Infrastructure Spending Not Targeted to High-Unemployment States: But Should It Be?
Pro Publica put together an informative analysis and interactive chart showing that stimulus money isn’t being targeted at high-unemployment states:
This is useful information. That said, I don’t actually think infrastructure spending should be targeted at high unemployment states. Look, for example, at a quintessential high-unemployment state like Michigan. Things are bad there for the same reasons things are bad everywhere. But the reason things are especially bad in Michigan is the structural decline of employment levels in the Detroit-centered automobile industry. One upshot of this structural decline is that today Michigan accounts for a smaller share of America’s population than it did in the past, and it will represent an even smaller share in the future. Under the circumstances, it wouldn’t make sense to locate a disproportionately large share of new infrastructure money there. Infrastructure should be built where it’s most useful—primarily in the largest and/or fastest growing of the 100 largest metro areas.
One thing to note about this is that it’s not as if it’s impossible for spending outside of Michigan to help people living in Michigan. If currently unemployed Northern Virginia and Maryland construction workers get jobs building the Silver Line and the Purple Line that makes it more likely that they’ll buy the products Michigan makes than they would be if they were sitting around idle.
Stimulus money has dual purposes, to provide direct assistance to people in need and stimulate the economy, and also to lay the groundwork for future prosperity by undertaking worthwhile projects. In the case of infrastructure, it’s appropriate to weight the balance of considerations primarily toward “undertaking worthwhile projects” which means the benefits probably won’t be narrowly targeted at the worst-off places. Other aspects of the stimulus package are directly targeted at unemployed workers and therefore will disproportionately benefit areas with a lot of unemployed workers.
45 Responses to “Infrastructure Spending Not Targeted to High-Unemployment States: But Should It Be?”
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February 18th, 2009 at 2:13 pm
I don’t know how I feel about measuring this on a per-unemployed worker basis. Maybe I’ll do the same thing per capita…
February 18th, 2009 at 2:19 pm
Ok, but if you focus on growing areas, aren’t you reinforcing the feedback loop that is creating decline in places like Michigan? I mean, if that infrastructure spending is spent on improving transit in Chicago, aren’t you just incentivizing the move from Detroit to Chicago? Which further harms Detroit?
I admit, I don’t have a right answer for whether or not that outcome should be avoided.
February 18th, 2009 at 2:20 pm
This is all worthwhile to discuss, but we also need to look at population mobility–are we wedded to Michigan or Western New York having the working-age populations they now have?
February 18th, 2009 at 2:20 pm
Why is the highest unemployment in blue states with high taxes and lots of unionism (e.g. Michigan and Rhode Island)? Coincidence?
February 18th, 2009 at 2:25 pm
[insert list of all the other things wrong with MattY's arguments] Part of the reason might be due to the fact that Detroit is already getting another set of billions, and that’s not in the chart. (Note also that GM is turning around and spending a billion of that in Brazil). We could discuss all day whether spending on retraining in Detroit would be better that spending on construction in VA, but I prefer to look on the bright side: out of the billions that CA is getting, a good chunk will go not to U.S. citizens, but instead will go to foreign citizens who are here illegally. They’ll then turn around and send some of that home, helping stimulate the Mexican economy. It’s a win-win, in “liberal” terms.
If anyone wants to get a million or so Youtube views, ask a political leader this question.
February 18th, 2009 at 2:28 pm
Maybe we should substitute the word state with country, and follow the same line of reasoning.
February 18th, 2009 at 2:35 pm
You need to divert more of the money to Philadelphia,obviously.
http://en.wikipedia.org/wiki/It%27s_Always_Sunny_in_Philadelphia
February 18th, 2009 at 2:43 pm
i’m glad donkeylicious is picking up the slack. do you love maps of states or hate cartograms? $$ where the ppl live, dude.
February 18th, 2009 at 2:43 pm
According to
this Wikipedia webpage
, the Detroit metro area is 11th largest in the nation. So I’d say it places fairly high on the “largest and/or fastest growing” list.
The Detroit metro area’s population seems to be underestimated almost always in these discussions about the future of Michigan and the auto industry.
February 18th, 2009 at 2:47 pm
There’s a figure whipped up by your own outfit on the stimulus/Gross-state-product ratio here: http://www.americanprogress.org/issues/2009/02/compromise_map.html
That seems like the most sensible number to weight stimulus against if you’re trying to give the economy the most effective kick in the ass possible. If you’re trying to mitigate the human cost of recession on a short-term basis, weighting against unemployment is probably better.
Checking out this map and unemployment rates, it looks with the exception of Washington DC, Nevada, and Alaska (sort of special cases in each instance) the top 15 or so states in unemployment are at or above the average stimulus level as a function of GSP.
It’s also worth noting that states like West Virginia, Louisiana, New Mexico, and Louisiana that have rather low unemployment rates have extremely high poverty rates.
