Hollywood's Catered Stimulus 

Why $23 million creates just 21 jobs

Wednesday, Nov 18 2009

“I don’t discuss my personal finances,” Tony Garcia says, sitting in his spacious photography studio on Melrose Avenue. In these hard times, with boarded-up storefronts lining the length of Melrose, Tony Garcia Photography seems to be a rare patch of prosperity. At the moment, the main studio is set up for work on a Sprite advertisement. The kitchenette is littered with half-eaten cake and bottles of booze.

Yet what Garcia refers to as “personal finances” are federal-government funds designed to combat what is routinely called the worst economic catastrophe since the Great Depression.

Tony Garcia Photography Inc. received a small loan courtesy of stimulus funding from the American Recovery and Reinvestment Act of 2009 (ARRA). The company is one of 881 entities in the County of Los Angeles that have received a total $4.14 billion in loans, hiring funds and outright grants from the American Recovery and Reinvestment Act.

  • Illustration by Grant Gilliland

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Los Angeles County’s take of stimulus funds is by far the largest in California, which has received $18.5 billion in ARRA funds, intended to create 110,219.36 jobs statewide — a pricey rate of $168,264.08 per job.

But Hollywood is a different story entirely. Hollywood — the geographic Hollywood as found on Thomas Guide map page 593 — has received $23,338,327 in grants, loans and contracting. This money has created just 20.57 jobs. That’s $1,134,580.80 per job. And as interviews with recipients reveal, even that tiny jobs claim is clearly false, with many of the claims of newly created positions either impossible to verify or lower than reported.

Not even 20 full-time jobs have been created in Hollywood proper.

In fact, Hollywood’s portion of the stimulus package reveals an important factor of the Recovery Act: The money is not going to areas that would more directly stimulate the economy but instead to provide ongoing life support to deficit-ridden federal, state and local agencies.

All of these figures, which come from recovery.gov — a site set up to provide transparency in the spending of $787 billion approved when the stimulus package passed in February — are subject to substantial revision. Local investigations around the United States by Associated Press and other media continue to turn up steep discrepancies between figures being announced by the White House Office of Recovery Implementation, which runs recovery.gov, and verifiable reports of growth and jobs delivered.

Broad claims about saved or created jobs by Council of Economic Advisers chairwoman Christina D. Romer and others are increasingly subject to substantial skepticism, with the respected Rasmussen Reports poll showing that only one-third of likely voters now believe the stimulus has helped the economy.

Los Angeles differs from the national trend in two respects: Official claims of jobs created are more modest in L.A. County, and a wide range of recipients here reflects L.A.’s unique economy. Cal Tech’s Jet Propulsion Laboratory is getting $53 million to “establish preliminary designs for key elements of the Soil Moisture Active/Passive (SMAP) Project,” as well as a $220,000 grant to analyze software development.

Some $52.5 million is going for concrete barrier construction and roadbed widening in the city of Bell Gardens. A $50,000 loan has been made to Wild Boar Media, a company that “develops, produces, co-produces, adapts, writes and dreams up new animation, stories, comics and toys.”

The Metropolitan Transportation Authority is getting $850 million for projects ranging from Gold Line East extension to HOV lanes on the 405. Hollywood’s Elegance International makeup school is getting an $80,000 grant. Garcia’s photography shop got a $45,000 loan.

Stimulus spending in Los Angeles also shows how the federal government has rewritten its original claims about the need for the legislation. In February, it was sold as a way to create jobs by making smart, targeted investments in green and, especially, “shovel-ready” projects.

President Obama raised the possibility of high unemployment and continuing mortgage foreclosures if the stimulus package failed, predicting that without it, millions more Americans would lose their jobs. Since then, the economy has shed another 2 million jobs, and unemployment is now at 10.2 percent, higher than the 9.7 percent that the White House economic team predicted if the stimulus package failed.

L.A. has been an epicenter of the problem, with California unemployment at 12.2 percent and, in the city of Los Angeles, now at a staggering 12.7 percent. But as more and more voters turned sour in polls about the stimulus effort, Washington responded by altering its claims about what the money is really for.

In May, the Council of Economic Advisers in Washington introduced the concept of a program that would “save or create” jobs, predicting that 3.5 million jobs would be saved or created by the end of the stimulus. But with more than half of the $787 billion sum spent, the council reports that the stimulus is responsible for 640,239 jobs.

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