A Stimulus Will Put People to Work Faster by Building Lots of Smaller, Cleaner Projects
May 26, 2020

Programs of small infrastructure projects such as solar installations can put people to work faster than mega-projects. Photo courtesy of GRID Alternatives.  

As of May 9, 4.3 million Californians had been laid off since the start of the COVID-19 pandemic – over 18% of the workforce. More Californians will likely have lost their jobs by the time you read this; as of this writing, one in 9 San Franciscans already had. Some experts are estimating that a greater percentage of American workers could lose their jobs than at any point since records were first collected. Worse still, low-wage workers earning less than $20,000 a year are twice as likely to have lost their jobs as higher-wage workers earning over $80,000. 

Our state and our country are in dire need of an infrastructure stimulus specifically designed to put people back to work quickly, notably low-income workers and people of color. The infrastructure that these jobs will build should lay the foundation for the future success of our communities as healthy places that have thriving, low-carbon economies and are resilient to future disasters. 

A traditional stimulus that reinforces the status quo won't cut it and will only exacerbate the problems that have made this pandemic so painful. To do recovery right, a stimulus instead needs to focus on large numbers of smaller distributed projects that will reliably and quickly get people to work and streamline the processes that get in the way of starting those projects. It needs to create jobs of the future that will lead to good careers, especially for those who have been hit the hardest. California and the Bay Area need a stimulus that will leave our most vulnerable communities healthier and more resilient to disasters. We must avoid spending one dime on projects that will leave us sicker, more polluted and more vulnerable. As governments face massive budget deficits, they must be laser-focused on the cost-effectiveness of the stimulus projects they fund and ensure that they don't require massive operating support that can't be sustained. 

What will it take to make this happen? 

A Distributed Stimulus: Smaller, Faster, Cleaner 

When many people think "stimulus," they think of huge, singular infrastructure projects like the Hoover Dam, built with stimulus funds during the Great Depression and so big that you can see its reservoir from space. SPUR has nothing against big projects – indeed they have an essential role to play in shaping the future of California. But today, megaprojects are not the most effective way to put people to work as quickly as possible. A stimulus will most reliably and quickly put people to work through a program of thousands of smaller, distributed projects – like installing fiber and cell towers to bring broadband to millions of homes across California, committing to tending our state's forests to reduce wildfire risk and increase carbon sequestration, or building publicly available electric vehicle charging infrastructure to zero out greenhouse gas emissions from transportation.

Most importantly, programs of smaller distributed projects take less time to deliver, so all the jobs are created when they are needed most: when the economy is at its lowest trough and unemployment is at its peak. Large megaprojects would take years to plan and complete, so the jobs created would be spread out over many years, with many jobs delayed until the economy had returned to strength. Quickly finishing programs of smaller distributed projects would also front-load all the other benefits they generate (whether it's access to broadband or safe walking access to the grocery store) for when they are most needed to restart the economy during the depths of the recessions. 
 

Jobs Created in Year One: Megaproject vs. Program of Distributed Projects 

Programs of distributed projects create far more jobs in the first year than megaprojects. Government spending on infrastructure typically generates between 5 and 20 jobs per million dollars spent, so for the purposes of comparison, we assumed that both a hypothetical megaproject and a hypothetical program of distributed projects create 10 jobs per million dollars spent.
 

Total Cost
(in Millions)

Jobs Created
per Million
Dollars Spent

Years of
Construction

 

Jobs Created
During First Year

Theoretical Megaproject
(e.g., a new rail extension)

$1,000

10

10

1,000

Theoretical Program of
Distributed Projects
(e.g., infill affordable housing)

$1,000

10

2

5,000


Programs of distributed projects on existing infrastructure, especially upgrading existing infrastructure, can start construction more quickly than larger projects. They spend less time on design and approval processes, for example, and get to construction faster. Even looking at projects that are already entitled (so-called “shovel ready projects”), programs of distributed projects can go through the procurement process faster than larger ones and can often rely on existing master contracts and make more use of in-house labor. If most of these distributed projects are on existing infrastructure — which they are more likely to be compared with megaprojects — they also will spend virtually no money on purchasing property, an expense that has almost no job-creation benefits.

The Federal Highway Administration estimates that the average highway expansion project takes seven years to complete, and less than 30% of the jobs are created in the first year. In contrast, a more modest program to modernize BART’s electrical systems and tracks took only weeks to initiate, with jobs being created immediately. Similarly, factory-built multi-family affordable housing projects can deliver almost all their jobs in the first year of construction.