February 18th, 2009 at 2:55 pm
All Oregon needs to do is fully legalize the cultivation of marijuana which already exists in that state. It would replace declining timber sales as the state cash crop. But nooooooo.
February 18th, 2009 at 2:56 pm
You know what makes me nuts? Wyoming has about as many people as Staten Island, but it gets $186 million dollars, while Staten Island gets less than $70 million.
It’s ridiculous.
February 18th, 2009 at 3:25 pm
@ Annonymiss,
It doesn’t make sense to strictly divy up money based on number of people, especially when talking about infrastructure. For example, it would probably be cheaper to replace all of the roads, bridges, etc. in Staten Island, then it would to build a road from one end of Wyoming to the other. Just something to think about
February 18th, 2009 at 3:39 pm
“For example, it would probably be cheaper to replace all of the roads, bridges, etc. in Staten Island, then it would to build a road from one end of Wyoming to the other.”
You are on crack. First, Wyoming already has a road going across the state. You may have heard of it: Interstate 80. Second, you have no idea how much it costs to build anything in New York City, between the environmental regs and the union labor, etc. It would probably be cheaper to build another intrastate road in Wyoming.
February 18th, 2009 at 3:46 pm
The data propublica is using is old. The state unemployment rates are higher now – I know, for example, that Washington State’s unemployment rate is 7.1%, not 6.4%. I think Michigan and Rhode Island are both now over 10%. And California and Florida are both over 9%.
February 18th, 2009 at 3:47 pm
@anonymiss
There are a number of factors working in Wyoming’s direction here. Over 40% of Wyoming is Federal land — there’s much more that the Feds own to work with. Rural broadband is a big expenditure and will go there more than Staten Island I would bet. The money for the Army Core of Engineers would go to Wyoming over Staten Island — Wyoming has many dams as many major rivers pass through it. Wyoming has more national parks to deal with. Wyoming has more natural resources to manage. If you don’t ignorantly focus on population it makes a lot more sense to pump up the economy by throwing money at Wyoming than Staten Island.
February 18th, 2009 at 3:49 pm
It would be silly to build stuff that already exists or that there is already too much of in Michigan, but there are plenty of things that Michigan needs more of even with reduced population–the Detroit area having no significant non-bus mass transit, for instance.
February 18th, 2009 at 5:09 pm
Great point by Matt Wilbert. Rich in PA’s point about this post being implicitly “wedded to Michigan or Western New York having the working-age populations they now have” is also quite well-taken.
It would seem that there’s something to be said for putting additional stimulus money into places (particularly those in the ‘Rust Belt’) that are developing *new industries* or would benefit from an investment in new *kinds* of infrastructure projects (such as rail lines in Michigan), as a means of reversing the upward trend in unemployment and downward trend in growth — while at the same time providing a more stable base for these kinds of areas in the long term.
February 18th, 2009 at 5:18 pm
It would be justified to give some extra infrastructure spending to states with Republican Senators if it meant that card check would pass.
February 18th, 2009 at 5:33 pm
Re: Why is the highest unemployment in blue states with high taxes and lots of unionism (e.g. Michigan and Rhode Island)? Coincidence?
Several Southern (and presumably union-lite) states have pretty high unemployment rates too, notably Sout hcarolina and Florida.
February 18th, 2009 at 5:41 pm
MY: did you really feel we don’t know which was New Mexico and which was Arizona? I mean, I’m sure some people don’t, but Texas is pretty recognizable.
If the map is unemployment, why is RI so dark?
February 18th, 2009 at 5:57 pm
The numbers in the propublica link don’t add up at all.
They start: “The money in the stimulus bill slated for transportation and infrastructure–a touch under $100 billion”
but the table they have on that page adds up to a little under 38 billion.
February 18th, 2009 at 6:11 pm
“Several Southern (and presumably union-lite) states have pretty high unemployment rates too, notably Sout hcarolina and Florida.”
Thanks for that non-answer, JohnF.
February 18th, 2009 at 8:49 pm
Building the Silver Line and Purple line also makes it more likely that people will have less use for Michigan’s products. This would be a good thing, of course.
February 18th, 2009 at 9:53 pm
Let me explain this to you: Michigan has had the highest unemployment rate in the country for the last 7 years or so. Despite this, Michigan pays more into the federal government than it gets back in taxes. And here Matt thinks it is a good thing that they don’t get their fair share of the stimulus money? What did Michigan ever do to you?
Decades ago Michigan took in poor sharecroppers from the South and gave them meaningful middle class jobs, and this is how the nation repays them; being shit on by the left and the right. If I were Michigan I’d quit the US and go join Canada. At least their love of hockey would be appreciated (and someone else could have the Lions).
February 18th, 2009 at 9:54 pm
To call Michigan a “blue state” is a misnomer. In fact, for most of the last decade the state legislature in Michigan was run by Republicans. So in terms of policies, Michigan is much more a “red state”, which would perhaps explain they the economy there is doing so poorly.
