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Briefing  Paper  No.  1:    Dashboard  Economist  Team  

Robert  B.  Cohen,  PhD;  Lawrence  Chimerine,  PhD;  Maryann  Feldman,  PhD  

Measuring  Genuine  Impacts  and  Benefits  of  Federal  Investments  –  The  Dashboard  Analysis  

Is   there   a   way   to   precisely   and   quickly   examine   the   impacts   and   benefits   of   Federal   Investments  regardless   of   purpose   or   timeline?   To   answer   this   question,   the   National   Dashboard   Project   has  combined   a   number   of   new   information-­‐gathering   techniques,   detailed   reports   on   funded   projects,  

intelligent  data  mining,  a  massive  storehouse  of  historical  data  and  regional   input-­‐output  modeling,  to  provide   a   much   more   reliable   way   of   measuring   the   impact   of   government   programs   than   existing  methodologies.   This  methodology   provides   policy  makers,   fund   providers   and   recipients  with   a  more  

sophisticated   way   to   estimate   impacts   of   each   component   that   a   Federal   investment   or   initiative   is  producing,  as  well  as  to  assist  with  future  investment  from  unspent  ARRA  and  emerging  reauthorization  programs  at  Federal  departments  and  agencies.    

The  Dashboard  explores  impacts  on  local  economies  and  provides  a  comparative  baseline  from  historical  

datasets  to  enable  predictive  impact  analysis  of  potential  future  investments.  The  Dashboard  offers  an  innovative  way  to  compare  Federal  initiatives  across  industries  and  geographies.  It  provides  the  metrics  that   government   officials   at   the   national   and   local   level   can   use   to   examine   the   impact   of   common  

Federal   spending   and   more   traditional   anti-­‐cyclical,   federal   spending   and   tax   cuts   and   to   determine  what   adjustments   might   be   made   to   ensure   future   spending   provides   the   biggest   national   benefit  possible      This  capability  has  always  been  needed  but  in  current  economic  times  and  pressures,  current  

and  future  Federal  investment  planning  and  execution  will  require  much  more  informed  and  integrated  knowledge  such  as  the  Dashboard  can  provide.  

Some  may   ask   how   the  Dashboard   differs   from   any   comprehensive   set   of   tools   used   by   government  currently   to   do   investment   planning   and   allocation.   The  major   difference   is   that   government   records  

contain   Federal   knowledge   but   the   impact   and   consequence   knowledge   is   contained   in   dozens   of  difference   data   collections   inside   and   outside   government   in   disparate   forms.   The   Dashboard   brings  together  Federal  data  from  many  sources  with  information  from  commercial,  state,  local  and  consulting  

venues   to   create   a   comprehensive   picture   of   all   inputs   and   outputs   from   funding   decision   to   the  different  levels  of  transfer  and  consumption  down  to  individuals.  

The  following  figure  illustrates  a  timely  example  of  how  the  Dashboard  could  be  used  to  understand  the  impacts   of   ARRA   spending   in   different   cities   and   across   occupations.   The   figure   presents   very  

preliminary  findings  concerning  two  different  size  Midwestern  cities  labeled  City1  and  City2.    The  figure  indicates   that   the   local  economic  benefit   for  new   jobs   is  highest   for  healthcare  and  education   jobs   in  

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City1.1  The  figure  compares  the  “benefit  ratio”  -­‐-­‐  the  value  a  single  job  adds  to  the  local  economy  (sales  less  labor  and  material  inputs,  estimated  on  a  per  employee  basis)  divided  by  the  cost  of  creating  a  new  

job  -­‐-­‐  or  a  rough  impact  measure,  relative  to  the  cost  of  creating  new  jobs.  The  figure  also  shows  that  the  same  jobs  have  a  higher  “benefit  ratio”  and  cost  nearly  half  as  much  to  create  in  City1  as  compared  to  City2,  for  reasons  that  we  discuss  below.    

 

Though  any  job  created  is  important  to  the  vitality  of  the  nation’s  recovery,  the  strength  and  durability  of   these   jobs  will   ensure   that   the   actual   investment   benefits   not   only   help   the   economy   in   the   short  term,  but  also  improve  the  long-­‐term  economic  competitiveness  of  states  and  communities.  The  impact  

analysis  and  assessment  using  The  National  Dashboard  tools  and  data  has  already  given  us  insights  that  can  define  how  best  to  deploy  similar  or  new  funding  via  grants,  loans  or  contracts  in  the  future,    

High-­‐level   Analysis   of   two   diverse   economies:   why   drilling   into   the   data   is   critical   to  performance  

Looking   further  at  City1,   there   is  a   rather  steep  benefit  curve   for   the   four   types  of   jobs  we  examined.  

Healthcare  and  education/training  jobs  in  City1  have  a  much  greater  economic  benefit  ratio  (more  than  1.0)   and   cost   less   to   create   than   comparable   jobs   that   the   funding   created   in  City2.   The   current  high  emphasis   energy   and   transportation/infrastructure   jobs,   the   focus   of  much   current   debate,   have   the  

lowest  benefit   ratio  and  the  highest  cost.  For  City2,   the  benefit   line   is  much  flatter,   indicating  a  much  wider   range   in   the   cost   of   creating   new   jobs   and   a   narrower   range   of   benefits   from   the   jobs   the  Recovery   Act   created.   In   City2,   education/training   and   healthcare   jobs   continue   to   have   the   highest  

benefit   ratio  and  the   lowest  cost.  Energy  and  transportation/infrastructure   jobs  again  have  the   lowest  benefit  ratio  and  the  highest  cost.    Though  preliminary,  this  result  comes  from  real  data  gathered  in  the  last  few  months  and  analyzed  by  the  Dashboard.  

