Countercyclical Public Works Employment

The Public Works Acceleration Act of 1962 (P.L. 87-658) created the Accelerated Public Works (APW) program, the first effort in the post-World War II period to create publicly funded jobs in construction and related private sector industries as a way to combat rising unemployment. In addition to redevelopment areas designated under the Area Redevelopment Act, areas eligible for assistance were those the Secretary of Labor determined had experienced substantial unemployment (i.e., a jobless rate above 6%) for at least nine of the preceding 12 months. The program, coordinated by the Commerce Department, was conducted through existing federal agencies. It provided $852 million for such projects as water and sewer facilities, hospitals, and street construction.

The APW program and subsequent public works programs have been criticized for their delayed startup, which resulted in projects not being completed until well after a recession's end. Some observers have suggested that if there were a program already in place with prescribed triggers for its initiation, the issue of timeliness would be resolved. In response, others have said that it still would take time to allocate funds, award contracts, obtain materials, hire workers, and complete the projects themselves.

The Local Public Works Capital Development and Investment Act of 1976 (P.L. 94-369, Title I) and the Public Works Employment Act of 1977 (P.L. 95-28) appropriated $6 billion for the Local Public Works (LPW) program. The Economic Development Administration allocated funds to states on the basis of their unemployment levels and rates, and to substate areas, on the basis of a complicated formula.

There was criticism that LPW funds were substituted for local funds that would have been spent on similar projects in the absence of the federal program. The differing assumptions of analysts about the extent of this practice (fiscal substitution) resulted in markedly disparate estimates of the net number of jobs created by the program.3 In addition, the LPW program largely provided jobs for already employed construction workers. For the few unemployed persons who did get jobs, the experience and skills acquired probably were minimal because the average length of employment was short.

The Emergency Jobs Appropriations Act of 1983 (P.L. 98-8) was designed to deal with some of the criticisms leveled at earlier job creation efforts. By appropriating additional funds to existing programs with projects already underway, Congress expected that money would be spent and jobs would be created comparatively quickly. According to an evaluation by the then General Accounting Office (GAO), this was not the case. GAO also found that few jobs went to the unemployed despite the law requiring that funds be used as much as possible to create jobs for the jobless. P.L. 98-8 provided some $9 billion to 77 programs and activities administered by 18 federal departments and agencies. About 86% of the appropriations ($7.8 billion) went to 55 programs and activities that fund public works activities (e.g., construction, repair, and maintenance of buildings and facilities). The remainder went to 22 programs and activities that perform public service functions (e.g., the maternal and child health services block grant, the social services block grant, and community health centers ($620 million); income support ($400 million); and employment and training assistance ($230 million)).

The Supplemental Appropriations Act of 1993 (P.L. 103-50) was signed into law in July 1993, well after the 1990-1991 recession had ended. Like P.L. 98-8, P.L. 103-50 provided additional funds for public works and public service programs (e.g., $166.5 million for summer youth employment, $150 million for hiring police officers, $50 million for the Youth Fair Chance program, $45 million for Amtrak's operating losses and capital improvements, $35.5 million for rural water and sewer direct loans, and $35 million for rural water and waste disposal grants).

Endnotes

2
The section is drawn from U.S. Economic Development Administration (EDA), Alleviating Unemployment Through Accelerated Public Works, Washington, D.C.: U.S. Govt. Print. Off., June 1976; EDA, An Evaluation of the Direct Impacts of the Job Opportunities Program, Final Report, Washington , D.C.: U.S. Govt. Print. Off., February 1981; EDA, Local Public Works Program, Final Report, U.S. Govt. Print. Off., December 1980; U.S. General Accounting Office (GAO), Antirecessionary Job Creation--Lessons from the Emergency Jobs Act of 1983, T-HRD-92-13, February 6, 1992; U.S. Office of Management and Budget, Public Works as Countercyclical Assistance, Washington, D.C.: U.S. Govt. Print. Office, November 1979.
3
The net number of jobs attributable to any type of job creation measure will be smaller than the gross number to the extent some of the subsidized jobs would have been created in the absence of the program.