Published as President Obama and others urge a "second stimulus," the AP story noted: "A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama's first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an 'urgent need to accelerate job growth.'"
AP reported further that its analysis "found that it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry."
The news service stated that it reviewed DOT data on more than $21 billion in stimulus projects in every state and Washington, D.C., and monthly unemployment data to assess the effects of road and bridge spending on local unemployment and construction employment. The AP concluded that "there was nearly no connection between stimulus money and the number of construction workers hired or fired."
In an interview with National Public Radio, Matt Apuzzo, one of the AP writers who wrote the article, said: "What we found was, there is no real correlation between the amount of money you spend on transportation and whether unemployment goes down, or even whether unemployment goes down in the construction industry. And that was what was most surprising because you would expect if you spent a lot of money to rebuild our nation's crumbling roads and bridges that construction workers would benefit. But what we found is that the construction industry is such a small subset of the overall economy, and the transportation construction industry is such a small niche within that subset, that you can pour all of this money in and it does put people to work. It does hire people, but not enough to make any sort of move on the needle, one way or the other, as far as overall unemployment goes."
As might be expected, construction associations contested AP's findings. The Associated General Contractors of America and the American Road & Transportation Builders Association were among the groups crying foul.
AGC's chief economist, Ken Simonson, issued a press release refuting the AP's methodology: "As we cautioned the story's two authors in advance, the fundamental assumptions in today's Associated Press story are flawed. It is virtually impossible to measure the impact of (the $21 billion in stimulus funds) by looking at overall employment figures for an industry experiencing a $137 billion drop in activity—especially when only one in twenty construction workers stand to benefit from those stimulus funds."
ARTBA was more verbose in its response (available here), but also cited an overall downturn in construction outlays, especially among state transportation departments.
At almost the same time as the publication of AP's report, the White House announced that it was changing the way it counts stimulus jobs. Instead of attempting to quantify the number of jobs "created or saved," it will now count "any person who works on a project funded with stimulus money—even if that person was never in danger of losing his or her job," according to a report from ProPublica.
What do you think? Is the AP correct in pointing out the limited effect of Obama's stimulus program? Or did the news agency paint an inaccurate picture? Let us hear your thoughts!