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Stimulus math: $30B in spending equals 950k tech jobs

'Shovel-ready' projects would likely get first dibs

January 7, 2009 12:00 PM ET

Computerworld - WASHINGTON -- For every $1 billion that the federal government spends on tech as part of a stimulus package, it will create or retain approximately 31,000 jobs, according to a think tank advising President-elect Barack Obama on technology policy.

The incoming Obama administration is working with Congress on a stimulus plan that reportedly will be around $775 billion. If $30 billion of that is spent on improving broadband networks, health care IT and smart power grids, it would create about 950,000 jobs, according to the Information Technology & Innovation Foundation (ITIF), whose president, Rob Atkinson has been working with the Obama transition team.

Atkinson, who released his group's findings today, said the analysis is based on funding "shovel-ready" projects that could begin to deliver benefits soon after a stimulus package is approved. The group expects a stimulus plan that combines tax credits and direct spending on infrastructure projects.

The stimulus' impact on jobs will arrive in a number of ways, according to the ITIF's analysis. There will be direct jobs, such as installing fiber-optic networks; indirect jobs, such as manufacturing equipment for the primary projects; and induced jobs created by employee spending at restaurants and stores.

Jobs could also be created by the network effects of stimulus spending. For instance, if more people have access to broadband networks, that would open up new opportunities for e-commerce vendors and could expand the number of people who earn money via eBay. Expanded broadband access could also boost PC spending as consumers buy new systems to take advantage of the faster speeds.

Atkinson sees the stimulus as a once-in-a-generation opportunity. In the 1930s, the U.S. could have begun work on a national highway system while spending heavily to put people to work during the Great Depression. But major highway spending didn't occur until the mid- and late 1950s. "Think about how the country would have been different if they had accelerated the construction of the highway system and done it then instead of later," he said.

The coming stimulus spending will not just create jobs but could also change the economy, he argued, citing Obama's plan to boost spending on health care IT. Moving to electronic health care records will increase the efficiency of the nation's health care, as well as "probably save lives," said John Irons, research and policy director of the Economic Policy Institute, which describes itself as a nonpartisan think tank.

Developing smart electric grids, a technology approach that includes the use of advanced meters, could help the U.S. become an exporter of smart-grid-related technology.

Not all of the jobs will be created in the U.S., however. The ITIF estimates that some of the increased spending could help overseas manufacturers as well as offshore IT service providers.

Read more about Government IT in Computerworld's Government IT Topic Center.

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