A new federally backed high-speed rail project in North Carolina is a boon for the local economy, creating or preserving 4,800 job years over the life of the project.
Wait - "job years"? Not "jobs"?
Indeed, if the arguments over the economic impact of spending projects need to be any more confusing, local officials are using a method of counting employment embraced by the Obama administration in promoting the fiscal stimulus.
The idea: One job for one year is one "job year." If that job continues for another 12 months, it's two "job years."
In North Carolina, it's the administration of Governor Bev Perdue that says the $545-million (U.S.) federally funded project will "create or maintain as many as 4,800 private sector jobs in North Carolina over the next four years, with 1,000 of those expected this year alone as ready-to-go projects get under way."
The Carolina Journal, a news and commentary organization sponsored by the free-market John Locke Foundation, has called foul on that number. The Carolina Journal says Ms. Perdue misstated the projections of her own Department of Transportation, which estimated in January, 2010, the funding would "create or preserve" as many as 5,700 "job-years" in North Carolina. Annual employment is to peak at 1,800 in the third year of the project, the Carolina Journal says, with the 4,800 tally supposedly coming from a "conservative estimate" by the state's DOT.
The Carolina Journal calls job-years "a metric invented by the Obama administration's transition team to sell the American public on the incoming president's controversial $787-billion stimulus plan." It also says, "The Obama administration has refused to defend the concept publicly."
Neither of those things is quite true, however.
A Google search for the phrase in Internet pages from before the January, 2009, inauguration finds a handful of examples, including citations to an academic paper on solar-industry job creation in California, and a 2005 blog post criticizing economic estimates for a development project in Brooklyn, N.Y.
And a defence can be found in the May, 2009, report from the President's Council of Economic Advisers on the stimulus.
"For some purposes, looking at the effects at a single point in time is not the most useful approach. Since the economy is likely to be operating below capacity for several years, job creation any time over the next several years is valuable. Thus, a second way to look at the employment effects of the program is to estimate the number of job-years the program will create over the President's first term. A job-year means simply one job for one year."
(Carolina Journal also quotes this passage, which I would take to counter the assertion the administration has never publicly defended the figure.)
The Obama administration might not have needed to use the figure if it hadn't insisted on promoting the number of jobs "saved or created," not just created. Setting aside how hard it is to determine how a job was "saved" by the stimulus program, it would be inappropriate to count one job saved multiple times in multiple years. ("Yup, we saved that job again in 2010.")
There's value to this concept, though. Government spending often goes to infrastructure projects, which means construction work - and jobs, albeit temporary ones. Creating 1,000 construction jobs that last two years - 2,000 job years - is more valuable than creating the same number of jobs that last one year (1,000 job years).
The problem, though, lies in the sloppiness of the telling. As Carolina Journal notes, Ms. Perdue didn't seem to grasp the job numbers she was promoting. When a Carolina Journal reporter questioned the Governor at a press conference this month as to the difference between "jobs" and "job-years," she said this, according to Carolina Journal:
"You know, what I'm aware of on rail is that the money would help us do what we need to do in this state, and what we need to do in the country, from my perspective as somebody who's had a chance to visit other countries and see their transportation system, that we need to focus on some type of transportation possibilities other than cars and buses. If it's 1,200 or 12,000 in this economy, they are important jobs. … And so if the job estimates are right or wrong, the bottom line is it's jobs for our people."
That's entirely too cavalier. "Jobs" and "job-years" is a distinction with a difference, and the people need to know the exact estimated benefits for a project with a minimum of confusion.
Contrary to some Republican claims, government spending can create jobs, plenty of good ones. The truth is enough; Fudging the numbers upward, intentionally or not, just gives more ammunition to government's critics.