Jobs, Jobs, Jobs, everything today is about jobs. An extremely important topic since our country is hurting today with high unemployment rates. But validating job claims is just as important as talking about them especially when a project is on track to spend more than $65 billion dollars. The High Speed Rail Authority has made some hefty claims related to job creation. But are their estimates accurate? Many sources point to valid questions about the accuracy of those figures.
They say this project will create 600,000 construction jobs and 450,000 permanent jobs (Pg 112 of the 2009 Business Plan). How’d they get to these numbers?
According to the definition from the HSRA, the federal government has defined job estimations for ARRA funded projects as “a 40 hour per week, 52 weeks-a-year position equates to a 1 year job equivalent.” Using this definition, this could mean that for each person who has a one year contract and renews it at the end of each year, each renewal could be counted as a separate job. In other words, 10 contract renewals during 10 years could equal 10 jobs. That isn’t how most Americans count jobs.
Elizabeth Alexis says “Unless a very odd definition of ‘job’ is being used, High Speed Rail won’t generate a lot of jobs for Californians during the construction phase. In fact, jobs may actually be lost.”
According to an analysis prepared by Alexis, co-founder of Californians Advocating Responsible Rail Design (CARRD) and an econometrics expert, “$25 billion will generate the equivalent of 75,000 years worth of employment using the 3 jobs/ $1 million ratio. Over the 10 years that planning and construction are expected to last, this would mean about 7,500 more Californians at work each year. In addition, some of the raw materials used in construction might be produced in California. The total number of construction-related jobs could be 100,000-120,000 one year jobs, which is equivalent to 10,000-12,000 jobs that last the 10 years that construction is expected to last.”
She also explains that projects with heavy capital expenditures net far fewer jobs that spending money on service oriented projects. It stands to reason that if you’re spending dollars on concrete, steel and trains, there’s less money to spend on labor. According to Alexis, $1 million spent on services equals 20 full time jobs for one year, whereas the same amount spent of heavy construction nets only 3 jobs.
She explains that “this number should be netted against the job losses from not spending money on education and health care. A really simple and conservative way to do this is to look at the size of the bond measure. Diverting $9 billion to High Speed Rail is the equivalent of cutting 180,000 one year jobs, with most concentrated in health care and education.”
Reality: “California workers could actually lose jobs when the math is done. If you just look at the numbers for the stimulus request funds, it looks even worse because California has promised to put up 50% of the funds,” says Alexis. For the complete study please click on Jobs Fact check
The LAO (Legislative Analyst’s Office) report also debunks job promises since it states it’s unclear how much funding would be spent in California. It states that “critical expertise might have to come from out-of-state or international firms since this mode of transportation has not been built here before. To the extent that the state procures the services of firms from outside of California to develop and construct the rail line, as well as to obtain rolling stock and equipment for the system, the overall economic benefit to the state could be diminished”.
Another watchdog group following stimulus dollars uncovered similar concerns about inflated jobs numbers in April, where they show that calculations were put in place to inflate job promises in an attempt to get federal stimulus dollars enacted.
“Backers of a $545-million, federally funded high-speed rail project in North Carolina got a valuable public-relations assist from the Obama administration in the form of a misleading counting technique that inflates potential job numbers by more than 300 percent.”
“Gov. Bev Perdue, N.C. Department of Transportation Secretary Gene Conti, and other supporters of the project claim that the rail endeavor would create 4,800 jobs, when, in reality, the real projection is closer to 1,200 jobs.
Yet, another similar opinion is voiced by the financial duo of William Grindley and William Warren in their report known as “Brief Note #5” where they discuss permanent jobs created by the High Speed Rail project. Below is an excerpt:
“In 2008, California’s High-Speed Rail Authority (CHSRA) said ‘Experts calculate…more than 320,000 permanent jobs will result by 2030.’ A year later the CHSRA’s 2009 business plan claimed the LA-SF project would create 450,000 permanent jobs-40% greater than 2008. Why such different conclusions than RIMS-based (Regional Input-Output Modeling System- an economic term) calculations and within a year?”
“Whatever the explanation, the CHSRA’s permanent job forecasts contain a deep seated flaw. The 2009 Ridership forecast is based on the high-speed rail system capturing passengers from California’s air and auto passenger marketplaces. That will create unemployment in those marketplaces. At best the rail-based jobs would only displace the airline and auto market workers, but if the rails administration is more efficient than those marketplaces, it is possible the train will create a net loss of jobs in California.” http://cc-hsr.org/assets/pdf/bnote-5.pdf
In addition to displacing rail and auto market workers, the loss of jobs due to the destruction of businesses, farmland, dairies and rendering plans is left unaddressed. Manuel Cunha, President of Nisei Farmers League, spoke at a Central Valley High Speed Rail meeting May 7th, “I’m probably going to lose 35 or 40,000 jobs year round jobs in agriculture. Let’s think about the farm workers that feed all of us, including Sacramento,” said Cunha.
Strategic Misrepresentation: The final word regarding job creation on mega-projects is by Bent Flyvbjerg, Professor at the University of Oxford, U.K. Research Director, PHD and expert in Mega Project design says, “job creation and other local economic benefits invariably used by proponents to justify the billions spent on such projects often do not materialize or are so weak that they can’t be measured outside the temporary jobs generated by construction itself, which may be substantial, but the benefits of which end the day the last construction worker leaves the site.”
On the broader subject of economic benefit, Flyvbjerg explained that even “the giant project like the Channel tunnel” showed five years after it opened, it had “very few and very small impacts on the wider economy.” “Many other projects corroborate these findings: the much-publicized positive economic and regional development effects of large construction projects are mostly nonexistent, marginal, or even negative.” In Flyvbjerg’s Megaprojects and Risk, he states “there is a massive and highly significant problem with inflated [rail passenger] forecasts for rail projects. For 2/3rds of the projects forecasts are overestimated by 2/3rds.”
Taking job creation numbers from an agency that is pushing a project should not be taken at face value and should be more carefully examined. More importantly taking a serious look at the financial viability of the project and the damage that could be done to the state has to be monitored more carefully by the Governor and elected state representatives. Instead employ people by fixing damaged infrastructure projects such as schools, bridges and roads, badly needed and many have been truly shovel ready for a long time.