Publication Date

12-23-2008

Abstract

[Excerpt] After the long economic expansion that characterized much of the current decade, the nation entered its eleventh postwar recession in December 2007. The unemployment rate rose from 5.0% in that month to 6.7% in November 2008, the latest data released to date by the U.S. Bureau of Labor Statistics (BLS). A majority of those unemployed in November—some 6 out of 10 million people—had been laid off by their employers. In November 2008 alone, employment at nonfarm businesses fell by 533,000, marking the biggest one-month drop recorded by the BLS Current Employment Statistics program since December 1974.

The announcement by the Business Cycle Dating Committee in November 2008 that a recession had begun, which preceded by one week the monthly BLS Employment Situation release containing employment and unemployment data for November, intensified congressional interest in passage of legislation aimed at encouraging creation of new jobs and warding off the further loss of jobs. In the 110th Congress, the Senate did not act on legislation (H.R. 7110) the House passed in September 2008, which contained among other things spending on infrastructure (public works) projects to promote employment in the troubled construction industry and in industries that supply it with goods and services (e.g., concrete and steel manufacturing). To mitigate all but one recession since the 1960s, Congress has chosen to increase federal expenditures on infrastructure. This means of job creation has not been without its critics, however, chiefly because of how long it typically takes for public works projects to start up. (See CRS Report 92-939, Countercyclical Job Creation Programs, by Linda Levine, for more information.) This would seem to be less of an issue if the recession is a long one and if Congress passes the legislation while the recession is still taking place.

Members of Congress have spoken of having ready for the president’s signature shortly after his inauguration a second economic stimulus bill that would include provisions to create and maintain jobs in the construction industry and in other infrastructure-dependent industries. A more expansive definition of public works than was used in the past is under consideration; one which includes so-called green jobs. Although no consensus definition currently exists, they appear to include jobs in the renewable energy industries (e.g., wind, solar), jobs retrofitting buildings to be more energy efficient, and jobs expanding mass transit systems. The report first examines trends in employment and job loss since the start of the latest recession. It next focuses on job creation estimates associated with increased spending on infrastructure, placing a heavy emphasis on explaining the limitations and caveats associated with the input-output methodology that often is utilized to develop the estimates. The report will be updated after the 111th Congress convenes to reflect legislation that includes “direct job creation” provisions, i.e., economic stimulus bills having the government raise demand for goods and services through increased federal spending for the purpose of creating and preserving jobs. It will not discuss stimulus measures that give consumers more money in the hope they will spend rather than save it and that provide income support such as extension of unemployment benefits. (Information on these forms of fiscal stimulus can be found in CRS Report RL34349, Economic Slowdown: Issues and Policies, by Jane G. Gravelle et al.)

Comments

Suggested Citation
Levine, L. (2008). Job loss and infrastructure job creation during the recession (R40080). Washington, DC: Congressional Research Service. http://digitalcommons.ilr.cornell.edu/key_workplace/573/

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