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LaHood Points to Flaws in AP Story on Creation of Construction Jobs

January 11, 2010

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In response to an Associated Press story claiming the government's $20 billion infusion into roads and bridges did not result in any significant change in employment rates, Transportation Secretary Ray LaHood said the AP missed the mark
According to LaHood, highway and road construction jobs account for about 258,000 out of 132 million jobs nationwide.
According to LaHood, highway and road construction jobs account for about 258,000 out of 132 million jobs nationwide.
and that the "stimulus spending is putting people to work."

While the AP's analysis claims that "stimulus spending only barely helped the beleaguered construction industry," LaHood argues that the spending is not meant to address the entire construction industry. The stimulus is meant to help those in transportation construction, a small sector of the whole construction industry, he says. In fact, LaHood claims that highway and road construction jobs account for about 258,000 out of 132 million jobs nationwide.

The AP's story calls into question the need for more transportation spending, in light of its analysis. In his blog, LaHood says that transportation spending accounts for 7 percent of the $800 billion package, and that when you look specifically at the transportation construction industry, you'll find that the effort has created jobs.

"My bottom line is, I'd be skeptical about putting too much more money into a second stimulus until we've seen broader effects from the first stimulus," Aaron Jackson told the AP. Jackson is a Bentley University economist who reviewed AP's analysis.

According to the AP, the analysis was based on data from the Transportation Department on more than $21 billion in stimulus projects in every state, as well as unemployment data from the Labor Department.

Overall public construction in November was up $8.3 billion from a year ago, while transportation construction projects were up $9.2 billion, according to LaHood's blog.

"So, on top of tens of thousands of laid-off workers back on the job, federal stimulus spending is reducing that drastic shortfall in other public transportation spending, making it possible for tens of thousands of workers to retain their jobs and never even hit the unemployment rolls," LaHood said.

Ken Simonson, chief economist for the Associated General Contractors of America, who was quoted in the AP story, said the story was "flawed."

"It is virtually impossible to measure the impact of $4 billion by looking at overall employment figures for an industry experiencing a $137 billion drop in activity - especially when only one in twenty construction workers stand to benefit from those stimulus funds," he said. "While highway construction plays a significant role in shaping the nation's economic fortunes, it only accounts for five percent of the total domestic construction workforce. And because of declines in the amount of state and local funds invested in road work in 2009, the roughly $20 billion in federal stimulus highway funds obligated in 2009 only contributed to a $4 billion net increase in highway construction activity last year."

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