I can already tell what the theme of 2022 is going to be in our local news: “Project X is coming in over budget”.
As every level of government is flush with cash from Washington–and many consumers that didn’t need pandemic relief still got pandemic “relief”–we are going to find that the money we thought was going to improve our communities isn’t going to go nearly as far as we thought. In just the last couple of weeks we have had stories about a four-seasons park pavilion project in Oshkosh coming in nearly 50% higher in cost than what was estimated by city officials. Demolition of the Whiting Paper Mill in Menasha is well above the expected budget. And now the new middle school in Oshkosh is projected to come in four-point-six million dollars above what was earmarked in the referendum that approved its construction.
We aren’t “building back better”. We are “building back more expensively”.
Even someone still taking Economics 101 in high school could have told you this was going to happen. When demand rises–but the supply of something remains the same–the price of that good or service can only go up. And that is under “standard” market conditions. What we have going on right now is an “extraordinary” circumstance that makes large-scale construction ever more expensive. Supply chain issues are backing up key components like steel and the construction companies aren’t having any better success in hiring skilled workers than any other industry in this country. So what we have is the perfect storm of government-funding-fed demand with less raw materials and labor to get the jobs done–and the result is fewer project will actually get done, and those that do will use a lot more money.
The logic of an “infrastructure stimulus” for the economy is based on Great Depression-era logic. When Franklin Roosevelt created the alphabet soup of federal agencies to undertake infrastructure projects like building roads and national parks facilities and hydro-electric dams, he had millions of men (and yes, I use that term intentionally) sitting around doing nothing. According to the unemployment numbers of today, there isn’t that vast reserve of untapped labor to jump into new projects this time around. Not to mention, most of the raw materials needed for that construction was produced right here in the USA.
And “infrastructure work” of that era was very different from the way we build things today. Back then, roads were constructed by large work crews using hand tools and rudimentary vehicles. Nails were driven by hand for the construction of buildings and lumber was cut on-site. And the skills required to build back then could easily be taught to almost everyone. Take a look at road construction crews now. Huge graders use GPS technology to form the road bed in the perfect spot at the perfect grade. Giant machines lay an entire lane’s worth of concrete in just a few minutes. And all of those machines are manned by just a handful of people. I guess we could put the ladies hoping to become “Instagram models” instead of holding real jobs on those crews to take pictures of themselves in front of the freshly-poured highway and hashtag it: “#infrastructurerocks!”
The regulatory atmosphere is also very different. Major highway projects are held up for years while agencies review the impact on threatened sub-species of butterflies and frogs. Renovation of old buildings for low-income housing becomes even more expensive when asbestos or lead paint is found on-site and special removal techniques need to be used. Brownfields with contaminated soil must first be purchased by government entities before they can be remediated because the cost of potential litigation in the future is astronomical. And often times after all the regulatory hurdles are cleared, some citizens group or angry neighbor files a lawsuit that ties things up even longer.
In 2020, voters in Oshkosh were told that we would get a new northside middle school, a new northside elementary school, and security upgrades at all of our campuses for 107-million dollars. Tomorrow night, the school board will vote to scrap the security upgrades that were so “vital” two years ago just to cover the rising cost of the new middle school. And something tells me that the $35-million earmarked for the new elementary school is going to be woefully short of what it will actually cost in a couple of years.
So that leaves us two options: 1–Get your teenagers off the computer and the video game console and teach them how to pour concrete, work a nail gun, and wire an outlet; or 2–Work on an explanation for why we got so little for the money that they will have to pay back.
