Previously, we asked whether the first transportation stimulus was a bust, despite reports from the AP that it had resulted in virtually no change in unemployment rates. Now, the Transportation Equity Network has responded to the AP story:

First, the story claims that stimulus spending on transportation infrastructure “has had no effect on local unemployment and only barely helped the beleaguered construction industry.” This is a misguided, apples-to-oranges comparison. Highway and road construction represents only a small percentage of the construction industry as a whole, and only a tiny percentage of the total national work force—0.2 percent—meaning that it cannot, on its own, be expected to transform unemployment trends.

Second, the story ignores decades of hard evidence about the jobs that transportation infrastructure spending creates—and fails even to mention the number of transportation-related jobs the stimulus has created or sustained: more than 210,000 direct, on-project jobs, plus another 420,000 indirect or induced jobs as of Oct. 31, 2009, according to the House Transportation and Infrastructure Committee.

On the first point, we heartily agree — the story specifies that only data on roads and bridges was examined in the analysis, and major construction projects have yet to et off the ground. On the second point, well, yes the stimulus created jobs, but the issue was the effect on overall unemployment rates — still, the TEN’s point goes to our previous contention that, without the stimulus, unemployment would have been much worse.

Thus far, stimulus spending on roads and bridges has had virtually no effect on local unemployment levels, and has only minimally boosted the construction industry, according to a new study by the AP (via Business Insider). The AP analysis included data from 700 counties in the U.S., and was reviewed by independent economists at five universities. The results included the following:

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”…

For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus like tax cuts, unemployment benefits or money for states….

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

As Biz Insider writer John Carney notes, the optimism about road-building being a boon for job creation may hail from an overly-nostalgic memory of FDR’s public works projects. And, clearly, the same strategy has not proven effective in 2010.

Still, does this mean we should simply scrap the plans to fund construction projects in the proposed $75 billion second stimulus? And have the $20 billion in funds already spent on roads and bridges been a waste? (more…)