Stimulus-funded road projects create few jobs
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After education and health and human services, Minnesota will spend most of its federal economic stimulus money on road and bridge projects.
All told, more than $500 million of stimulus money will go to road projects in the state over the next two years. But officials are backtracking on earlier estimates about how many jobs the road work will create.
Some states aren't spending money to label construction projects: 'Paid for by the American Recovery and Reinvestment Act, ' but Minnesota is. Along highway 169 just a couple of miles outside of St. Peter, an orange sign with the 'Recovery.gov' logo informs motorists what's behind the mess that lies ahead.
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In downtown St. Peter, Highway 169 is closed in both directions for blocks. The pavement is gone; dump trucks, front end loaders, rollers and excavators are kicking up dust.
Like many road projects, the St. Peter construction would not be taking place on this scale or at this time had stimulus money not been available.
When St. Peter is put back together in a few months, City Administrator Todd Prafke said its historic downtown will have modern infrastructure including new water and sewer lines. He also said the street layout will be much improved, making it safer and more attractive.
"From a city perspective, our goal is that these enhancements, these improvements are looked at being kind of a mile marker in our community in that this really relates in the big picture to the transition of our downtown," Prafke said.
A transition, Prafke said, that without the stimulus would been spread out over several years, causing more disruption and costing significantly more money.
Key goals of the economic stimulus package were to keep people from losing their jobs, to add new jobs and to update infrastructure.
Until recently, MNDOT has been saying that for every $1 million spent, as many as 27 jobs could be directly and indirectly created.
But those projections were based on what MnDOT says were old Federal Highway Administration figures. MnDOT now says the jobs numbers could be less than half that; a total of 5,400 jobs rather than 13,500.
University of Minnesota associate professor David Levinson, a civil engineer, said today's road construction is far less labor intensive than it used to be. Heavy machinery long ago replaced legions of men with shovels and pick axes.
As for the stimulus projects themselves, Levinson said one has to wonder just how necessary they are given that without the stimulus money, they were not among MnDOT's top priorities.
"In order to be shovel ready, it had to be already designed," Levinson said. "If it was a large project it had to have gotten its environmental permit and it had to have not been built yet.
"Now if a project has gone through a design and got its permits and people can't find money for it using then normal process, that indicates it's probably not the most important project to be finishing," he said.
MnDOT officials said 36 stimulus projects are underway, and about 120 more in the pipeline.
Even before the stimulus, MnDOT had an aggressive 2009 construction schedule. The stimulus added $150 million to more than $800 million already on the books. Next year, including stimulus money, MnDOT will spend about $1.2 billion on road and bridge work.
John Chiglo oversaw the rebuilding the 35W bridge for MnDOT. He's now managing the department's economic stimulus program. Chiglo said the extra money over the next two years will help reduce long-term maintenance costs.
"It's a significant investment," Chiglo said. "It has allowed us solve unfunded, unmet needs in the future and carry those needs forward and resolve them in a much earlier time frame that what we ever anticipated."
Minnesota-based Shafer Contracting won the nearly $14 million bid for the St. Peter project. Shafer's vice president, Brad Mattson, said it's one of two economic stimulus jobs his company is doing. Mattson said together that stimulus work will account for about 20 percent of Shafer's business this year. That happens to be $20 million worth of work and jobs.
"We usually run about 275 to 300 employees and probably 50 or 60 of them would not be working had it not been for the stimulus dollars," Mattson said.
At a time when many companies are cutting jobs, Mattson said Shafer has added a few positions.
Among the new hires is Mike Yokiel, who lives in St. Peter. Yokiel was out of work following his last road construction job in Rochester. He said he got the job with Shafer after attending a community meeting about the project.
"I just happened to talk to the people from Shafer and asked if they needed help and they said yeah, we're looking for another excavator operator and I just kind of fell into it," Yokiel said.
In addition to directly hiring a couple of locals, Shafer is subcontracting with several regional companies.
Some of St. Peter's businesses such as bars, restaurants and motels are cashing in on those workers. Embassy Bar and Grill owner Terry Blaschko said his main street business is up about 10 percent since the project started even though the street is gone.
Although Blaschko is profiting from the project, he thinks it's a waste of money. He said it was a bad decision to so severely disrupt St. Peter's business district given what's going on with the economy.
"Times are tough already, so now they just made it tougher for some of these businesses," Blaschko said. "I can't complain because it's a bar, bar-grill, so I do get construction workers in here. That's where I benefit from it."
Across torn up Minnesota Avenue, and down a block or so from Blaschko's bar, Jake Yushta and his young daughter Samara are surveying the road project from a sidewalk behind a temporary fence.
"We're just checking it out. She likes the big trucks," Yushta said.
The work Yushta and his daughter are watching is work Yushta said he used to do.
"The company I worked for laid most of their people off so I'm one of the many Americans without a job, but we'll pull through it and move on," he said.
Yushta said it makes perfect sense to spend stimulus money on projects like St. Peter's. As for the stimulus more broadly, Yushta thinks it will help revive the economy, but he said that will take time.
"Well I've heard that the stimulus package is not doing what it's supposed to," Yustha said. "You know it's not digging us out of the rut we're in, but it's not going to happen overnight. It's not going to take a week. It's going to take years for it to work."
The St. Peter road and utility work is supposed to be done by Thanksgiving.
MnDOT said four of its relatively small stimulus projects have already been completed. So far, the department said stimulus road construction in Minnesota has directly created or sustained 2,130 jobs.
MnDOT has 100 more stimulus projects out for bid.
