In the last year, St. Cloud received a sizable chunk of Minnesota's share of the federal stimulus bill, but the federal money didn't always lead to new jobs.
Minnesota state agencies have received nearly $5 billion dollars from the federal stimulus bill that passed a year ago, and at least $8.2 million of that have flowed directly into the St. Cloud area for transportation.
CASE STUDY: PINECONE ROAD
Federal stimulus money directly paid for one project in the city of St. Cloud: a $1.6 million street project called Pinecone Road. It created about 160 construction jobs. Steve Gaetz, St. Cloud's public services director, says each worker was on the job for an average of 28 hours .
"Some people were there for one day; some people for a week; some people for a few months because there are different phases of construction," he said. "But the average number of hours worked per employee wasn't that significant."
So was the project worth the money? Gaetz says it was prudent to spend stimulus money on the road because the public will benefit from it for years to come. Gaetz also says transportation projects like Pinecone Road create a ripple effect in the local, and even national economy, that goes beyond the people who worked on the project.
He gave the example of a Tennessee-manufactured water pipe that construction workers installed at Pinecone Road.
“The consensus seems to be that for every dollar of government spending, you perhaps get $1.30 of GDP.”Louis Johnston, economics professor
"Also someone, or different companies, mined the raw materials that went into that pipe, so you affect another operation. The pipe needed to be shipped here to Minnesota, so you have some shipping involved. Locally, you have a warehouse and a local distributor so you affected their operations," Gaetz said.
JOB CREATION: A RIPPLE EFFECT
King Banaian, an economics professor at St. Cloud State University, said for every ten jobs the stimulus creates, local spending by the hired workers may create three or four more jobs.
Banaian examined the construction jobs under St. Cloud's Pinecone Road project.
"Those construction jobs created about 4,500 extra hours of work, so that's like two people and a half working a full year, he said. "They might have created an additional job between the two of them as well."
Another economics professor, Louis Johnston, at the College of Saint Benedict/St. John's University, says the question is how much this snowballing of economic activity adds up to.
"There are economists who argue that it's zero, that government spending makes no effect at all. There are people on the other end who think that you can double your money," Johnston said. "But the consensus seems to be that for every dollar of government spending, you perhaps get $1.30 of GDP."
STIMULUS MONEY DOESN'T ALWAYS MEAN JOBS
But it's clear within this past year, stimulus money hasn't led to new jobs in every case. The Canadian transit bus manufacturer New Flyer with plants in Crookston and St. Cloud was forced to lay off more than 300 of its employees last year because the Chicago Transit Authority delayed a bus order.
This is the same company that Vice President Joe Biden singled out on a visit to St. Cloud last March. He said city and state governments would use stimulus money to expand their transit fleets and as a result, bring more business and new jobs to New Flyer.
St. Cloud Mayor Dave Kleis says the New Flyer layoffs are disappointing, but he has faith that New Flyer will eventually recover the jobs lost in St. Cloud because the company still has a healthy backlog that should keep it busy for several years.
"So there was a very high expectation a year ago and that didn't materialize as we anticipated, but we're still hopeful," Kleis said. "We're not out of the recession by any means and this is still what we look at every day: job creation and job retention."
Kleis says the city has applied for more stimulus money for transportation, particularly for the Northstar Commuter rail's planned expansion from Big Lake to St. Cloud. Kleis says the city also received an $800,000 grant from the stimulus to help improve the city's energy efficiency and that project is now in progress.
St. Cloud's Steve Gaetz says the city's construction projects are meeting the real intent of the stimulus package even though the number of jobs created may not sound like much. He anticipates St. Cloud's stimulus investments will continue to bring benefits down the road.