Should Stimulus Projects Create Jobs?

Well, yes. The chief purported basis for February's $787 billion stimulus bill was to reduce the ever growing number of Americans unemployed. Back then, it was a mere 7.6% in January. Now it has risen by more than one-third standing at 10.2% in October. An article today in the New York Times explains precisely why so much of the spending has been so ineffective: because it was aimed less at creating jobs and more at satisfying other goals.

In this case, the Times questions a wind farm project seeking $450 million in stimulus cash. It would produce just 300 jobs in the U.S. That's a cost of $1.5 million per job. Here's some detail:

According to partners in the deal, the proposed 600-megawatt wind farm, announced late last week, would be built on 36,000 acres in West Texas using 240 wind turbines manufactured by A-Power Energy Generation Systems of Shenyang, China.

Partners in the $1.5 billion deal said that while most of the financing would come from unnamed Chinese banks, they would seek about one-third of the project's cost -- $450 million -- from money set aside in the American Recovery and Reinvestment Act, the huge stimulus bill that passed earlier this year.

This highlights a problem with much of what the stimulus targeted: what Congress wanted instead of what the economy needed. Wind and solar energy projects are great causes that will have dividends for decades to come. But they're ineffective at creating lots of jobs immediately -- what stimulus is supposed to do. Such projects are capital intensive, take a significant amount of time to get off the ground and create too few jobs at too great a cost.

Senator Charles Schumer (D-NY) is annoyed about this project and others like it mostly because they fail to focus on creating jobs in the U.S. He notes an American University study revealing the problem:

Mr. Schumer pointed to a recent analysis by the Investigative Reporting Workshop, a nonprofit journalism project at American University, which found that 84 percent of the $1.05 billion in "green" stimulus funding distributed since September had gone to foreign companies building renewable energy projects in the United States -- mostly wind projects.

Again, are green energy projects a valuable endeavor in the long run? Absolutely. Are they an effective a way to create lots of jobs immediately in a cost-effective manner? Absolutely not. Congress should have saved such goals for later spending bill once the economy had improved and should have instead sought genuine employment-driven spending for February's legislation.