Jobs! Jobs! Jobs! Huh? - Energy Analyst Looks at Spectra in Jersey City
By John Thieroff
Recent mailers from Spectra have been frothy with the prospect that the would-be pipeline project could almost by itself end local unemployment. 5,200+ jobs created in NJ! 2,300+ in Jersey City alone! Many of these jobs won't even be in construction(!) – due to something called the "multiplier effect." And on top of it all, an "Independent Rutgers University Study" verifies these claims.
Okay, first things first. Two thousand local jobs would be huge. How could anyone say no to such a great opportunity that could alleviate suffering for so many? Well, as with most things Spectra-related, you need to dig a little deeper. "Jobs" doesn't mean what you think it does. According to the team at Rutgers who prepared the "independent" study (more on that in a moment), a "job" is a term used to describe the work done by one person for one year. Doesn't that strike you as odd? Have you ever gone on a job interview and asked for ten jobs – because you thought you might work at the company for ten years?
Digging deeper still – there is no requirement that the "jobs" created by the project be filled by local residents. In essence, this "jobs" bonanza would just be yet another way that Spectra exploits Jersey City for the benefit of others.
As for the "independent study" performed by Rutgers*.... Spectra commissioned that study at a cost of $45,000. Spectra provided the Rutgers team information used in preparing the survey and Spectra had the ability to review the findings before publication. Interestingly, when reading through the findings in the study it becomes evident that the jobs claim is based on a vague concept called a "multiplier effect". (I don't know about you, but it really chafes me that our state university can be manipulated against the very people who at least partially fund it.)
I know what you're thinking – "multiplier effect" sounds like a page from the Madoff playbook! Actually, the multiplier effect is a staple of economic research. The basic idea is that a dollar invested will yield a much higher return in job creation and consumption in the general economy as the newly hired workers spend their money on local goods and services.
On the surface, this makes sense. Yet upon closer examination, some of the findings just seem strange: for instance, the pipeline project is forecast to create 435 "jobs" in the finance, insurance and real estate sector. Somehow, a pipeline being laid in Jersey City with the sole purpose of transporting natural gas to Manhattan is going to cause banks and insurance companies along the waterfront to hire scores of new employees? (I can understand the increased real estate workforce: if this thing gets built there will be more than a few people looking to sell and leave dodge.)
The problem with the multiplier model is that it is hardwired to reinvest spending into the local economy proportionate to its existing industry base. Jersey City has a lot of financial back-office jobs, ergo new spending will grow that sector. Remarkably, fewer than 1,500 of the 5,234 projected "jobs" will be in construction. Doesn't add up, does it?
At this point, you are likely to say: "Okay, fine - maybe the economists can't be precise in their attempts to estimate the effects of the project with regards to job creation but there is no doubt increased economic activity will result." And I'd have to agree: Lunch business will pick up. Hotels will probably see an uptick – probably not huge, but an uptick nonetheless. Parking lots will be fuller. Some workers who don't currently live here may choose to relocate. All of these things are unassailable truths.
Here is what else is true: all of this economic growth and job creation would also happen if the pipeline is laid in the river. Chances are, the economic benefits would be even greater due to the more challenging logistics and longer completion time an underwater route would require. There is the chance that Spectra could choose the Manhattan side of the river to base their operations if they had to lay the pipeline through the river instead of on land – but economics and geography would argue that they'd be doing so out of spite. So, in all likelihood we'd still be expected to enjoy a rosy future of full hotels, overflowing restaurants, increased tax bases and 435 new bankers that Spectra is promising AND not have to worry about trading in our health and safety to do so. Sounds like a winner, doesn't it?