February 19th, 2009 at 9:18 am
Speaking from Michigan, I think we should build lots more highway in California, and lots more in the lobbyist belt around Washington DC.
Obama lied to rustbelt states about his interest in manufacturing, and is now double crossing the UAW members who supported him.
Benny – Michigan has a Dem governor and two Dem Senators, and voted for Gore and Kerry – red???
February 19th, 2009 at 9:38 am
“Decades ago Michigan took in poor sharecroppers from the South and gave them meaningful middle class jobs, and this is how the nation repays them; being shit on by the left and the right.”
Michigan was only able to give those middle class jobs to sharecroppers because it could make the rest of the company pay through the nose for its cars when it had a cozy oligopoly.
“If I were Michigan I’d quit the US and go join Canada.”
I’m sure Canada would love to have Detroit as one of its largest cities. Keep dreaming.
February 19th, 2009 at 10:08 am
Bullshit!
http://books.google.com/books?id=N6U952OoE1sC&pg=PA51&lpg=PA51&dq=sticker+prices+1965+chevy&source=web&ots=nrWUjrC1KG&sig=5TVhCWcX26yIqcjMF83k-fe3haM
Once again, Fred, you prove to be nothing more than a feckless liar.
February 19th, 2009 at 10:42 am
“Once again, Fred, you prove to be nothing more than a feckless liar.”
Sorry, posting a long hyperlink to a book doesn’t prove your point. Try learning how to argue cogently.
February 19th, 2009 at 12:18 pm
Right rationale; dead wrong conclusion. But that’s such a basic, first-order error that this post is just profoundly offensive. So–
–I call bullsh!t. ’scuse my, ah, frankness. But the technical term for this post is “cheap rationalization.” The logic, such as it is, is mis-applied.
Specifically:
“In the case of infrastructure, it’s appropriate to weight the balance of considerations primarily toward “undertaking worthwhile projects” which means the benefits probably won’t be narrowly targeted at the worst-off places.”
Well, no kidding. But that hardly means you won’t get the most bang for the buck on “worthwhile projects” in under-invested regions with high unemployment rates. Also, try to remember: the point of the stimulus bill is to get people working again.
It’s the worst off places that have routinely gotten short-shrift on infrastructure investment for the past 50 years, and that’s one of the reasons they’re bearing the brunt of the current recession/depression.
There is no contradiction between “undertaking worthwhile projects” and building infrastructure in places like Michigan. None whatsoever: you could easily, easily come up with enough worthwhile infrastructure projects in states like Michigan sufficient to distribute stimulus spending roughly proportional to unemployment levels.
By that I necessarily and specifically mean projects that “lay the groundwork for future prosperity.” In Michigan.
Since time immemorial, whenever high-speed rail was mentioned in the national conversation, all the assembled D.C. policymakers and ‘analysts’ and residents along the Eastern Seaboard could do was mumble “NorthEast Corridor” over and over again, like barely coherent junk addicts too short-sighted, self-centered and too whacked out on your own self-regard to put what’s best for the country ahead of your parochial ‘need’ to add another transit line in Washington.
D.C.’s already got the best subway/transit system in the country, but adding the Purple Line has got to come before making a real effort to even things up in the Midwest? Really? After all this time?
Are you actually asserting that making parts for the Purple Line is good enough for Midwestern folks? That your prosperity is more important than our/national prosperity?
That Midwesterners just don’t need mass transit or prosperity or jobs like you do? Or that it ‘just wouldn’t work as well out there as it would here? Because that’s total crap. You argue in the abstract. The money has to be spent rationally, where it is needed and for impact, but it simply is not best spent the way you claim. Offering this kind of weeeak rationalization does not make it so.
I guess those peasants in Michigan will just have to settle leftovers, secondary effects: crumbs from the table of your very own economic stimulus, if you will. The trough is still yours, after all this time. After all this neglect, DC and NYC and the NEC are still gorging at the head of the line.
That you actually presume to justify it by asserting it would “lay the groundwork for future prosperity,” though, is just beyond the pale.
The biggest problem with the infrastructure package is the ratio of highway to transit spending. It’s obviously a sop to vested interests that compounds the structural inefficiencies that got us into this mess. Most shovel-ready’ highway projects now in the pipeline are hotly contested as unecessary, exacerbate the problem, and further damages our competitive edge. Too bad for you they do not “lay the groundwork for future prosperity.”
Blind to the needs of the present and lacking the vision to shape future prosperity, let alone see across the Hudson River, what passes for wonkiness–on this blog and in DC generally–is just compounding the poor choices that’ve gotten us here, economically speaking, in the first place.
Once again, we’ll have to lead you if we’re to going to begin to get a handle on this mess.
February 19th, 2009 at 1:11 pm
You should take your own advice. Lying isn’t a cogent argument. Though if you’d bother to read the quote, you’d see that car prices weren’t through the nose as you claimed.
Like so many conservatives, you seem allergic to facts.
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