By: Melanie Berkowitz, Esq.
The $787 billion American Recovery and Reinvestment Act (the “Recovery Act”) aims to attack the country’s current economic downturn on a number of different fronts simultaneously. Signed into law on February 17th, the Act looks to address some of the short-term needs of both individuals and businesses by extending the period of time laid-off workers can collect unemployment compensation. In the long-term, the provision offers tax credits, promotes investment in industries hard-hit by the current crisis and seeks to create new jobs in those industries and elsewhere.
No one expects the stimulus bill to turn around the economy overnight, but there are things that businesses can – and should – be doing today to best position themselves to benefit in the coming months. Whether it’s meeting with an accountant to discuss your company’s eligibility for tax credits, creating a strategic business plan to take advantage of stimulus dollars or updating your marketing efforts and staffing plans to reflect new opportunities, the time to start planning is now.
The suggestions below can help you get started. Additionally, Monster is working to develop stimulus resources that will help keep you informed about related projects and opportunities.
The Big Picture: What’s in the Stimulus Bill?
The news is full of summaries of the Recovery Act and what it hopes to accomplish. In short, the goals of the Recovery Act are to create or save 3.5 million jobs, revive the renewable energy industry, invest in infrastructure, healthcare, education and technology, and provide tax credits to millions of Americans and businesses.
As for how the $787 billion will be divided up to achieve these goals, here are the highlights, as explained on Recovery.gov -- the government web site President Obama established to keep Americans informed about where and how stimulus money is being spent. Some employers may find business opportunities in a number of these different sectors.
$ 288 billion for tax cuts, both individual and business-related
This includes the so-called “making work pay” $400 tax credit that will go to 95% of working Americans, a child tax credit, and a number of business tax credits that encourage businesses to upgrade their technology and infrastructure.
$ 144 billion for state and local fiscal relief
According to Recovery.gov website, this money will be used to prevent “state and local cuts to health and education programs and state and local tax increases.” There is some overlap of this allocation with monies designated for educational and healthcare programs.
$ 111 billion for infrastructure and science
This category includes improvements to state and local highway systems, bridges and rail systems and an expansion of the broadband network to rural areas. On March 3rd, the Department of Transportation released $27 billion for highway improvements to the states, which have 120 days to designate specific projects before losing these funds. See Recovery.gov for a state-by-state breakdown of allocated money.
$ 81 billion for protecting the vulnerable
Some of this money overlaps with programs designed to provide healthcare to at-risk populations and to improve educational and job opportunities in low-income areas. Funds have also been designated to subsidize COBRA benefits for individuals who lose their jobs, to combat homelessness, improve low-income housing and to give a child tax credit to working families.
$ 59 billion for health care
The Act plans to spend money computerizing health records and has given $10.2 billion to the National Institutes of Health to invest in a broad range of scientific and research projects around the country. Additionally, on March 2nd, The Department of Health and Human Services released $155 million to support 126 new health centers across the country. These centers are estimated to create 5,500 new jobs and provide healthcare for people in need.
$ 53 billion for education and training
These funds are earmarked to protect education jobs at risk because of state and local budget cuts and fund the increased construction work needed to complete school modernization projects. This money will also be used for the creation of new vocational and technical programs and to promote excellence in education through the building of data systems that can track academic progress and innovative new learning models, and investment in programs designed to promote the hiring and training of quality teachers and principals.
$ 43 billion for energy
The Recovery Act is committed to revitalizing the country’s renewable and alternative energy sources and encouraging energy savings through “green” programs. Money will be spent to assist in the weatherization of private homes and federal buildings and to fund research into new energy sources.
$ 8 billion for other items
The above categories are obviously general in nature and often overlap. For example, money given to states and localities for fiscal relief may go towards protecting teaching jobs that would otherwise be eliminated because of budget cuts.
Going forward, money will be provided to federal agencies directly from the federal government and passed on to state and local governments, educational institutions and private entities through a combination of grants, contracts (and subcontracts) and loans as needed to implement the agencies’ Recovery Act programs. See Recovery.gov for links to federal agencies and their web pages.
