Federal Funding to the States: Saving and Creating Jobs

The White House’s Council of Economic Advisers recently released the 2nd Quarter 2010 report about jobs saved or created as a result of the American Recovery and Reinvestment Act of 2009. The report pays particular attention to tracking public investment spending and the resulting impact on job creation and protection across the country. The CEA puts the estimate of jobs created or saved through Recovery Act funding nationwide between 2.5 and 3.6 million.

In addressing the gradual ramp up of spending related to public investment spending, the CEA says:

“The public investment components of the Recovery Act were always expected to spend out more gradually, because they typically require planning and are often awarded through a rigorous competitive process. But as of the end of June, roughly two-thirds of the public investment funds included in the Act had been obligated, and more than $86 billion had been outlayed. Public investment outlays increased by more than 50 percent between the first and second quarters of this year, which explains why the Vice-President has named this summer the “Summer of Recovery.” As the other stimulus in the Recovery Act gradually winds down over the next few quarters, the public investments will continue at a rapid pace, providing continued support to the economy.”

Individual states have received varying proportions of Recovery Act funding, given a variety of factors including population and the mix of industries present in each state. Accordingly, the impact of Recovery Act funding varies among states.

The most recent report breaks down the economic impact by state, estimating the number of jobs saved or created in each state, of Recovery Act spending. The methodology of such estimates is detailed here.

For the Central Appalachian states, the economic impact varies substantially based on population, economic-mix, and other factors:

  • Kentucky – 41,000
  • Ohio – 117,000
  • Tennessee – 60,000
  • Virginia – 73,000
  • West Virginia – 16,000

Groups such as the Institute for Southern Studies, among others, have drawn attention to not only the state-by-state breakdown of the economic impact of Recovery Act spending, but also the state’s political leadership’s orientation towards the Recovery Act – pointing out that even states with the fiercest opposition by local leaders to the passage of the stimulus bill (Texas, South Carolina, Louisiana, Mississippi, Virginia) have reaped tremendous benefit from government jobs programs.

As Kentucky prepares to host the National Conference of State Legislatures’ 2010 Legislative Summit at the end of this month, the dialogue about government-led recovery efforts will surely continue in and around the Commonwealth. As the latest CEA jobs report shows, a national crisis like the one presented by the past two years’ economic tumult has required leadership and financial support by the national government. The allocation of federal money to the states has been critical to stemming job losses throughout the country, but especially in our region. It is our hope that leaders of the Central Appalachian states will advocate for strengthening the region’s job and economic landscape by capitalizing on opportunities presented by the Recovery Act. We also hope that help — in the form of federal financial support — keeps coming for the long road ahead.

Kristin Tracz

About Kristin Tracz

Kristin Tracz served MACED’s Research and Policy team from 2009-2012 working on clean energy policy, energy efficiency programs and the Appalachian Transition Initiative. She joined MACED after finishing her Master of Environmental Management degree at the Yale School of Forestry & Environmental Studies. She now lives and works in Washington, DC.