Tens of millions of dollars in federal stimulus funds have gone to projects in Minnesota counties with relatively low unemployment rates, while counties with higher rates saw less of the money that was supposed to save and create jobs.
In Lincoln County, for example, the jobless rate stood at 4.5 percent in October, and it never rose as high as the statewide average in any single month this year. Yet, some $29 million in stimulus funds have been funneled through the county, according to ProPublica’s analysis of recovery spending. That adds up to nearly $5,000 for each resident in the largely rural county on Minnesota’s southwestern border.
In Mille Lacs County north of the Twin Cities, on the other hand, 10.8 percent of the workers still were looking for work in October. In March, the county’s unemployment rate stood at 15.6 percent, far higher than the state’s peak rate. Yet the county has seen less stimulus funding — about $20 million, or $760 per resident — than Lincoln County.
Creating and saving jobs was the No. 1 stated goal for the $787 billion American Recovery and Reinvestment Act that Congress passed in February.
But as the money flowed through state governments and 28 federal agencies, that priority often took a back seat to other considerations.
Unemployment rarely a factor
Unemployment rates were not even a factor in distributing much of the funding that was funneled through Minnesota state agencies, said Michelle Weber, the state’s Recovery Act Coordinator. In many cases, state officials couldn’t peg the money to job losses because federal rules dictated other priorities.
For example, Minnesota got hefty chunks of stimulus funding through federal education and weatherization programs. And the rules for distributing funds under those programs are based on poverty and other factors, not unemployment rates.
“Many of the dollars in the stimulus package were dedicated to existing federal programs,” Weber said. “We had no choice but to take into consideration the elements that are built into those programs.”
States also were under pressure to come up with “shovel-ready projects” that could serve quickly as conduits for pumping money into the ailing economy, regardless of the region-by-region jobs picture.
That is not to say Minnesota’s jobless workers missed out on the funding altogether. Even in counties that saw relatively low shares of stimulus money, the unemployed benefited from job training, extensions of unemployment benefits and other initiatives. And a few programs — such as community services grants for anti-poverty work — did consider regional economic climates in allocating the funding.
In general, though, steering the money toward regions with high unemployment rates “was not a requirement for all of the programs,” Weber said.
Targeting stimulus dollars toward geographic areas where they are most needed can be tricky work, said Timothy Taylor, managing editor of the Journal of Economic Perspectives, which is based at Macalester College in St. Paul.
“Just to be clear, I thought the Recovery Act stimulus was, broadly speaking, a good idea, although I think parts of it were not structured well,” Taylor said in an email interview.
“This is a standard problem for any big macro stimulus package,” he said. “If you take a long time to target specific geographic areas and groups, then it takes government months or years to figure out who is going to get what. If you get the money out there fast, then some of it isn’t going to be well-targeted.”
What’s true at the county level in Minnesota also is true nationwide, according to an analysis by Veronique de Rugy of George Mason University. She looked at the government’s reports of stimulus-created jobs.
Many higher-unemployment states saw similar numbers of jobs created as lower-unemployment states — or, even worse, saw relatively fewer jobs created, she said in an article published on The Gov Monitor website. In Michigan, where unemployment was higher than 15 percent, for example, the government claimed to have created or saved fewer jobs through September than in California or Washington — states with relatively lower unemployment.
One obvious reason is that it takes far more effort to create a job in hard-hit Michigan these days.
Another reason, de Rugy said, is that “much of the money has been allocated randomly among states without regard for the level of unemployment in those states.”
Tracking the stimulus-unemployment trends together is not at all simple, even though another Recovery Act goal is “to fully and transparently account for the distribution of the stimulus funds.”
The fed’s Recovery.gov website invites you to “track the money.” Minnesota does something similar on its own site. ProPublica, one of several private entities doing their own tracking, says it found thousands of records the government didn’t include in its reports.
The level of detail available on the full range of tracking sites is truly dizzying.