Distributing the stimulus across a greater number of smaller projects also reduces the risk of delays in any one megaproject. Large projects are notorious for massive delays and cost overruns, both in the design and entitlement phases, as well as in the procurement phase. A study of Caltrans projects showed that on average, those under $50 million came in under budget compared to those over $300 million which, on average, went more than 50% above budget. In addition, larger projects often require multiple sources of funding and are at risk if any one of those funding sources doesn’t come through. In 2017, for example, the $1 billion Caltrain electrification project was put on hold as the Trump administration sat on federal grant funding that was needed to complement state and local funds to start the project.

Programs of smaller projects can deliver just as many, if not more, jobs. Analysis of the 2008 American Recovery and Reinvestment Act (ARRA) stimulus funding found that smaller “complete streets” projects, such as pedestrian improvements and bike lanes, generated 30% more jobs per government dollar spent than larger highway projects.

More Jobs, Delivered Faster

The core goal of a stimulus is to put people to work fast. As the region ramps up spending on infrastructure projects, state and local governments must also streamline their delivery so that jobs are created as quickly as possible. Every dollar saved in unnecessary costs is equivalent to one additional dollar of stimulus funding that can help put people back to work.

From a regulatory perspective, this involves streamlining project approvals, government procurement and project funding processes. To save hundreds of millions of dollars and years of potential delay in getting projects out the door, the state should grant California Environmental Quality Act exemptions to sustainable transportation projects (new sidewalks, bike lanes, bus facilities or rail upgrades) on existing streets and rail. Eliminating permits for standard residential and commercial rooftop solar, solar storage and electric vehicle charging infrastructure would increase the volume of projects and the speed at which they could be deployed, providing a significant jobs boost. Allowing a 50% density bonus for affordable housing projects could transform the number of affordable housing units that are built. The stimulus should be accompanied by this regulatory modernization and streamlining.

From a project management perspective, project sponsors for programs of distributed projects should adopt more standardized engineering, design and cost estimation practices and should rely on existing contracts or cooperative contracting arrangements. For example, local governments should empower agency staff to deliver the infrastructure for approved bike and pedestrian plans, using national best-practice standards from an organization like the National Association of City Transportation Officials, rather than putting each intersection through a lengthy design and public approval process. The stimulus should incentivize local governments to adopt these best practices.

Importantly, it is more straightforward to put regulatory and project management changes in place for smaller projects than for larger ones. A large port expansion, for instance, will always require significant environmental and public process during its entitlement phase. This is not the case for upgrading tens of thousands of miles of old and unsafe pipes to guarantee safe drinking water to communities around the state. Similarly, there is little that can be standardized when upgrading highway interchanges, which are each complex and unique, but much can be standardized in building bike lanes and pedestrian safety improvements.

Careers Over Jobs

An infrastructure stimulus also needs to look beyond putting people to work in the short term. The stimulus must put people back to work in jobs that will endure after stimulus money is spent by giving a boost to the careers and industries of the future. A stimulus that creates jobs in declining industries like coal mining (today there are fewer than a third of the coal miners there were 35 years ago) will only create jobs for the duration of the stimulus. After the stimulus is over, those Americans will lose their jobs and will need to be retrained to do new ones. Jobs created in expanding industries — like solar or factory-built affordable housing — will endure long after the stimulus has ended and leave those workers with the skills they need for their future careers. There are 2.5 times more Americans working in solar today than 20 years ago, and in 2018 the Bureau of Labor Statistics estimated that solar photovoltaic installer and wind turbine technician will be the two fastest growing occupations of the next 10 years.

Building the Foundations of the Future — for Everyone

Fundamentally, the stimulus money must also help us fight the greatest threats to our future, including inequities resulting from an economy that benefits the few and the ravages of the climate crisis.

To take just one example, of the 10 big cities with the worst air pollution in the country, seven are in California. There is now clear evidence that living in a polluted city increases the risk of dying from COVID-19. Even outside a pandemic, it is estimated that air pollution from transportation alone kills more than 3,000 people every year in California and costs the state over $29 billion. The damage caused by air pollution is disproportionately concentrated in poor communities and communities of color. Latinos and African Americans are, on average, exposed to 50% more of the most harmful air pollutants than white Californians. The transportation sector generates just under half of California’s greenhouse gas emissions and leaves so many of us spending months of our lives stuck in traffic.

The visionary investments to address these grave challenges are just the type of investments that should be included in a stimulus: ones that would generate a healthier, lower-carbon future for California. 

Deep investments in publicly available electric vehicle charging networks and hydrogen fueling infrastructure would generate good jobs fast and would significantly reduce air pollution and greenhouse gas emissions. Major investments in affordable housing near transit (yes, we need to think of affordable housing as infrastructure) and in creating walkable communities would generate good jobs quickly and would significantly reduce growth in air pollution, greenhouse gas emissions and congestion, as residents would not need to drive as frequently. It would also deliver life-changing support to those who have been most left behind by the economic boom and most affected by the pandemic: low-income households, seniors and those experiencing homelessness. SPUR has estimated that in the Bay Area alone, there is a need for 1.2 million affordable housing units. These will be far less expensive to build through stimulus funding during a downturn than during boom times.