In   looking   at   similar   jobs   in   different   cities,   nursing   jobs   in   a   medium-­‐sized   city   might   provide  more  

economic   value   relative   to   their   pay.   In   contrast,   nurses   in   a   larger   city   might   contribute   the   same  

                                                                                                                         1    Local  economic  benefit  is  measured  as  the  value  added  locally  (sales  less  labor  and  material  inputs)  divided  by  the  cost  of  creating  new  jobs,  a  “benefit  ratio,”  

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economic  value,  but  have  a  lower  economic  impact  relative  to  their  cost  because  nurses  are  paid  more  in  larger  urban  centers.  Things  might  work  in  a  similar  way  for  jobs  in  education.  For  instance,  teachers  

in  smaller  cities  are  paid   less  than  their  urban  counterparts,  but  provide  students  with  similar   learning  and  skills.  Consequently,  the  contribution  of  teachers  in  medium  sized  cities  to  the  local  economy  may  be   larger   relative   to   their   cost   or   pay   than   the   economic   “benefit”   of   teachers   in   bigger   cities   who  

usually  get  paid  more.    

Initial  Conclusions  from  The  National  Dashboard  Proof  of  Concept  

For  the  sake  of  illustration,  one  could  draw  two  very  preliminary  conclusions  from  these  findings.  First,  healthcare   and   education/training   jobs   are   likely   to   contribute   larger   economic   benefits   to   the   local  economy  than  the  current  energy  and  transportation/infrastructure  jobs  the  current  emphasis  on  these  

topics   is   creating.   Job   creation   is  necessary  on  a   short-­‐term  AND  a   long-­‐term  basis   for   local   recovery.  Within  these  four  sectors,  the  types  of  jobs  created,  the  overall  economic  environment  in  which  the  jobs  are  created,  and  the  ability  to  sustain  growth,  are  vital  to  understand.    

 

Second,   jobs   created   in  medium-­‐sized   cities  are  more   likely   to  have  a  bigger  economic   impact  on   the  

local  economy  than  jobs  created  in  larger  urban  centers,  primarily  because  they  contribute  more  value  relative   to   their   pay.   And   yet,  within   larger   urban   centers,   there   are   pockets   of   employment   and   job  creation   that   must   be   assessed   rather   than   rolled-­‐up   or   aggregated.   The   more   that   analysis   and  

assessment   of   impact   can   be   drawn   to   the   locations   and   places  with   the   greatest   need   and   greatest  benefit,  the  more  targeted  certain  grants  and  contracts  in  the  future  will  create  improved  ratios.    

The   economic   benefit   estimated   here   considers   only   the   local   economy.   It   does   not   include   broader  economic  benefits   that   result   from  spillover  effects,   such  as   spending  on  materials  purchased  outside  

the   local  economy.   It   also  does  not   consider   secondary  benefits,   such  as   the  benefits  of   reducing  our  

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imports  of  oil   that  would  result   if   the  United  States  creates  more  alternative  sources  of  energy.  These  benefits   and  measurement   techniques   are   being   explored  within   The  National   Dashboard   local,   state  

and  regional  communities  where  critical  outcome  data  is  available.  

Our  assessment  for  fellow  economists  and  policy-­‐makers  of  The  National  Dashboard:  it  provides  analysis  of  metrics  and  economic  decisions  that  are  difficult  or  nearly   impossible  to  create  from  other  sources.  Federal   government   statistics   do   not   provide   adequate   detail   at   the   level   of   the   local   economy.   The  

Federal   government   and   private   sources   also   do   not   have   regional  models   that   can   easily   assess   the  impact   of   specific   programs,   such   as   the   components   of   unique   or   specialized   programs   that   emerge  from   several   sources,   and   not   from   just   one   grant   or   contract.   The   metrics   and   analytic   approach  

developed  within  The  National  Dashboard  process  reveals  where  special   investment   initiatives  such  as  ARRA   is   succeeding   and  where   it   might   be   improved   if   additional   funding   is   approved.     In   turn,   The  Dashboard   Project   creates   and   leverages   new   knowledge   of   one-­‐time   or   special   investments   so   that  

policy-­‐makers  can  enhance  their  planning  and  execution  of  traditional  federal,  state,  and  local  spending  patterns.    

 

About  the  National  Dashboard  

The  National  Dashboard  is  a  project  of  the  Center  for  State  and  Local  Government  Excellence,  and  a  consortium  of  organizations,   institutions,  and  individuals  focused  on  the  effectiveness  and  efficiency  

of   federal,   state,   and   local   spending   for   economic   recovery,   competitiveness   and   targeted   use   of  public  resources.  

For  more  information  on  The  National  Dashboard,  please  review  www.nationaldashboard.org