Burgess in the News

Cost of stimulus jobs in Texas so far: $545,000 per job

Fort Worth Star-Telegram, Darren Barbee, October 31, 2009
Tags: Economy
Texas gained 19,572 jobs created or saved by federal stimulus funds, at a steep cost to taxpayers: $545,000 per job, according to data from a new but flawed government report.

The information, available on recovery.gov, shows that 376 contracts worth $608.9 million created 1,458 jobs. Grants totaling $10 billion contributed 18,114 more.

Administration officials argued that it was "calculator abuse" to figure the cost per job because many contracts haven’t been completed so additional people could be hired.

Still, at this stage, some contracts awarded in Tarrant County showed a high premium for jobs.

A company called Affiliated Western received a $2.6 million contract to repair hangar doors. Total jobs created: a single position. Or two, since an interactive map on recovery.gov counted the contract twice.

The city of Arlington reported that $853,342 in stimulus money for "new pedestrian infrastructure" — a sidewalk — and a van service would create 130 jobs. Though the city reports that the project is less than 50 percent completed, it claims that 100 of those jobs would come from providing more transportation options to low-income residents.

Sheryl Kenny, grants manager for Arlington, said the grant from the . Department of Housing and Urban Development will provide two full-time drivers to ferry the 100 low- to moderate-income people in central Arlington to jobs.

"We’re providing them access to transportation ... in 15-passenger vans," said Kenny, who said some details had not yet been worked out. As for the jobs number, "It’s an estimate," she said.

In another case, Tarrant County got credit for a contract awarded to B.W. Strayhorn of Wichita Falls worth $2,559,791. But zero jobs were created or saved, according to recovery.gov. The contract calls for the company to conduct embankment repairs at Bardwell Dam and shoreline erosion repair at Lavonia Park and Lavon Lake.

Project manager Shana Rose said the company isn’t going to be hiring for any new positions, but the contract is "actively keeping us afloat." The contract was not bid out, Rose said.

She said 12 jobs were retained for the project — but that total isn’t reflected on recovery.gov. The Web site does not distinguish between jobs created and jobs saved.

U.S. Rep. Michael Burgess, R-Lewisville, said he believes that the administration’s claim that 640,329 jobs were created across the nation is inaccurate based on other media reports.

Burgess was incredulous at the average cost of jobs in Texas, saying, "$500,000 per job created is preposterous." He added that before passage of the stimulus act, called the American Recovery and Reinvestment Act, Americans were told the $787 billion stimulus would prevent the unemployment rate from topping 8 percent. Burgess said he expects an unemployment report next week to show the rate above 10 percent.

The Texas unemployment rate is more than 8 percent, which translates into nearly 1 million people out of work, according to the U.S. Bureau of Labor Statistics.

Bernard Weinstein, an economist at Southern Methodist University’s Cox School of Business, said the job numbers are "fictitious" in the sense that they’re an educated guess.

"There’s no way to definitively identify the number of jobs that have been either been saved or created," he said. "Certainly the fact that the feds gave a couple hundred million dollars to state and local governments meant that the job losses and the state and local level weren’t as great as they otherwise might have been."

But Weinstein said that in context of 7 million jobs lost since the recession began in late 2007, the new jobs mean little.

"This is all about politics. It’s all about the administration wanting to demonstrate that, No. 1, it cares about the economy and, No. 2, that it’s had a positive effect," he said.

The White House has said President Barack Obama’s goal is to create or save 3.5 million jobs by the end of next year.

White House economists said the 600,000 jobs do not paint a complete picture of the impact of the stimulus. Many companies have spent less than half the stimulus money they received, suggesting they will report more job creation in the future, according to Jared Bernstein, chief economist and senior economic adviser to the vice president. Also, many "indirect jobs" were created via tax cuts and through stimulus recipients redistributing money in their communities, he said.

"If the contractor who gets a project and a set of jobs through the recovery act goes and buys their asphalt and roof tiles through another firm, that’s going to create jobs and economic activity that’s not reported," Bernstein said.

The jobs number is actually a calculation of "full-time equivalent" jobs based on the number of hours employees work, according to White House officials. A company that hired thousands of people for a few months would have likely created only a few hundred full-time equivalent jobs.


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