On September 30th, the Secretary of Housing and Urban Development spoke on the details and benefits of Project Rebuild, and its design to create jobs and renovate housing in downtrodden areas of the US. In the interview, Secretary Shaun Donovan claims that his portion of the American Jobs Act would create 200,000 jobs, and halt or reverse the growing blight that is American communities after the crash of the Housing bubble.
I think the, and it’s not just my favorite part, but it’s the President’s favorite part too, and why he included it in the American Jobs Act, is that it has both the effect of putting 200,000 people back to work, and you know the construction industry has been one of the hardest hit industries in the entire country. It would put those folks back to work quickly, because we can get the money out very quickly. it’s rehabilitation, so there isn’t a lot of time necessary to get those projects started, and it’s a type of work that is really going to be focused in communities that have the highest unemployment rates. – HUD Secretary Shaun Donovan
Even with these limited details about the project expressed by the HUD Secretary, many realities about the housing markets are left out, making this job creation claim much more than a simple make-work project intended to address blighted communities.
First, the creation of 200,000 jobs in construction is an arbitrary number, similar to how the Obama administration claimed it created or saved 3.5 million jobs under the 2009 Job Stimulus bill. In fact, the unemployment rate from the start of the 2009 program through 2010 rose from just below 8.5%, to over 10% (see chart to the left of this article), confirming that the money either created few jobs, or that the design of the stimulus program did little to accomplish job growth.
Secondly, the HUD Secretary focussed on foreclosures and abandoned homes, but failed to mention that these properties for the most part are now under the ownership of banks. In fact, there are over 870,000 bank owned homes as of May 2011, and in a report that came out yesterday, there are still millions of homes in the shadow inventories of institutions that have not been placed on the market.
So, should Project Rebuild be passed in its current form by Congress, then the American people will once again be bailing out the banks, as a large portion of the money that the HUD Secretary says will go to renovate foreclosed homes, will be given to the banks who failed in their responsibilities as homeowners to pay the costs of their own renovations.
Lastly, Project Rebuild is ambiguous in naming the urban centers and locations where renovations and job creation would take place. In two different statements, Secretary Donovan said that the money would go to places that have a large quantity of abandoned homes and foreclosures, but also said the money will go to where there is the most unemployment. These two things are not necessarily inclusive, as the largest state to be hit by the crash of the Housing bubble was Florida, and the greatest urban blight and unemployment is in cities like Detroit and Cleveland. Couple this with the fact that we are now moving into the fall and winter seasons in the Midwest and Northwest, and construction would not begin in earnest for another six to nine months, negating HUD’s assessment that the money would create jobs quickly.
In the end, Project Rebuild is like most programs created similarly during the Great Depression, where the purpose was to do something quickly, without taking the time to determine the best way to make a lasting effect. HUD Secretary Shaun Donovan offers much in the plan to create jobs, and renovate cities burdened by abandoned homes and foreclosures, but instead, the money and efforts would be better spent in court forcing the banks who now own nearly one million homes in areas around the country, to fulfill their responsibilities by using their own money to fix and rebuild properties acquired when Americans were forced to leave their homes.