Cat: Stimulus cash too slow in coming
Paula Daigneau makes $18.60 an hour directing traffic for the repaving of Main Road in Tiverton, a town of 15,000 in eastern Rhode Island. She says that's twice what she would have earned doing chores on a friend's farm.
"The jobs were getting pretty limited," said Daigneau, 51, a flagger who signals drivers with a sign she pivots from "Stop" to "Slow."
Daigneau and 31 full-time co-workers are beneficiaries of President Barack Obama's $787 billion spending program aimed at reviving the U.S. economy. To Michael D'Ambra, president of the construction company that landed the $2.4 million contract, the Main Road project shows the effort is succeeding.
"It appears that the stimulus is doing its job," D'Ambra said. "It's putting people to work."
To critics, the Tiverton project, which is scheduled to end in September, illustrates the stimulus program's weaknesses: They say it may be creating too few jobs, too slowly, for too short a time.
Once the stimulus money is spent, "that's the end of it," said Harry Staley, chairman of the Rhode Island Statewide Coalition, a group that advocates responsible government spending. He said he's concerned that the money is going to "projects that are not in fact critical" and won't provide a long-lasting boost to the economy.
3.5 Million Jobs
When Obama signed the stimulus bill on Feb. 17, the administration said it would create or save 3.5 million jobs by the end of September 2010. Through May 5, according to a May 13 report released by Vice President Joe Biden, $28.5 billion, or 3.6 percent, of the stimulus money had been disbursed, counting tax cuts, benefits such as Medicaid payments to states, education and construction projects. About 150,000 jobs had been created or saved, a news release said.
The U.S. economy lost a combined 1.2 million jobs in March and April, and the unemployment rate rose to 8.9 percent last month from 8.1 percent in February, according to the U.S. Labor Department.
The question for some economists is whether the money is being doled out fast enough. According to the plan, 70 percent of the total is to be spent through next fiscal year, and all of the funds won't be distributed until 2011 or beyond.
"One of the criticisms of the stimulus package has been that it's somewhat backloaded," said Dean Maki, co-head of U.S. economic research at Barclays Capital Inc. in New York. "So the more of these projects that can be started now when the labor market is so weak, the better for helping achieve sustainable growth over time."
Caterpillar's Complaint
Caterpillar Inc., the world's largest maker of earth-moving equipment, is among critics saying the money isn't being spent quickly or widely enough. The U.S. "missed an opportunity to correct past underinvestment in U.S. infrastructure," the company said in an April 21 economic commentary.
"The net-net effect of the construction spending in the short run is probably close to zero," said Robert Stein, senior economist at First Trust Advisors in Lisle, Illinois. "We expect the economy to rebound for a variety of factors having nothing to do with the stimulus bill."
Construction is already underway on about 303 highway and bridge projects nationwide, the Transportation Department said. The agency is still tallying how many jobs the projects are creating, said Maureen Knightly, a spokeswoman.
"We are at the beginning of the construction season and over the next five or six months, there will be an enormous number of people working," Transportation Secretary Ray LaHood said yesterday in an interview. "There's going to be billions of dollars paving over America."
Rhode Island Woes
Stimulus transportation projects are creating 1,500 jobs in Rhode Island, including those in Tiverton, according to Rhode Island Transportation Department Director Michael Lewis. Tiverton's is one of the first transportation stimulus projects in the country to get started.
Rhode Island needs the work. The state's April unemployment rate was 11.1 percent, up from 10.3 percent in January, and the fourth-highest in the country. The rate was the highest since the Labor Department began reporting the figures in 1976.
In Tiverton, workers are resurfacing and installing new sidewalks and curbs along 2.3 miles of Main Road, a street of tanning salons, car repair shops and chain drugstores. Sidewalks stop and start along the strip, so pedestrians sometimes have to walk on the shoulder.
'Would Have Been Bleak'
The project in Tiverton, whose biggest employer is the town government, wouldn't have happened this year if not for the stimulus package, Rhode Island's Lewis said.
"It would have been very bleak in Rhode Island, not just for infrastructure but for the contracting community and for the engineering community" without the projects funded by the act, he said.
The Tiverton work may not generate many so-called indirect jobs, which the government includes in its estimate of how many will be created by the stimulus program.
National Grid Plc, which distributes electricity and natural gas, is doing gas line maintenance as Main Road is resurfaced, but that work would have been done anyhow and hasn't required any new hiring, said company spokesman David Graves. National Grid's U.S. headquarters is in Westborough, Massachusetts.
Packed Lunches
The road workers, from Rhode Island and nearby Massachusetts, aren't spending much money in Tiverton because most pack their lunches for their 30-minute lunch break, said D'Ambra, the construction company's head.
Aside from renting an office and buying fuel, "I don't think we really bring a lot of dollars and cents into that town," said D'Ambra, whose company is based in Warwick, Rhode Island, about 35 miles from Tiverton.
"What the project's going to mean to me is short-term, we may lose business," said Doreen Rapoza, co-owner of the Hair Reflections salon. "But after, it may do well because more people will be walking with sidewalks."
Main Road flagger Daigneau, a divorced mother and grandmother, says she's optimistic she'll find work after the stimulus project ends in September.