Upgrading federal facilities would create thousands of jobs, economist says
As House and Senate negotiators hammer out the final economic stimulus package this week, one of the issues they will debate is how much to spend upgrading federal facilities nationwide to make them more energy efficient.
Bills in both chambers would allocate several billion dollars for facilities improvements, although the Senate version stripped $3.5 billion from such programs. The House bill provides $6 billion to the General Services Administration alone to make federal facilities more energy efficient, and millions more to the Defense Department and other agencies for similar improvements.
Republicans have criticized spending on federal facilities as wasteful, but in a prime time press conference on Monday, President Obama asked, "Why would that be a waste of money? We're creating jobs immediately by retrofitting these buildings or weatherizing 2 million Americans' homes, as was called for in the package, so that right there creates economic stimulus."
"And we are saving taxpayers, when it comes to federal buildings, potentially $2 billion," Obama said. "And we're reducing our dependence on foreign oil in the Middle East. Why wouldn't we want to make that kind of investment?"
Professor Stephen Fuller, an economist and the Dwight Schar faculty chairman at George Mason University in Fairfax, Va., said the upgrades to federal facilities proposed in the stimulus plan would have broad impact because such buildings are located across the country.
"This is something that probably would have been done anyway, but they're going to do it much faster if this money is available and that benefits the economy, irrespective of the energy savings," he said.
Fuller's research, based on data collected by the Commerce Department's Bureau of Economic Analysis, suggests that for every $1 billion spent on making federal facilities more efficient, 28,100 jobs will be created.
"This is construction work. It just happens to be green construction," Fuller said. About half of the jobs created would be in the construction sector itself, while the other half would be in other sectors, such as retail, he said.
Of the jobs created in the construction sector, about one-third of those would be on-site workers; the other two-thirds would be in trades that support the on-site activity, such as the people who truck materials to the area or the employees who manufacture materials.
"You've got to order stuff, then you hire people to install it, then they spend their payroll at some point and it shows up in the economy. It doesn't happen all in one day," he said.
Because the construction sector has lost about 900,000 jobs since peaking in 2007, the most visible impact of the stimulus with regard to federal facilities likely would be the rehiring of unemployed construction workers.
Another benefit of spending money to upgrade federal facilities is it can be done reasonably fast, Fuller said: "GSA knows how to manage these projects and we'd be able to get this stuff going."
It's critical that the money be spent quickly to begin to stabilize the economy, Fuller said. "But the agencies shouldn't be allowed to be sloppy either. They know how to do this. We ought to be careful because these are limited funds."
Fuller likens the economy to a patient who is bleeding seriously. While the stimulus is necessary to stem job losses, it won't get the economy healthy and running again. "We're buying time so we can work on other parts of the economy where the real problem lies -- the credit crisis and the liquidity of the banks," he said.