Apr 23 2009
Infrastructure is moving again
Bonds are being sold again, and the proceeds are - once again - going to the infrastructure (and other) projects that they fund. The spigot is back on, and projects are moving ahead.
This is great news for the construction industry, and terrible news for everyone else. It isn’t even that great of news for the construction industry because bond funds have to go to very specific projects. The smae guy who builds houses in the Inland valley cannot work on the carpool lane in San Francisco. The areas hardest hit by job losses in the construction industry won’t be helped by these bond funds.
Normally, with bond-funded projects, there is a bidding process because the funds are going to government agencies. That means any number of things, but one of the most damaging is that most government agencies (local and state) require that anyone bidding on bonds use union labor. This drives up the cost of the project by driving up the cost of the labor. It also means that smaller contractors or people who are not union, cannot get into the job.
So how much is this going to help the unemployment rate?
Construction accounts for approximately 11% of the economy in California. Some years it accounts for more, and some less, but 11% is the general number. So even if construction gears up 100% from these infrastructure projects - which it won’t do - it still doesn’t help the state all that much.
There is a lot of focus on the construction industry because they are the hardest hit, in terms of percentage of their workforce that is unemployed. There is also a focus on the constructino industry because they are the one place that government can really spend money, in construction and infrastructure. Also, this type of “bailout spending” worked before - in the Great Depression. You don’t need me to tell you that there are a ton of differences between today and the Great Depression - but we are trying the same old trick again.
The good news is that infrastructure is moving again. The bad news is that it won’t do much for the economy in California.