Transformative investments in safe walking and bicycling infrastructure, particularly in disadvantaged communities, would similarly create good jobs quickly and reduce pollution, carbon emissions and congestion as residents left their cars behind for most of their trips. There would also be significant public health benefits to a more active lifestyle, cost savings for the bike users from not having to own a car, and potential boosts to local businesses that have suffered so much during the pandemic. 

A stimulus can, and must, direct investments that both reduce the structural inequities in our communities and lay the foundation for an economy that is inclusive, healthy and low-carbon. 

Don’t Make Things Worse

A stimulus can lay the foundations for a better future, which means not one dollar should be invested in projects that make our communities sicker, more polluted or more vulnerable to natural disasters, like highway or arterial expansions that create congestion, pollution and sprawl. A stimulus should not invest in dirty freight and logistics infrastructure that creates air pollution in nearby neighborhoods — so often low-income communities and communities of color. And we must certainly not make investments in fossil fuel production, processing or distribution infrastructure.

This is especially important because it is much more expensive to make up for environmental damage than it is to do the damage in the first place. Taking an example from the Bay Area, for every dollar spent on highway widening projects, government would have to spend more than $7.50 on transit investments to make up for the increased emissions, even if those widening projects were high-occupancy vehicle or transit lanes. There is also powerful evidence that while highways were great investments that generated significant benefits in the middle of the last century, today’s highway investments barely generate more benefits than they cost and actually generate significant disbenefits per dollar spent if the public health and environmental costs are incorporated.

Weighing Benefits and Costs

Although the federal government has put together trillion dollar stimulus packages in mere weeks, funding is far from unlimited and must be spent wisely. An effective stimulus must focus on projects that deliver not only more good jobs but more net benefits to society — in particular to lower-income communities — per dollar spent. This means weighing the benefit-cost ratio of infrastructure projects. The differences can be huge. For example, the Bay Area’s Metropolitan Transportation Commission has estimated that almost all highway expansion projects actually have significantly higher costs than benefits. On the other hand, smaller projects like investments in bicycle and pedestrian infrastructure, road and transit maintenance and climate resiliency projects generate many times more benefits than costs and, in the case of resiliency projects, over 10 times more benefits than costs. Smaller projects focused on maintaining and upgrading existing transportation infrastructure also generate up to 30% more jobs per dollar spent than larger highway projects.

Spending Money to Save Money

Infrastructure stimulus money must not be spent on projects or programs that leave governments with unfunded ongoing operating and maintenance costs after the initial stimulus has passed. Otherwise, the effect of the stimulus will be to take money from existing government programs to fund the operations of stimulus projects. To go further, we believe the stimulus money should be spent to reduce the ongoing operating costs of government after the stimulus has been spent, enabling government to be in as strong a position as possible to deliver the highest quality infrastructure and services to those who need them most. 

The SMART train in Marin and Sonoma was funded in large part through local, state and federal stimulus funding during the Great Recession and cost over $400 million to build. After coming on line, however, it has required almost $40 million of annual operating assistance. Even before the pandemic, it was faced with either cutting service or raising taxes.

By contrast, investing in the repair and modernization of existing infrastructure and reducing the “state of good repair” backlog can save governments huge sums of money. Spending $1 on routine road maintenance has been estimated to save between $4 and $10 in lifecycle costs. The Metropolitan Transportation Commission estimated in 2012 that the benefits of investing in road maintenance outweighed costs 50 to 1. An equivalent savings exists for maintenance spending on transit, water, electrical and other infrastructure, including natural infrastructure like parks, forests and wetlands.

And the need is great. Over the next 30 years, the Bay Area alone has an estimated shortfall of almost $100 billion to keep its transit network in a state of good repair. The San Francisco-Oakland metropolitan area has the country’s highest proportion of roads in poor condition (the Los Angeles metro area takes second place).

Conclusion

A stimulus done right can lay the groundwork for the next decade — or century. Out of the Great Depression came the New Deal and the foundation for our country’s greatest century. A stimulus can set workers up to build careers in the industries of the future, create a foundation for affordability, prosperity and public health for all, and avert and protect us from the ravages of climate change. By focusing on programs of distributed projects, with a particular focus on repairing and modernizing existing infrastructure, a stimulus can frontload job creation and put people to work faster and more reliably. 

A stimulus done wrong would create a limited number of dead-end jobs that are slow to materialize, saddle us with expensive infrastructure that sucks money from critical services and accelerate us into the climate crisis.

The choice is ours to make.

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