Hollywood's Catered Stimulus

Why $23 million creates just 21 jobs

Comments (0) By Tim Cavanaugh Wednesday, Nov 18 2009

...continued from page 2

The L.A County government is getting $356.4 million of the total $4.14 billion awarded to the L.A. region. The vast majority of that, some $285 million, is going to social services, with smaller amounts to capital projects, public health and safety, and a $15.4 million grant to make energy-efficiency loans to homeowners, to be paid back through property taxes.

Although Los Angeles County government does not have any central office to handle stimulus funds, Wiles says it is working on an interdepartmental Web site that will allow tracking of local stimulus funds in the manner of recovery.gov.

Illustration by Grant Gilliland

More About

It’s not clear if increasing public knowledge of where the money is really going will be a good thing back in Washington. The Council of Economic Advisers under Obama has been claiming since early 2009 that stimulus funds are creating more jobs than they really have, claims that have been easily knocked down, and not just in Hollywood. Last week a Boston Globe report spot-checked from among 12,374 jobs that were reportedly saved or created in Massachusetts. The newspaper found scores of jobs that did not exist. An Associated Press investigation earlier this month found that two-thirds of the 14,506 jobs credited to one federal office were actually pay raises wrongly counted as jobs saved.

So far, the Recovery Act’s clearest achievement is the help to federal, state and local agencies facing shortfalls. Money has gone to help local governments pay for unemployment checks, subsidized housing, politically favored development projects like the W Hotel in Hollywood, and welfare programs. Los Angeles County is spending its stimulus grant not on job creation but largely on social services.

The public is increasingly torn because the idea of providing emergency funds for cash-strapped agencies is not, even among California voters, viewed as a good reason for massive government intervention in the economy. But voters do support maintaining entitlements and government assistance during hard times.

A small pay-out to an architecture nonprofit in Hollywood, for instance, is an uncontroversial public investment, and some of these funds may even stimulate economic activity.

“Food stamps are incredibly stimulatory,” says L.A. County’s Wiles. “You get the money, you spend it right away. I think the green jobs, too, once we get that, will be stimulatory.”

But in L.A., that kind of spending does not create jobs — not at the level the White House is claiming.

In Hollywood, where $23 million won’t get you 21 jobs, stimulus disbursements have included such wild cards as $16,822 for the visual-effects school Gnomon Inc., and $237,238 for the Musicians Institute. Yet Musicians Institute general manager Tak Sakimoto is unaware of the school’s having received any stimulus funding at all, and speculates that the money may be part of a student-loan program.

In the words of the photographer Garcia, the money going to Hollywood may mean that the “personal finances” of the beneficiaries do not get squeezed too badly. But is it creating any growth?

Despite billions poured in by the Los Angeles Community Redevelopment Agency, and Hollywood’s new reputation for late-night clubbing, Hollywood is still a tattered business district filled with barricaded empty storefronts.

It might have been a good candidate for job-intensive stimulus funding, with its struggling Business Improvement Districts, enterprise zones, special hiring areas, and woeful streets and water infrastructure. That was not to be.