Wednesday, July 20, 2011

Is my restaurant doing better or worse because of infrastructure projects underway in the name of "Fiscal Stimulus"?---Well, let me tell you a story...

I own a restaurant on the outskirts of town. It is located off a highway beside an overpass that has easy on and off ramps. In good years, I had a staff of 20, but now I have 10 because of the recession. Assume the economy (and my business) has bottomed out and is not going to get worse.  The overpass and the ramps have been classified as shovel ready projects and are to receive stimulus funds because there are not in good repair. 

Construction begins. It is going to take 6 months to complete the work.  The site requires 50 construction workers. On any given day 25 of the workers come to my restaurant to eat lunch. This is 25 NEW customers that I did not have before the construction started.

Do I need to hire another waitperson or cook to serve these new customers? While I ponder that question, I notice that I have 30 fewer non-construction work related customers.  Some of these are my friends! I call a couple of them up and they tell me the construction makes it inconvenient for them to get to my place of business, so they are trying some of the other restaurants in town.

I am WORSE off then before! I now have to lay-off a worker. What is this worker to do? The construction business seems to be good, but they are a waitperson and do not have construction skills.

I wonder if my fellow restaurateurs in town have seen an uptick in business and are going to hire workers--maybe I can place the waitress I had to layoff. I call them up and I hear a common refrain---Yes! They all are seeing a few more customers (that may have eaten at my place if it were not for the construction) AND a few construction workers coming in after work to the various establishments. This is great for them but, they tell me, it is not enough for them to justify hiring additional staff (like the one I laid-off). They just work a little harder. Besides, they know when the overpass is finished in six months, my customers will return and the construction workers will go away.

They tell me the restaurant suppliers who deliver us our supplies are encountering the same conundrum. There is a short term increase in the demand for supplies, but why hire when they know they will have to lay-off in a few months as the infrastructure money runs out? Keep the profits and get more productivity out of existing workers. Those additional profits will come in handy when/if things go back to normal.

As a small business owner, this is what I learned: The additional outside money injected into my town left me at status quo (actually a little worse off). Increased the short-term profits for my fellow restaurant owners. Did not create any additional permanent new long term jobs in my community. YES, it did provide jobs additional construction jobs on a temporary basis, but it caused one of my employees to lose their job. 

Do I just not see "The Big Picture" Washington is painting for me??

This is a quasi-made up story, but I believe there is a lot of truth to it IF you take the position of a small business owner (allegedly the backbone of the economy).  Where I live (Dallas/Ft Worth), there is MAJOR road construction all around. I have avoided many businesses, large and small that I frequented before the traffic snarls. This has to hurt them in the short run, right??  Just look around when driving through the construction zone in your area. What do you notice??

I understand the long run benefits of upgrading infrastructure and I do see how some workers are better off, but the short term benefits appear to be marginal at best and perhaps negative, FROM MY PERSPECTIVE AS A SMALL BUSINESS OWNER.

My advice to politicians: Don't make spending on infrastructure the center-piece of promoting a recovery, especially the employment aspect of it--people will be disappointed with the results.  Focus on post-infrastructure policies you have in place (you have post infrastructure policies in place, don't you?) that will use this new and improved over-pass and  ramps to encourage/incentive OTHER businesses (preferably high value/high paying) to locate there permanently.  If you do this then I will hire more workers and perhaps expand my business because I know everyday I will have a sustained increase in customer traffic. That is what small businesses people want to see.

Where am I going wrong? Is Washington already doing this but not communicating it well or or am I not listening to them.--or a combination of the two...Respectful replies are encouraged...
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