Bonding bill or stimuless bill

Shar Knutson, the president of the Minnesota AFL-CIO, tries to make the case in the StarTrib today that we should pass a billion dollar bonding bill to create jobs.  She lays the groundwork with some questionable facts, such as "While numbers from St Paul and Washington show that the worst is likely over, we still have a long way to go", referring to the economy.  She apparently agrees with Sen Harry Reid that losing only 36,000 jobs last month was a good thing.  She also asserts that "Help from the federal government in the form of the Recovery Act and other jobs packages has saved and created many jobs".  If by many you mean more than two, then I guess that statement could be correct.

But then she goes off into fantasy land with a quote from the chief economist at the Associated General Contractors of America, who says that a 1 billion dollar bonding bill will create 27,000 jobs.  Setting aside for the moment the fact that the AGCA is a trade group that conducts lobbying efforts on behalf of construction spending, lets look at those number for a minute.  1 billion dollars for 27,000 jobs.

If all of the 1 billion dollars went to wages, that would be about $37,000 per job.  That is roughly $18 an hour, and not a bad number to put on your tax return at the end of the year.  But the minimum wage for a union highway construction worker in Minnesota (which the state will have to pay by law) is $19.41 an hour.  The minimum for a union carpenter is $28 an hour, $25 an hour for ironworkers, and $28 an hour for cement masons.  Ironically, these wage rates are taken straight off the AGCA website.

So out of that $1 billion, even if all of it went to wages, you still couldn't create 27,000 jobs at prevailing union wage rates that last one full year.  Presumably some of the bonding bill money would be used for supplies and materials, right?

And if you accept the 27,000 jobs for $1 billion dollars theory, then we really got screwed on the federal stimuless bill.  At the rate of 27,000 jobs per billion dollars spent, the federal recovery act should have created 21,249,000 jobs.  Although the numbers from the White House change daily (even by the hours some days), the highest number of jobs created that the White House has claimed is 4 million jobs, according to President Obama last month.

So even if you take the President's claim as true, (4 million jobs created for the 787 billion in cost), then the job creation rate for the state bonding bill would have to be 5 1/4 times higher than the federal rate.  Does anyone honestly believe that Minnesota lawmakers can create jobs with stimuless spending at a rate of over 5 times that of Vice President (nobody messes with) Joe Biden?

I mentioned it earlier, but it is worthwhile to note that the Association of General Contractors of America is a trade group that includes lobbying efforts to get government to spend money on construction.  They are hardly an unbiased source, and there is no mention of how they arrived at the 27,000 jobs figure.

The bonding bill is not intended to create jobs.  It is supposed to be reserved for capitol improvements around the state.  The state budget website says this-

The State of Minnesota sells General Obligation Tax Exempt and Taxable Bonds, and Revenue Bonds. The proceeds from the sale of General Obligation bonds are used to pay the cost of building the capital projects that are approved by the Legislature. Certain tax-exempt bonds must receive an allocation from the state prior to the issuance. This process is administered by the Treasury Division.

Making the bonding bill into a jobs bill is nothing more than a transparent attempt to get people to support tax dollars for pet projects around the state that we can't afford.