Is Obama Giving Real Talk About 'Shovel-Ready' Jobs?
Will the American Jobs Act get shoveled in the ground as fast as advertised?
By now, you’ve heard the mantra from President Obama “pass this jobs bill,“ which he’s echoed no less than a thousand times throughout September to numerous voting constituencies, in the front and back yards of his political opponents and across every social media platform worth mentioning. Much of the money in the American Jobs Act bill is slated for infrastructure “shovel ready” jobs but can the bill really get those proverbial shovels in the dirt?
The dirty truth is that many jobs deemed “shovel ready” are anything but. In a recent Politico article, a Berekley professor said, “Unfortunately, there aren’t many jobs ready to go at the snap of a finger.” And earlier this week, when Obama visited GOP presidential candidate Rick Perry’s state of Texas, he was welcomed with an ad that reminded the administration of when Obama admitted himself that jobs weren’t as shovel-ready as he thought. So why so much focus on the shovel-ready if there’s little certainty that they will dig us out of unemployment?
One thing positive that can be said is that employers have been doing more hiring than firing in every month since February 2010 -- a reversal of the misfortune suffered during the height of the recession when job losses outweighed creation, according to Gallup. A lot of those jobs come from small firms, employers with less than 50 people on staff. Payroll company ADP reported yesterday that small firms were responsible for almost two-thirds of jobs added last month.
Many of the shovel-ready infrastructure jobs -- repairing schools, office buildings, bridges, building a new wing on a university, or a new annex on a college campus -- come from small firms who’ve received sub-contracts from bigger firms that contract directly with governments.
Despite this fact, there have been few jobs points put on the scoreboard, and tomorrows unemployment rate from the Department of Labor is supposed to be dismal. So what’s the problem?
Of course, there has never been a silver bullet for unemployment. But the Obama Administration's focus on shovel-ready jobs, in both the stimulus act and now the American Jobs Act, should give pause. Center on Budget and Policy Priorities chief economist Chad Stone explained in an interview with Loop 21, “It’s a fact that infrastructure investment can take longer to have an impact on the economy.”
Before explaining the actual procurement process for shovel ready jobs, consider that Republicans in Congress are stalling on the American Jobs Act. Despite Obama’s chest-pounding House Majority leader Rep. Eric Cantor told a reporter that the package as a whole was “dead,” meaning he wasn’t even going to let it come up for a vote. This infuriated Obama so much that he did something he rarely does in calling out his jobs-killer by name, saying:
“Look, I’d like Mr. Cantor to come down here to Dallas and explain what exactly in this jobs bill does he not believe in. What exactly is he opposed to? Does he not believe in rebuilding America’s roads and bridges? Does he not believe in tax breaks for small businesses, or efforts to help our veterans?”
If Cantor ever does have a change of heart, the bill will have a tough time getting through both the House and the Senate, and by the time it gets to Obama’s desk it will surely be changed from its original draft. One casualty of the bill-passing process -- from introduction to law -- is that the amount of money budgeted for an item can get cut or increased, depending on negotiations between the House and Senate.
Then say Obama signs it into law -- here’s where the work really begins:
- Public comment periods for people to weigh in on what infrastructure projects should be done and where: 1-2 months
- Local and state governments send wish-list of projects and needed funding to the federal government for their review and approval: 1-6 months
- Federal government releases funding for approved project to states, which then sets up request for proposals and bidding processes to contractors wishing to do the work: 1-3 months.
- Contractors send in proposals bidding on infrastructure projects, and then public hearings about which contractors are best suited to do the work: 1-3 months
- State departments and agencies review proposals mostly checking for compliance with labor and environmental regulations: 1-3 months
- State releases funds to local governments or directly to contractors, after which local governments go through bidding process for contracts and contractors sub out work to small firms: 1-3 months.
That’s up to 20 months, or almost two years for a job to become shovel-ready after funding has been approved by Congress and the President. Depending on the state and city, the process could be shorter or longer, but few jobs are ready to go after Obama signs the law.
The Huffington Post reports that it's not so much been a lack of shovel-ready jobs, as it is that states haven’t been getting the funding to create them. Officials from transportation agencies in Arizona, Nevada, and North Carolina say that there are projects that either don't need environmental approval or have already received it that are ready to go now -- they just need the funding.
But funding can get gummed up at any of the stages of the process outlined above, and with much necessary transparency and accountability controls in place -- needed to weed out waste and corruption -- contractors have to be meticulous with their proposals, which takes time.
Center on Budget and Policy Priorities economist Stone notes that unemployment will not return to normal levels before the end of 2012, even if the jobs bill passes tomorrow, “but the fact that [the jobs bill] doesn’t kick in instantly doesn’t mean it doesn’t have value.”
Says Stone: “We shouldn’t pretend it will happen instantaneously, but that’s not a fatal flaw.”