Updated June 8, 2013 at 12:05pm:
Metrolinx has issued a correction via Twitter (where this discussion started) clarifying that, yes, it is person-years of employment, not jobs, that they are creating, and acknowledging that the graphics and tweets using them were “shortened”.
Anne Marie Aikins @femwriter
… Report explains “person yrs of construction & LT employment” pg 30. Graphs/tweets shortened. Good reminder. Thx
[Anne Marie Aikins is a Media Relations Manager at Metrolinx]
That’s putting it mildly. Someone did a calculation to figure out how many ACCs would be needed to hold all those people, and so clearly did not understand how the numbers should be used. Someone put that chart in the Metrolinx report. The report survived Board scrutiny without anyone, including their members from the banking sector, spotting the problem.
Ooops.
The original post from June 7 follows below.
Metrolinx recently published a graphic purporting to show the employment effect of the Next Wave’s spending over twenty years.
These numbers are a complete fabrication and show how an organization more concerned with puffery than with accuracy can screw up basic arithmetic.
The statement here is that “enough newly employed people” would fill the ACC 48 times. The official capacity of the ACC is 19,800, and so we’re talking about 950,400 newly employed people. That’s roughly 1/3 of the entire population of Toronto.
The problem here is the confusion between employees and employee-years. Metrolinx plans to raise $2b annually for twenty years. Let’s assume that it will all be spent on job creation, not on getting more work from an existing pool of labour, nor on purchasing offshore technology such as rolling stock, control systems and managerial expertise. We’re talking about design, engineering and construction, not the cheapest of professions and trades, and a reasonable average fully-burdened (including benefits) cost per job would be at least $80k. (Governments have paid vastly more per new job on things like auto plants.)
The math is straightforward: $2b/year divided by $80k gives 25,000. If the entire amount goes to net new hires, then that’s 25k. Do this every year for 20 years, and you produce 500k person-years of employment, but not 500k new hires.
There will be some multiplier effects in that an employed person has money to spend and that will find its way into the local economy. How many new jobs will result is another matter.
We can look at this from the reverse angle: if there is $40b on the table, and it has to be shared among 800k new hires, then each of them will receive $50k.
In this, I have assumed that even the 25% of revenue dedicated to municipal projects creates jobs on the same basis as for the 75% allocated to the Next Wave.
Metrolinx has similar math challenges on commuting times when they routinely confuse avoided future congestion with actual savings. Moreover, the claimed “saving” only occurs if the entire Big Move is built, something that appears vanishingly likely. Because Metrolinx only ever discusses their fully-built scheme, we have no idea of how much “saving” will accrue for intermediate stages of the network, nor of the variation in benefits across the region. This most basic of business analyses is totally missing, at least in any published Metrolinx papers.
Metrolinx really needs some remedial work on economic analysis and basic arithmetic. Think about it: does it really take 1/3 of Toronto’s population to build a transit network? I have to repeat: the Metrolinx claim is not for job-years, but for newly employed people, nearly one million of them. That’s a basic reasonableness check anyone should be able to spot. How did such a claim even get out the door?
Howling errors like these job creation numbers undermine credibility not just of an incompetent agency but of the government who looks foolish for making claims they cannot possibly deliver.
Steve Munro 