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DOT economist warns: Transportation spending not economic quick fix

U.S. Department of Transportation Chief Economist Jack Wells Tuesday wrote about transportation spending on the DOT's blog, particularly with regards to job creation and short-term economic growth.


"Whenever the economy hits a rough spot, politicians often say that we need to spend more on transportation infrastructure to create jobs," Wells writes. "They often cite numbers like "47,500 jobs are created for every billion dollars spent on infrastructure." However, he says, that figure is outdated and misleading. That number comes from a study done in 1997, he says, and is also based on a federal investment of $1 billion plus matching funds of $250 million in state spending.


Also, he writes, "It's really more correct to say that the billion dollars 'supports' ... jobs because the actual number of new jobs created depends on how much unemployment there is when the highway spending starts."


Moreover, he added, "it takes a long time for these jobs to be created. Infrastructure construction requires a long series of steps to plan, design, get environmental clearance on and construct infrastructure projects. Only about 27 percent of the funds, on average, are actually spent ('outlayed') in the first year, while another 41 percent are spent in the second year."


Read Jack Wells' entire blog entry at http://fastlane.dot.gov/.