“Jobs.” According to Boston 2024’s "Bid 2.0," that’s the number one benefit that the Summer Olympics would provide to Boston and Massachusetts:
Jobs: Hosting the Games is a major job creation engine for Boston and Massachusetts. Bringing the Games to Boston will create 4,100 construction jobs each year from 2018 to 2023 and more than 50,000 jobs to support the Games in 2024 (Source: The Boston Foundation). The Games will also lead to 2,200 job-years in 2025 and beyond to support legacy neighborhoods and developments.
As noted in the “Bid 2.0,” Boston 2024’s job-creation estimates are based on a March 2015 report prepared by researchers at the University of Massachusetts’ Donahue Institute on behalf of the Boston Foundation. Unsurprisingly—given Boston 2024’s track record—these numbers are almost certainly overstated.
A few problems are obvious or have been noted elsewhere already:
First, as the Boston Business Journal and DigBoston have already reported, the Donahue Report appears to have been manipulated by the Boston Foundation to ensure a flattering analysis for Boston 2024. Second, as Professor Andrew Zimbalist wrote in The Boston Globe, the Donahue Report’s numbers are based on an inappropriate model and unrealistic assumptions. Third, the Donahue Report’s numbers are based on the original Boston 2024 bid—which the group has claimed elsewhere should be ignored now that the “Bid 2.0” has been released.
But there’s one more major problem with the Donahue Report’s job estimates—and with Boston 2024’s job-creation promises, generally—that has yet to be explored.
To assess the economic impacts of the Games, the Donahue Report used economic modeling software called “IMPLAN”—which, in economic jargon, uses “U.S. Bureau of Economic Analysis’ Input-Output Benchmarks with regional employment and wage data to construct quantitative models of the flow of goods and services between a region’s businesses and households, and estimates direct, indirect, and induced effects of investments and ongoing economic activity” (page 15).
That’s a mouthful. But the bottom line is simple. IMPLAN—and, thus, the Donahue Report—assumes that the economy created by and around the Games is a normal, properly functioning market that works the same way as the rest of the broader economy.
Unfortunately, that’s not the case.
Many of the most obnoxious features of the Olympics—from special VIP traffic lanes (open to foreign royalty yet closed to ambulances) to absurd trademark rules—are contained in hundreds of pages of technical manuals, incorporated by reference into the host city contract. And buried deep in the fine print of the IOC’s Technical Manual on Workforce is a provision that’s not merely obnoxious and immoral, but potentially illegal (page 108, emphasis added):
Contractors represent a significant portion of the total Games workforce, and most of the contractor staff is sourced from the same labour pool available to the [Organizing Committee (i.e., Boston 2024)]. It is essential, therefore, that the [Organizing Committee] work with the contractor organisations in order to coordinate on recruitment strategies and avoid escalation of wages and ‘poaching’ of volunteers.
Yes, that’s right. If Boston is awarded the games, those chest-thumping job-creators at Boston 2024 will be expected to collude with contractors behind closed doors—engaging in a price-fixing scheme to suppress the wages of paid workers and to prevent volunteers from seeking paid employment.
One obvious problem with this plan is that it’s likely illegal. Apple and Google tried something similar in the late 2000s—reaching a no-poaching agreement to refrain from cold-calling each other's employees. As a result they were investigated and sued by the Department of Justice. Then, their employees brought a class-action lawsuit that resulted in a massive $415 million settlement.
As Joseph Harrington, a Wharton professor of business, economics, and public policy has explained elsewhere, no-poaching agreements violate federal antitrust laws. As Harringon explains, “In terms of suppressing competition... agreeing not to compete for... employees is the same as companies agreeing not to compete for each other’s customers... In the latter case, it results in customers paying higher prices because of the lack of competition, and in the former case it results in workers receiving lower wages because of the lack of competition.” In that same article, another Wharton professor of legal studies and business ethics, described no-poaching agreements as “shocking” and “blatantly illegal conduct.”
In addition to their likely illegality, the wage-suppression requirements of the IOC’s Technical Manual undermine the crucial assumption of the Donahue Report—that the Olympic economy is a normally functioning free market.
In the normal economy, and thus in IMPLAN’s model, employers compete for employees, which increases wages. Increased wages means workers have greater disposable income. The additional money those workers spend creates more jobs. Repeat ad nauseam. That’s the assumption underlying the Donahue Report.
Now replace that rosy assumption with the truth of the Olympic economy as set out in the Technical Manual. In truth, the Games’ employers—under Boston 2024’s watchful eye—are expected to collude to suppress wages, driving down disposable income, and decreasing consumer spending. The end result: far fewer jobs and jobs at lower wages than the Donahue Report projects.
Mark Melnik and Dan Hodges of the Donahue Institute, the authors of the Donahue Report, did not respond to a request for comment.