Obama Economic Stimulus Package Lacks Stimulus for the Average Joe

April 9th, 2010 admin Posted in obama healthcare stimulus Comments Off

The fastest method of economic recovery lies in the creation of commercial construction jobs. The fact being, that when you build a structure it creates an immediate demand on both the skilled labor and manufacturing sectors to produce.


Obviously, residential construction is not what is being advocated due to the high inventory of unsold homes already on the market, but rather the thousands of private commercial capital improvement projects which are on hold resulting from the lack of credit needed to finance their projects.


Even after receiving the first $700 billion from the Bush administration, banks are not willing to lend money to institutions who can demonstrate that the proposed improvements will create cash flow in repaying the debt.


There are aspects to the Obama stimulus package that will create jobs in the “long term”, however the package lacks any near term benefits. When you look at some of the larger elements of the package they break out as follows:


Energy: $60 billion; Tax cuts: $275 billion; Education: $140 billion; Infrastructure: $90 billion; Financial Aid: $102 billion; Healthcare: $110 billion


With the exception of infrastructure, tax cuts, and about half of what is allocated for energy, the rest is strictly financial aid and cannot be considered stimulus. Tax cuts, on the other hand, will spur some level of spending, but in this economic climate will most likely go to basic necessities as opposed to the purchase of non-necessities.


Construction activity creates manufacturing demand and when combined together, construction and manufacturing represent the largest pool of workers in the country.


During post WWII and early 50’s an infrastructure boom occurred with the Interstate Highway System project, which rolled back unemployment lines to the lowest levels ever.


The intent of the Obama infrastructure stimulus is the same, however falls short when you consider the years of planning required before breaking ground as well as the level of technological advances that have occurred since post WWII in reducing labor man hours for road work projects. Over the last 50 years, construction technology and equipment in terms of road and highway construction has improved to the point where they are now considered “Material heavy” and “Labor light”.


Additionally, seeing as how most of our infrastructure already exists, these projects would be relegated to improvements rather than full scale construction projects – the lackluster notion being, “building a house is more labor intensive than painting a house.”


Although maintaining roadway infrastructure is important, the economic benefit of aiding private commercial projects would be realized immediately.


Commercial building projects are labor intensive involving the entire spectrum of work trades ranging from carpentry to electrical to mechanical disciplines. In addition, the components required for the structure are manufactured and engineered which compliments the broader manufacturing industry as a whole.


The opportunities exist in the Healthcare, Institutional, and Research sectors and come in the form of building additions and large interior renovations for existing facilities.


The demand for these projects is created by the need to keep up with the technological innovations of capital equipment. Additionally advancements have been made in building science; most notably in the areas of operating efficiency and environmentally friendly construction solutions.


If banks will not lend money for commercial building projects the unemployment lines will continue to swell.


Commercial construction is and has always been the catalyst to economic prosperity and will undoubtedly create an instant demand in our manufacturing sectors. Government stimulus in the form of financing will put people back to work almost immediately as most of these projects are already designed and considered to be “shovel ready”. 


Even though Obama may not care for Joe the Plumber from Ohio for his tough questions, he has the ability to win the respect of Joe the Plumber by putting him back to work and getting our economy back on track.

Eric Kaad

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