Yet gaps and loose ends abound — especially if you try to link the money to labor markets. Unemployment rates are calculated at the county level, so that was an obvious unit to consider for purposes of evaluating the program’s effectiveness.
“Unfortunately we don’t have a county-by-county sort,” said Cheryl Arvidson, the assistant communications director for the federal Recovery Accountability and Transparency Board in Washington, D.C.
Surely, I thought, state officials could give me the complete picture for Minnesota. Not so.
“We only have information on the programs that were administered by state agencies,” said Weber, the Recovery Act coordinator in St. Paul.
But that excludes hundreds of millions of dollars funneled through Minnesota by federal agencies that doled out a good share of the money at the local level.
“All of the states are struggling with this because of the public’s desire to have the full picture,” Weber said. “Because the federal government awards the grants locally, too, there is no mechanism for us to obtain that information in a consistent manner.”
One county’s case
Even when you scratch through all of the information from all of the entities involved, there is no true clarity.
Take the Lincoln County case. The Minnesota site says the county was allocated $4.2 million in recovery money. ProPublica says it got $29 million, counting all of the dollars from all of the government agencies. Again, the feds don’t slice the data by county.
ProPublica must be closer to the true total because the U.S. Agriculture Department announced in April it was awarding $16.5 million in stimulus money for one project alone — the Lincoln Pipestone Rural Water System, a utility based in Lake Benton.
But Dennis Healy, the water utility’s CEO, told me the project actually got $17 million in a stimulus-funded grant-loan package.
You try to reconcile these numbers. I cannot!
Worthy? Yes. But jobs? Uncertain.
To question whether the money flowing through Lincoln County was needed to create jobs is not to say this water project wasn’t needed.
A few rural residents in southwestern Minnesota lack working wells, and they must haul water from town, Healy said. Many others rely on wells that are contaminated by nitrates and other toxins. The stimulus money combined with other funding is expected to deliver piped water to as many as 800 rural homes.
Doing so isn’t cheap in a sparsely populated region. “We average almost a mile of pipe per customer,” Healy said.
So the need is clear. But does the project also create jobs where they are needed? That’s not at all clear.
Healy is waiting for guidance from the feds on how to calculate and report the jobs the project will create. The utility will add two field men for sure. And he estimates that more than 100 people will work on the construction.
The bulk of the initial work will be done by specialized companies from Illinois and South Dakota that bring their own crews to the site, Healy said. Maybe those workers come from counties suffering high unemployment. Who knows?
Meanwhile, Healy said, local workers are likely to get a share of the paychecks before the project is finished.
“I certainly hope that we get some local contractors more involved, and I expect that we will,” he said.
Lincoln County surely would appreciate the jobs. Last March, its unemployment rate climbed to 8.2 percent before settling below 5 percent in August.
Still, Southwestern Minnesota has not suffered nearly the job losses that hit the state’s east central region.
Anoka County saw less total stimulus funding than Lincoln County, even though its population is far larger and its unemployment rate was stuck at 7.8 percent in October. ProPublica calculates that Anoka County got $50 in stimulus funds per resident — compared with $4,997 for Lincoln County.
Kanabec County, with an unemployment rate of 10.4 percent, saw far less total funding, too.
Eventually, the full account of how well stimulus dollars matched employment needs may come in the government’s compilation of jobs created with each project.
Don’t count on it, though. Getting an accurate tally on this side of the equation also will be a challenge, said Taylor at the Journal of Economic Perspectives.
“It’s rarely clear with such projects whether the jobs ‘created’ are really new, or might have happened anyway, or whether they to some extent took the place of other projects or spending that might have happened,” Taylor said.
“Again, I think the overall balance is probably positive, but the task of identifying particular jobs saved in a direct way is hard,” he said.
Sharon Schmickle writes about national and foreign affairs and science. She can be reached at sschmickle [at] minnpost [dot] com.