Thursday, October 13, 2011

Vikings' "Public Aid for Jobs" Pitch a Loser

Much like most of what emotes from the mouths of the Minnesota Vikings' inner circle of stadium building drum beaters these days, the Vikings' contention that building a stadium on the public dime is critical to local job building is an outright loser of a platform. For, while stadium construction certainly would create jobs, it would do so with an opportunity cost of not creating other jobs that likely would be more enduring and local.

By the Vikings' estimate, construction of a new stadium would mean approximately 1,400 jobs over four years. That, the Vikings' argue, would be a boon for the local economy.

The Vikings' number assumes, however, that all jobs would be for the entire course of the project, that the project would require four years to conclude, and that the jobs would go to local workers. The team's conclusion regarding the result for the local economy is more dubious than these assumptions, as a boost of 1,400 jobs would be a drop in the proverbial bucket even in the State's employment picture.

The goal of any publicly funded job program is to create jobs that are sufficiently sustainable to make a difference both to the local economy and to the overall job picture moving forward. Construction of a new stadium does little in the latter regard and arguably nothing in the former, particularly when taking into consideration the alternative job programs that the State could employ to foster job growth--assuming that's on the mind of those making policy these days.

The Vikings are requesting $300 million (and more) from the State and another $360 million (and more) from Ramsey County to construct a stadium and amenities in Arden Hills. Never mind that the stadium construction itself should cost no more than $360 million, with retractable roof.

With $300 million dollars, the State could employ 10,000 people at $30,000 a year to complete any number of public works projects that currently are not being completed. Both the $300 million and 10,000 figure rely on assumptions, of course. One is that all workers are paid $30,000/year, the other is that the State's pool of money is $300 million.

Neither assumption, of course, is correct. Many individuals would accept less than $30,000 a year for the opportunity to work at a meaningful job that would permit them to fill both a void on their resumes and a depleted bank account. More important, however, is the fact that that $300 million that the State is suggesting that it will contribute to the pot is more like $1.1 billion. That's because to pay the $300 million, the State will need to bond or engage in some other mortgaging type of arrangement. That means paying interest on a loan. And that means that the State ultimately will pay somewhere in the neighborhood of $1.1 billion--not $300 million--to construct a new stadium.

With $1.1 billion dollars, the State could hire those same 10,000 workers at $30,000 per year for nearly four years. That's more than seven times the number of jobs that the Vikings contend the stadium will create, but full time jobs for the full four years of the same window. And none of this takes into account the additional $360 million (or more) that Ramsey County must bond or the cost overrides that the Vikings want the State to pay. Putting Ramsey County's money into play means another 10,000 jobs at $30,000 per year for closer to five or six years. That's 20,000 jobs for four to six years, or more than 14 times the number of jobs that the Vikings contend the stadium construction job will create in the State.

None of these figures factor in that each worker will be paying local tax revenue rather than receiving unemployment benefits, that each worker will be establishing working credentials making themselves viable if and when the market does return, or that the significant addition of workers to the ranks of those paying taxes will actually help fuel a local recovery. And, of course, none of this factors the benefit to a far larger population than would be afforded by a commercial stadium that is a stand-alone entity providing value to a limited pool of consumers eight days of the year.

Are there job benefits, many probably even local, to constructing anything? Of course. But those benefits must be weighed against the opportunity cost of not having public money dedicated to said construction to put towards other projects. And if job creation is part of the Vikings' sales pitch, it is a clear loser in contrast with what can be done with the public money that the Vikings are soliciting to build their giant revenue stream.

Up Next: Will Frazier's Intransigence Cost Vikings' an Opportunity to Gain on Weak Field?

1 comment:

grepper said...

What public works jobs are you going to have 20000 people do that don't require materials, tools, construction equipment, office space, etc to do?
I'd guess the main difference between the number of jobs you list and the number of jobs they list is that sort of overhead. (Plus the overhead for any job, like insurance and payroll taxes.)

I also think you are wrong that construction workers would be happy to work for less than $30k/year. Becoming an electrician takes years, and working in the construction industry one expects to have some downtime between projects when they aren't being paid. I'm sure that the cost of construction labor is historically low right now, but it isn't like a skilled carpenter or electrician is going to be happy to work for minimum wage.