NCPA - National Center for Policy Analysis

Transportation Bill Won't Spur Job Growth

February 25, 2004

A confrontation with Congress is brewing over the pending transportation bill. President Bush wants one that spends no more than $256 billion over six years. But the Senate wants $318 billion and the House of Representatives is pushing a $375 billion bill. Bush has promised to veto a bill that is more than $256 billion.

Many believe that the chances of a veto are very small because new construction spending for highways and bridges will create 1.6 million jobs. Unfortunately, says Bruce Bartlett, there are many problems with the idea of creating jobs with public works spending.

For starters, there are relatively few people working in highway and bridge construction, and their numbers have been rising, not falling:

  • According to the Bureau of Labor Statistics, employment in this job category actually rose during the recession.
  • There were 340,000 people working in this area in 2000, rising to 346,000 in 2001 and 2002; employment fell very slightly to 341,000 last year.

Another problem, notes Bartlett, is that unemployment is seldom highest where construction projects are being built, and the skills of the unemployed are unlikely to match the needs of road and bridge builders.

Even if the transportation bill passed tomorrow, says Bartlett, it wouldn't create any jobs this year. The legislation only authorizes spending; the spending itself would still have to be appropriated. And even after it is appropriated, it will take months at least before the first dollar is actually spent and the first additional person is hired.

For these and other reasons, says Bartlett, economists are dubious about the employment effects of public works spending. As a 1998 Congressional Budget Office study put it, "additional federal investment spending is unlikely to have a perceptible effect on economic growth."

Source: Bruce Bartlett, "Transportation Bill Won't Spur Growth," National Center for Policy Analysis, February 25, 2003.

 

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