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When $1 Billion Doesn’t Buy What it Used To — And When it Does

2:43 PM PDT on October 8, 2009

Since Washington's economic recovery debate first began last fall,
advocates for greater infrastructure investment have invoked one phrase
more often than almost any other: "Every $1 billion spent on
transportation creates 47,500 jobs."

one_billion_dollars.jpgHow many transportation jobs could this $1 billion create? (Photo: Infosthetics)

Sen. Charles Schumer (D-NY) and Rep. Jerrold Nadler (D-NY) used that figure in December,
attributing it to the American Association of State Highway and
Transportation Officials (AASHTO). Sen. Ben Nelson (D-NE) was a little
less specific in March 2008, shortening the claim to "over 40,000 jobs created."

But by the time Democrats were using AASHTO's estimate, the group had already lowered
its number to 35,000 jobs created, attributing the claim to "analysts."
And it turns out that members of Congress have been using the "over
40,000" range since at least 1997, before years of inflation limited the value of that hypothetical billion dollars.

Transportation Secretary Mary Peters told Streetsblog Capitol Hill
yesterday that she was amazed the outdated "47,500 jobs" number  had
remained an article of faith at the U.S. DOT. In fact, Peters' chief
economist tried to use the number last year to bolster a bizarre argument against spending stimulus money on infrastructure -- before getting taken down by my colleague Ryan Avent.

Ryan observed at the time, casting transportation spending as a matter
of economic productivity rather than job creation was a stunningly
out-of-touch move by the Bush administration, and one that ignored the
likelihood of imminent double-digit unemployment.

focusing on that aging AASHTO estimate of job creation (also credited
to the Federal Highway Administration) overlooks the fact that a more
updated study of that billion-dollar hypothetical was recently
completed ... for transit.

The American Public Transportation Association (APTA) concluded in March that $1 billion in transit money would create "betwen 24,000 and 41,000 jobs," depending on how
the spending was targeted. And APTA's data showed that transit
operating money, i.e. what it takes to run trains and buses, creates
more than 50 percent jobs per dollar than money for capital investments.

So until the puzzle
of counting highway stimulus jobs can be solved, one might think
Congress would focus on the demonstrable job-generating potential of
transit operating aid. And they have -- to the tune of 10 percent.

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