Estimates of Jobs Created by Department of Transportation Programs
under the American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009 (ARRA) allocates $48.1 billion to the Department of Transportation (DOT) for infrastructure investment spending. This spending is intended both to create jobs in the short run and to improve the productivity of our transportation system in the long run. Section 1201 of ARRA directs DOT to estimate the direct, indirect, and total jobs created by the projects funded under the Department’s allocation. Reports of jobs created are due to the Department from its grant recipients on May 18, 2009, August 17, 2009, February 17, 2010, February 17, 2011, and February 17, 2012. The Department also plans to report on the number of jobs created every month.
Jobs will be reported in three categories: direct, indirect, and total employment. Direct jobs are those jobs represented by the number of people whose work is directly billed to the project. Indirect jobs represent employees working for producers of materials, equipment, and services that are used on the project, such as steel producers, producers of accounting services. Total employment will include direct, indirect and induced jobs, which are those jobs created when employees go out and spend their increased incomes on consumer goods and services.
For the section 1201 reports, the Department has directed its grant recipients to report the number of direct job-hours (i.e., the number of people whose work is directly billed to DOT ARRA projects multiplied by the number of hours each person worked) generated by projects funded under the DOT ARRA programs from the enactment of the Act on February 17, 2009, to the reporting dates listed above. DOT staff will review those data for possible errors and make corrections after consultation with the grant recipients. DOT will then divide these job-hours by 173 (the average number of working hours in a month – 40 hours per week times 52 weeks per year divided by 12 months per year) to estimate the total number of job-months worked since the enactment of the Act. Job-months can be divided by 12 to estimate job-years, but we believe that job-months are a more meaningful measure during the first months that the program is underway. We will therefore report job-months for the first two reports under section 1201, and begin reporting job-years for our report in February 2010.
Indirect jobs will be estimated for our section 1201 reports using an input-output model that estimates the amount of input materials and services, and the number of jobs created in producing those materials and services, based on the level of expenditures. We will also use this input-output model to estimate direct employment in the production of vehicles, (e.g., buses, vans, and rail cars), which are an important part of the overall Recovery Act program for transit. Each section 1201 jobs report received from grant recipients will also include a report on federal expenditures on the project over the reporting period.
Estimates of total employment will also be based on expenditure data, consistent with guidance from the Council of Economic Advisers (CEA). Total employment includes not only direct and indirect jobs, but also induced jobs. CEA estimates that total employment is increased by one job-year for every $92,000 in direct government spending. We will therefore take the expenditure data and divide by $92,000 to estimate the total job-years of employment created. To estimate job-months of total employment, we will divide expenditures by $7,667 (i.e., $92,000/12).
For our monthly reports, we will generally use the same procedure, with each month’s report showing the change in job-months since the last monthly report. The increase in job-months for the most recent month shows the average number of full-time employees at work over the past month. We will get monthly reports of direct job-hours and expenditures from all our grant recipients except for recipients of Federal Transit Authority (FTA) grants. So for the Federal Highway Administration, Federal Aviation Administration, Federal Railroad Administration, Maritime Administration, and the TIGER Discretionary Grants program administered by the Office of the Secretary of Transportation, we will use the same procedure to report monthly employment as we use to report employment for the periodic reports required by section 1201. For recipients of FTA grants, we will estimate monthly expenditures based on outlays from the U.S. Treasury for the previous month. We will then use those estimated expenditure levels in conjunction with the input-output model used to estimate indirect employment to estimate monthly direct employment for transit projects.