Highway and Transportation Officials and director of the Missouri Department of
Transportation, begs to differ. "If additional federal transportation funding is provided to the states through a stimulus bill, it will accelerate the creation of construction jobs with within 30 to 90 days, because we have projects that are ready-to-go now and awaiting funding," he said in a statement.

Transportation investment is one of the components currently being considered by Congress for inclusion in a second economic stimulus bill.

Earlier this year state departments of transportation identified more than 3,000 highway projects totaling approximately $18 billion that could be implemented within 30-90 days from enactment of federal economic stimulus legislation, AASHTO reports.

(Read Jack Wells' entire blog entry at http://fastlane.dot.gov/. )

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