April 21, 2004

April 21, 2004 | News Releases on Jobs, Jobs and Labor Policy

Claims that Highway Bill Would Create Jobs Hit Dead End, Study Shows

WASHINGTON, APRIL 21, 2004 - Federal lawmakers have been promoting the latest pork-laden transportation bill by claiming that it will create jobsĀ - as many as 2 million, Senate Majority Leader Bill Frist says. But decades of independent studies show this claim is highly questionable, according to a research review from The Heritage Foundation.

Proponents of the legislation have highlighted U.S. Department of Transportation estimates that each $1 billion in federal highway spending leads to 47,576 "person years" in employment benefits. This includes about 12,500 jobs in the highway construction sector with another 7,000 jobs in industries that supply road-builders, such as stone, concrete and fuel.

An additional 21,000 get jobs because of increased spending by workers on everything from Big Macs to bourbon.

But as Ron Utt, former privatization czar under President Reagan and a longtime transportation policy analyst, points out in the Heritage paper, the Transportation Department itself uses cautionary statements and "wiggle words" in explaining its research because the model it uses has only a limited ability to predict job creation.

The model the department uses, Utt says, doesn't take into account the fact that a dollar spent by the federal government on highways is a dollar that can't be spent on other activities that may create even better and more permanent jobs. "The only way $1 billion in federal highway spending can create 47,000 jobs is if the money appears out of nowhere, like manna from heaven," he says.

The claim that federal infrastructure spending would increase economic growth can't be supported. And according to the CRS study, any employment gains caused by increased highway spending "likely would by offset by job losses elsewhere in the economy," Utt notes.

The CBO found that, as the interstate highway system has neared completion, highway spending has become less beneficial to the economy than private investment in general.

But according to Utt, federal programs should serve their original purpose and not be viewed as job-creation machines. "Lost in the job-creation debate is the fact that the highway reauthorization process is supposed to be about transportation, mobility, congestion mitigation and safety," he says. "If these goals are going to be sacrificed to some illusive job-creation process, the program becomes less effective, if not irrelevant, and ought to be scrapped rather than allowed to continue to waste scarce tax dollars."

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