Within one year after President Obama signed the Recovery Act, almost a billion dollars has been invested in the San Diego region. A large chunk of the money has gone to the Camp Pendleton, Coronado and UCSD. However, even if you are not on base or campus, it is highly likely that you have been touched by the Recovery Act. Major public works construction projects have benefited from this spending, including the four-lane expansion of SR-76, construction of I-905, and the HOV lanes on I-805. Future funding has already been allocated to the construction of Otay Mesa crossing, the Oceanside transit station, and the high-speed rail to Los Angeles/Sacramento. And the Recovery Act funding is going to flow into our homes, in the form of solar panels and weatherization.
We estimate that the direct and indirect multiplier effect of a billion dollars invested in the region’s economy in construction would create about 19,500 jobs, about 8,500 of which would be in construction. These multipliers are based on the final output demand for changes in the state gross domestic product.
So, where are the jobs gone? Direct reporting by contractors on the recovery.gov website shows only about 1,600 jobs created or retained in the region. The onus of actually counting and reporting jobs has been completely a new paradigm for contractors and agencies. It has led to in inaccurate picture of the success (or failure) of Recovery Act projects. There are contractors that have spent millions, but do not report a single job.
Some contract recipients have stood up to create local jobs. MAAC Project recently launched the Green Careers in Weatherization program to provide not just weatherization training, but careers in construction for low- and moderate-income residents. Another example is an electrical contractor, Synergy Electric, which is a local, woman-owned business that created over 50 construction jobs (the highest Recovery Act jobs reported by local contractors) on solar photovoltaic power systems in Camp Pendleton.
Without the Recovery Act, construction industry spending by the private sector was not enough to tide through the recession. The construction industry was shrinking from $8.3 billion in the peak in 2006, to $6.4 billion in 2008. Even though the share of the construction industry in relation to the entire San Diego economy was between 3-4% in both revenues and employment, the multiplier effect on other industries was significant. In this scale of impacts, a billion was not enough, but a good start.
The question we should be asking is not “where are the jobs gone?”, rather “where are the jobs that have not gone?” Employer reports to the state show that the construction industry employment is at 65,100 jobs (in December 2009) reduced by 30% from its peak (in August 2006), to in December 2009. However, more than half of which were lost prior to the passage of the Recovery Act. Since then, public investments in the construction industry have retained thousands of jobs that would otherwise have driven San Diego’s unemployment rate to the teens. These are the jobs that will seed the economic recovery for our region in 2010. They need to stay local.
Murtaza H. Baxamusa, Ph.D., AICP is the Director of Research and Policy at the Center on Policy Initiatives