Wednesday, February 27, 2008
Washington Nationals Stadium
It won't be long now and the new stadium will open in Washington to serve as the home of the Washington Nationals. But there is trouble with the job creation benefits of the construction project. Specifically, to get union support for the project, the deal called for a minimum percentage of workers employed by the project to be residents of the District of Columbia. That minimum has not been met.
A funny thing happened on the way to the job creation benefits. The stadium analysts forgot to factor in the possibility that all those union workers would be employed at other job sites. In other words, in a world of near full employment, the new government project can only induce labor to be moved around from one job to the next; it can't create new workers. Of course, it is a predictable outcome from employing a model that assumes either unemployed resources are abundant or that the elasticity of supply of those resources is infinite when neither assumption is accurate.
On the political side of the matter, they didn't consider that most of the skilled laborers they would need for the construction project live in the Maryland and Virginia suburbs rather than in the District, so it would be hard to meet their quotas of DC residents in any case.
A funny thing happened on the way to the job creation benefits. The stadium analysts forgot to factor in the possibility that all those union workers would be employed at other job sites. In other words, in a world of near full employment, the new government project can only induce labor to be moved around from one job to the next; it can't create new workers. Of course, it is a predictable outcome from employing a model that assumes either unemployed resources are abundant or that the elasticity of supply of those resources is infinite when neither assumption is accurate.
On the political side of the matter, they didn't consider that most of the skilled laborers they would need for the construction project live in the Maryland and Virginia suburbs rather than in the District, so it would be hard to meet their quotas of DC residents in any case.
