Friday, September 16, 2011

A Jobs Plan For Milwaukee: Guest Post By John Kovari

John Kovari, a previous essayist on this blog, is a Ph.D candidate in American Politics (Urban Politics) and Public Administration at UW-M, and is employed as a Research Assistant at the UW-M Center for Urban Initiatives & Research. He's also a former City of Milwaukee aldermanic staffer and Mayoral office intern.

By now we have all heard about President Obama’s new jobs plan, a combination of tax cuts and stimulus projects.  Milwaukee Mayor Tom Barrett recently endorsed this proposal and has called on Congress to quickly pass the plan.

But Mayor Barrett can do more than just urge Congress to pass the bill via a press conference.  He can and should enact a Milwaukee jobs plan. 

The plan does not need to be complex.  Simply double the City’s capital budget and build, build, build.

Accelerated infrastructure investment is sound economics.  Even conservative economists note how important infrastructure investment is for a growing economy (see Gramlich 1994).

Simply stated, the more a local government spends on infrastructure, the more it can expect back in terms of assessed property value, employment, and aggregate personal income.  There is no better single, direct way to stimulate the local economy.  When local infrastructure spending goes up, so does employment. 

So let’s look at the actual figures - see chart, below, using employment as the key indicator.

In the graph below we are looking at the correlation between the combined capital budgets of the City and County of Milwaukee (in 2009 dollars) and the average monthly employment in Milwaukee County.  As the graph shows, as local spending on infrastructure increases, so do employment averages.  The correlation is statistically significant and strong (Pearson Correlation = 0.708).

Obviously this data set includes capital spending of both the City and County of Milwaukee.  The values are combined to show how cooperative action might stimulate Milwaukee County’s overall economy.

Mayor Barrett (and County Executive  Chris Adele) can do more than urge Congress to pass a bill.  They can leverage the city and county’s considerable resources to invest in our local infrastructure and create jobs on their own.

For those who think that government is already spending way too much, please remember that infrastructure investment has an estimated return of $30 in assessed value for every dollar invested in infrastructure.

Property tax rates need not rise.  Even with doubling the capital projects budget, the accelerated infrastructure would be paid off in about five years – an impressive rate of return.

The City of Milwaukee’s 2011 adopted capital budget was $111.3 million, down from over $160 million in 2006.  Here’s hoping that Mayor Barrett will propose additional capital spending when he presents his proposed 2012 budget.  It would create jobs – lots of them.


Anonymous said...

ickOverlooked fact #1 - The County pension backdrop provides no return for the dollar as an unfunded liability. Same for Milwaukee, city and County unfunded OPEB liability.

Fact #2 - Job creation takes money. Another one time shot by the federal government will have the same no job creation as the last stimulus.

Fact #3 - Public employee unions are killing Milwaukee. Higher taxes, less services, no private sector job creation.

James Rowen said...

Anon. is not addressing the specific proposal. Focus, please.

Anonymous said...

Same old talking points from Republicon Anonymous.

This is an insightful jobs plan. Simple and would address our crumbling roads and bridges.

Could be a fantastic example of real leadership and bridge to the governorship.

Walker has not come close to what this would achieve.

Anonymous said...

Show me the money, not more debt, to "create jobs" comes from. Focus on where the money comes from, please. Milwaukee can't print money.

Anonymous said...

> Show me the money, not more debt, to "create jobs" comes from.

Well, that's simply a breathtaking example of talking past the issue, and the opportunity. After all, capitalism as an economic system depends heavily on borrowing to create wealth-producing assets. So it's apparently okay if businesses borrow (especially from the government) to build more capacity, but it's not okay for government to do the same -- especially when the business sector isn't investing much at all. The statement, in fact, ignores most of the recorded history of economic progress in the USofA, especially the recoveries following the Great Depression and WWII.

Anonymous said...

What have new roads done for Fond du Lac Avenues economy in Milwaukee?

Invest money into turning the most decayed Milwaukee dead zones back to green space.