- Special Projects
We are responding to Civil Beat’s fact check, “Rail Opponent: City Has Yet To Identify 10,000 Promised Jobs,” which relates to the following section from our commentary, “How the city misled the public,” which appeared in the August 21, 2011 Star-Advertiser:
“EXAGGERATED JOB CREATION: The city initially claimed that rail would create 17,000 new jobs during the construction phase, but later lowered its estimate to 10,166, without explanation. Even this number is pure fiction. The $483 million construction contract went to Kiewit, which said it needed 350 workers to build the first segment. The same workers would probably end up building the remaining segments, because the plan is to build the system in segments, not all at once. An Italian company, Ansaldo, expects to receive more than $1 billion for providing and maintaining the trains and rail system. It is promising “300 local jobs for local people. If you are counting, we have identified 650 new jobs. The city has yet to identify the other 9,516 that it has promised.”
Civil Beat rated the above statements “half-true,” agreeing with us that (1) the city created the impression that the promised jobs will all be in Hawaii, which is clearly not true; (2) an independent UH economist criticized the city for using multipliers that produced job forecasts that are “way too high” and (3) our statement that the city has identified only 650 of the promised jobs is literally correct.
What was not true, Civil Beat wrote, was that (1) our statement that the city “inexplicably” changed the number of promised jobs from 17,000 to 10,000 differed from the city’s claim to have always been clear that the 17,000 number is for the peak-construction year and the 10,000 number is an average, and we did not prove otherwise; (2) because the city used “a widely used” modeling program to estimate the number of new jobs, it was wrong for us to refer to the city’s numbers as ”pure fiction”; and (3) although it was literally true that the city has identified only 650 of the promised jobs, it was “not fair (for us) to give the impression that the city should be able to identify all the jobs the project will create (because) that’s not the way job models work.”
We think Civil Beat’s analysis amounts to quibbling over the placement of the knives, forks, and spoons at a table on which sits an elephant nearly the size of an aircraft carrier.
Our overarching points about the city’s jobs claims are unassailable: the city has led the public to expect that the proposed heavy rail system would increase the number of jobs in Hawaii by at least 10,000, and that number is extremely misleading.
This is a classic case of “garbage in, garbage out,” where modeling has been used for advocacy purposes rather than to enlighten the public. The city told the computer than it would be spending at least $5.3 billion. The computer responded with an educated guess that the average number of new jobs would be about 10,000; and that more than 4,000 of those jobs would be “direct” (i.e., construction) jobs. What the city neglected to tell the computer (i.e., to include in the modeling analysis) was that the city won’t be spending “new” money, but money taken out of Hawaii’s private sector in the form of higher taxes, and that the city will spend a great deal of it outside of Hawaii (e.g., paying more than a billion dollars to Ansaldo, an Italian company, and another $1.5 billion to creditors, most of which would almost certainly be located outside Hawaii).
Common sense alone tells us that taking billions out of the private sector affects the economy and job count in this state to some degree. Here’s how UH economist Summer LaCroix described it last year:
‘That excise tax (being collected to pay for rail) — a net of $460 million so far — is costing the state jobs. The extra excise tax is a drag on market activity. People are finding that their budget doesn’t go as far so they’re cutting back just a little bit. What that means is some businesses don’t get that spending. If you want to look at the jobs created by the project, you have to subtract out the jobs that have been lost from the effect of the excise tax.” (Emphasis added)
When the federal government recently announced that the number of jobs created during the past month was roughly equal to the number of jobs lost, the Obama administration properly focused on the fact that the net number of new jobs last month was zero. In contrast to that, the city simply pretends that the negative part of the jobs equation in Hawaii doesn’t exist.
Economists at the University of Hawaii Economic Research Organization (UHERO) did their own modeling and there is a considerable discrepancy between the job numbers produced by the city’s model and UHERO’s model: UHERO forecast just 2,000 direct jobs rather than 4,240 claimed by the city according to the Honolulu Advertiser – a more than 100% discrepancy.
Comparison with completed projects elsewhere is also instructive. According to a 2009 Advertiser article, the city’s estimate that rail would create an average 4,240 direct jobs annually is only about 1,000 jobs shy of the actual number of construction workers employed by Boston’s $14.6 billion ‘Big Dig,’ which was the nation’s most expensive highway project. How realistic is it to expect the City’s $5.3 billion rail system to create nearly 80% of the jobs actually created by a project nearly three times its cost?
Kiewit plans to hire 350 people to build the proposed elevated heavy rail system in Honolulu, and Ansaldo says it would hire 300 people in Hawaii. The resulting 650 is long way from the claimed 4,240 direct jobs. As pointed out by Civil Beat, “direct jobs are jobs created in the construction industry.”
Given the discrepancies mentioned above, we believe the city should explain why it continues to promise that rail would create more than 10,000 jobs without explaining how many of these jobs would be in Hawaii, and whether the 10,000 number takes into account the number of jobs lost by the drag on consumer spending and job creation of the .5% general excise tax. After all, the public has the right to know the net number of jobs that can realistically be expected and how many are likely to be in Hawaii, rather than in Italy, the mainland, or any other place.
City leaders are not dumb. They undoubtedly know that thousands of the new jobs would be outside Hawaii, and that the bulk of the lost jobs (because of higher taxes) would be here in Hawaii. Why has the city not explained any of this to the public?
We wonder why Civil Beat continues to quibble over the literal accuracy of metaphors like “pure fiction” and “aircraft carriers in the sky,” and we marvel that a self-proclaimed civic watchdog would be upset about the “fairness” of four individual citizens asking the city to be more honest with the public. Does Civil Beat not understand the implications of our allegations?
We don’t mind having Civil Beat fact check our statements. In fact, when Civil Beat took the “aircraft carriers in the sky” metaphor literally — and actually went to the trouble to compare the measurements of three classes of aircraft carriers to those of the planned rail stations — we were amused. But we could not even smile when Civil Beat insisted that it is neutral on the issue of heavy rail. We believe that statement should be “fact checked.”