Access to Stimulus Dollars – Get Educated About Opportunities
Private businesses can get access to Recovery Act funds and benefits in several ways. Some entities may be chosen as contractors or subcontractors on projects using stimulus money. Others can take advantage by offering goods and services that are likely to be in high demand by consumers seeking their own benefits under the Act.
As of March 3, federal agencies are required to report their use of stimulus dollars. Starting in May, they will also need to make their performance plans available to the public and release information about their distribution of competitive grants and other financial data. The agencies are also required to post funding and loan opportunities at the government websites grants.gov and govloans.gov as well as on their own agency web pages.
A number of states have already established their own websites to track how Recovery Act money will be used on statewide projects. This information is mostly prospective as each state determines how best to spend stimulus money. Some state websites provide an idea about how some stimulus money is likely to be spent. For example, the state of Illinois explains that it will be receiving money to improve the state’s roads, bridges and rail systems, and that it also intends to request money for additional projects, such as its neighborhood stabilization program. Detailed program outlines are not yet available, but should soon be forthcoming.
Employer Checklist:
- Visit Recovery.gov to get an idea of the types of projects that are likely to be initiated locally.
- Visit grants.gov, govloans.gov and fbo.gov (federal business opportunities) to identify the federal agencies that are planning projects using Recovery Act money.
- Go to relevant agency websites for more details on specific projects and how to bid for them.
Industries to Watch
Even without the availability of specific project information, employers can make educated projections about industries that are likely to benefit the earliest from Recovery Act money. The Obama Administration has been clear in its intent to invest money in infrastructure, alternative energy and other “green” companies and education. Below is a sampling of how some federal agencies are already using stimulus funds to plan and implement projects in these business sectors.
Infrastructure and Construction
Proposed infrastructure projects range from improving the country’s system of highways to expanding the availability of broadband networks to making improvements to other transportation systems in both cities and rural areas.
In the housing industry, the Department of Housing and Urban Development (HUD) has already allocated $10 billion of the Recovery Act to a number of projects that look to increase and improve housing for low-income and homeless families. The HUD website explains the various targets for these funds. There is also a spreadsheet showing how funds are allocated by state and by project type (public housing improvements, lead hazard reduction, combating homelessness, etc.).
A broad range of businesses will likely benefit from increased work in this sector, including suppliers of raw materials, manufacturers of equipment and machinery and construction contractors who provide the skilled and unskilled laborers to actually perform the work.
Energy
The Recovery Act provides a variety of opportunities for employers in the alternative and renewable energy industry. In addition to outright manufacturers of products such as solar panels, the Act seeks to improve energy efficiency via an ambitious weatherization program for federal buildings and private homes. It also offers a tax credits to individuals who weatherize their homes by installing more energy-efficient windows or added insulation. Employers who offer “green” building materials or other energy efficient products or services will likely be in demand.
Additionally, the Department of Energy (DOE) reports that it plans to “put scientists, engineers and computer programmers to work developing better ways to build ever more efficient buildings and appliances.”
Education
Part of the money allocated by the Department of Education (ED) will fund construction or renovation of school buildings and other facilities. The money will also be put to use by either saving or creating elementary and high school teaching and administration jobs that are at risk because of state and local budget cuts. Training and vocational programs are also slated to receive federal stimulus dollars. Some of the money will also be used to improve educational standards, reports the Department of Energy, including “quality assessments, robust data systems and teacher quality initiatives. This includes $650 million to fund school systems and non-profits with strong track records of improving student achievement.”
Other Industries
In addition to industries that will be directly impacted by the influx of stimulus dollars, employers in a number of other sectors can also expect to see gains. This is projected to result from a general increase in consumer spending power (hospitality and leisure industry can hope to benefit here) as well as in support of industries that receive direct Recovery Act money (business and professional services such as lawyers, accountants and consultants).
What to Expect
During the coming weeks and months, more specific recovery plans will emerge from a variety of federal agencies. Employers will hopefully soon have multiple opportunities to either bid directly for contracts using Recovery Act money or the chance to expand their businesses by providing goods and services to an expanded economy.