One of my most consistent arguments for high speed rail has been that it will provide a significant economic stimulus to our state at a time when we badly need it. Yesterday's Los Angeles Times put some flesh on that argument by examining the impact of the 2006 infrastructure bonds, which are just beginning to turn into actual projects on the ground:
Without this money, "the construction industry would be out of business," said Rich Gates, president and general partner of Silva Gates Construction in Dublin, Calif. "This is kind of the drip of the IV to keep us going."
The governor's decision to turn on the bond money tap allowed Silva Gates to bid successfully for three freeway projects in the Sacramento and San Francisco Bay areas.
Every $1 billion in public works spending creates approximately 18,000 jobs, according to a formula developed by the Commerce Department.
By that formula Prop 1A alone would create around 180,000 jobs. The California High Speed Rail Authority has been more conservative in its estimates, giving a figure of 160,000 construction jobs.
Schwarzenegger's spending plans, though substantial, won't do more than soften the blow to construction that's left thousands of houses half-built in abandoned tracts up and down the state, said Stephen Levy, director and senior economist at the Center for the Continuing Study of the California Economy in Palo Alto.
"This is one of the few things that state and local government can do to help in the short run" and to invest in improvements that will be in place once the economy turns around, he said. But, "if you're down by a dollar, and this helps by a penny or two, you don't want to overstate its magnitude."
I don't disagree with that, and I don't want to overstate the matter. Prop 1A isn't going to lift the state out of recession single-handedly. But it WILL help matters and create jobs at a time when we need as many jobs as we can get - a state with a 7.7% unemployment rate isn't in a position to turn down 160,000 jobs.
Those jobs have a catalyzing effect on the economy, by the way:
Getting money quickly through the transportation planning and approval process helps the construction industry, business in general and the state as a whole because of California's need for more roads and less traffic congestion, said Dan Dunmoyer, the governor's cabinet secretary and a key liaison to industry. "It's very useful now, but we would be doing this even if our economy was roaring," he said.
"Construction jobs are what you'd call high-powered jobs," said Jack Kyser, chief economist at the Los Angeles County Development Corp. Highway projects not only pay good wages to carpenters, ironworkers and operating engineers but also create a ripple effect for a slew of people working for companies that supply building materials, heavy equipment and related goods and services, he said.
These are jobs that cannot be easily outsourced. HSR's long construction schedule is a plus for these companies, from haulers to contractor wholesalers, as well as for their employees. They all get a stable source of money that will keep them in business for many years. That in turn makes them more likely to spend on other services, from a restaurant to home furniture to a weekend vacation here in our Golden State.
Up in Washington State the rule of thumb was that one Boeing job created three jobs in the community, from waitresses to mechanics to hairstylists. Whatever the actual number here in CA, these jobs sustain small businesses and help keep money within the community and the state, which then generates more tax income - something California can't exactly afford to turn down either.
HSR has many other benefits alongside economic stimulus - providing an alternative form of travel that's environmentally friendly, reduces carbon emissions, isn't dependent on ever-rising oil prices, easing congestion on roads and airports. But the economic stimulus IS a significant part of the picture, something that Californians should find quite compelling.