Business Update with Mark Lacter

Mass transit and job creation in LA

KPCC's business analyst Mark Lacter says construction of mass transit creates local jobs in LA, but the numbers aren't very impressive.

Steve Julian: Mark, with all the talk of a bullet train in California and mass transit projects in LA, is it safe to assume that transit projects mean lots of jobs?

Mark Lacter: Well, they do mean jobs - Congress is giving the MTA a funding mechanism to work on 12 local mass transit projects, and that includes the big Westside subway extension. This was part of a huge transportation bill that President Obama signed into law on the same day that the California Senate approved in initial funding for construction of that high-speed rail line. So you now have these massive public works projects that are about to get started - Mayor Villaraigosa called the transportation measure a "game changer" for job creation, but then you start drilling down on the actual number of jobs involved and it becomes a little less impressive.

Julian: How so?

Lacter: It's really the difference between political rhetoric and economic reality. The subway extension, just as an example, is expected to generate around 40,000 jobs, which is a nice round number and sounds impressive, but it also covers the life of the project, which is at least 10 years - and probably a lot more judging by the way these things typically go. And as with any construction work, these are not full-time permanent positions and they might not become available for many years down the line. Matter of fact, calculating the number of jobs created for any public works project is subject to lots of different interpretations.

Julian: Is there a good example of how that plays out?

Lacter: I’m thinking of the modernization program at LAX. That was supposed to create 40,000 jobs, according to a study. But the number includes lots of assumptions about jobs being created indirectly. So, for example, my sandwich shop near the airport is doing so well that I have to hire two additional workers. But stuff like that is hard to verify. All we know for sure is that on a daily basis, only 1,000 people are actually working on construction of the international terminal, which is a long way from 40,000.

Julian: That’s better than nothing, right?

Lacter: Absolutely. But L.A. County has a total workforce of 4.3 million. So a thousand or even a few positions is not exactly what you would call a "game changer." All of which is a big deal because the MTA projects, especially the subway, are being promoted just as much for their creation of jobs as for any kind of relief from traffic congestion. So we should be careful about those job estimates.

Julian: What about the timeline for these projects?

Lacter: That's also a question mark. The mayor had been pushing for legislation that would allow the MTA to borrow from the federal government - and that would shorten construction time from 30 years to just 10 years. But projects of this size are notoriously late and notoriously over-budget - and this is a monster project that can run into all sorts of unexpected complications (I mean, they're digging a nine-mile stretch of L.A., much of it along Wilshire Boulevard).

Julian: Remember the good ol' days, Mark, the 1950s?

Lacter: Not personally, Steve, but proponents of these projects point to those years when many of the freeways and the Interstate Highway System were built fairly cheaply. But there are reasons for that - land was a lot more available (and inexpensive) than it is today, and we hadn't entered the era when everybody goes to court, whether it's because of environmental issues or a homeowners group not wanting construction in their neighborhood. Already there are legal squabbles between the MTA and the Beverly Hill Schol District over the subway running under Beverly Hills High.

Julian: High speed rail, too.

Lacter: Yeah, the farm bureaus in Merced and Madera counties in the Central Valley have filed suit because they say that the rail line would disrupt 1,500 acres of farmland (one of the arguments is that the wind from passing trains would disrupt bee pollination). And this is the problem with major projects - they're just extremely difficult to pull off in a timely and cost-effective basis. Yet politicians love them because it’s something they can point to – for better or worse.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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