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This blog focuses on real estate, land use and construction-related topics affecting Virginia and the Washington, D.C. metro area. With topics ranging from contract drafting and negotiation to local and regional land use project updates, the attorneys at Bean, Kinney & Korman provide timely insight and commentary on the issues affecting owners, builders, developers, contractors, subcontractors and other players in the industry. If you are interested in having us cover a specific topic, please let us know.

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Stimulus, Construction Jobs, Political Optics and the Regional Scorecard

Dipping toes in the waterToday we tip our toe, quite gingerly we might add, into the ugly place where preliminary statistics and politics meet. In the last week, print news and the internet have been awash with reports on stimulus spending today and estimates of the impact that spending has had a jobs created or saved. In particular, Chris Thorman and Don Fornes of Construction Software Advice have culled through the quarterly reports which are publicly available at www.recovery.gov and provided a detailed state-by-state breakdown of construction stimulus spending amounts awarded, amounts "received", jobs created and the cost per job (this article was also posted to ENR's blog and both have separate comments).

In general, the "cost per job" analysis of stimulus funding has triggered political ugliness reaching internet meme proportions. The "Usual Suspects" have regularly weighed in to the debate. In January, Rep. John Boehner (R-OH) ripped into the stimulus spending arguing that "the plan would spend a whopping $275,000 in taxpayer dollars for every new job it aims to create". In reply, economist Paul Krugman called Boehner's approach a "bogus talking point" that "involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years." With the latest quarterly numbers, the political machines for both sides have cranked up and marched out the latest updated versions of the talking points. We will leave it to our individual readers to decide whether the "Usual Suspects" refers to the motley line-up crew from Casablanca or Keyser Soze.

On a regional level, the data from Construction Software Advice provides some real points of interest. First, comparing amounts awarded to amounts received, there is a huge divergence amongst Maryland, Virginia and the District of Columbia in the flow of money. Maryland has "received" close to half the awarded funding. Virginia has received only 34%. The District has only received 5.5% of the $1,900,000,000 awarded (the most regionally). This tells us that in terms of the DC region, a huge amount of the money has not even been "received" yet and we can expect continuing economic impact, particularly from the DC projects. The underlying data may also face significant adjustment over time as corrections and changes are made, a reality that even the Recovery.gov site recognizes on-going data correction impacts the analysis. The precise measurement of jobs "created or saved", especially indirect jobs, appears to very difficult if not impossible.

It strikes us that at some point, a post mortem on cost per job will be appropriate and necessary, but at this stage it is difficult if not impossible for that exercise to be meaningful. Construction jobs in particular involve significant ramp up and as such stimulus funding that may have initiated the project will likely not see full employment fruition of jobs created or saved for some time. The Construction Software Advice report expressly recognizes these limitations stating, "With 76,214 jobs created/saved during this reporting period, the number will undoubtedly go up in future months as more projects begin and as more projects enter more labor-intensive phases." What we take from this information is that there are a lot of stimulus dollars, in particular construction stimulus dollars, in particular in this region, that have yet to be spent.  (Hat tip to our friend Rob Geedra from Geedra.com for passing along this link).

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  • Shareholder

    Timothy Hughes is the managing shareholder of Bean, Kinney & Korman. He also represents clients in construction and commercial litigation, as well as corporate, contracts and general business matters. With over 20 years ...