Any minute now, recovery.gov will have a report that touts 650,000 jobs have been saved or created thus far by February's $787 billion stimulus package. In fact, the White House is already bragging about this on its blog. Am I the only person who's completely unimpressed?
According to a Washington Post article on this these 650,000 jobs, they were created or saved by the $150 billion in grants or loans having been dispersed through the stimulus. A little simple math shows that this means those jobs cost an average of $230,769 each. That seems kind of expensive to me, given that I doubt many of these jobs pay anything close to six-figure salaries.
Moreover, this is a virtual blip compared to the vast population of unemployed. That number was up to 15.1 million in September according to the Bureau of Labor Statistics. I suspect next week's October statistics will reveal it's even higher right now. Without the stimulus, if these jobs weren't saved or created, then the September unemployment rate would have been around 10.2% instead of 9.8%. I guess that's a little better, but that difference doesn't exactly blow your mind.
Indeed, let's revisit President Obama's chief economist Christina Romer's chart (.pdf) of unemployment expectations with and without the stimulus from January. I noted this chart in a post a few weeks ago, and added actual numbers as red dots:
If you look at the variance between the original unemployment estimate with and without stimulus, the administration was expecting around 1% lower unemployment with the recovery package by September (eyed by measuring the distance between the light and dark blue lines below the red dot for September). It got less than half that with 0.4%.
I would measure the effectiveness of the stimulus by how efficiently it's working and how well it's meeting expectations. As my above analysis shows, it fails on both accounts. That doesn't mean it has been completely useless. 650,000 jobs is something, just not impressive.
Too much in dumb ass tax cuts and not enough on building stuff and plastering that Recovery logo on everything.
I've lost or have not gained 78 pounds. Give me a gold star. Or a Nobel.
I think the fact that they've waited until Friday afternoon shows that even they think it's buncombe.
It's far, far worse than "buncombe". At the same time as they "saved or created" 650,000 jobs, 1,125,000 foreign workers got work permits to work in the U.S.
If anyone wants to do something about this, ask a stim supporter about that at one of their public events and get it on video. Or, ask a stim opponent - including the "tea partiers" and major bloggers - why they aren't mentioning that but instead are concentrating on less important matters.
And what will happen when the funding for these new/saved jobs dry up? They will get cut!
So was that $787 mill "porkulus" bill worth it in the end? 650K is something as you say, but have we "turned the corner"? I'd say the jury is out on the that and some might argue we are headed back down. TDB...
Scott
Pardon my indelicateness, but are you even capable of reading the material you link to? In fact, are you even capable of keeping your first and second paragraphs from conflicting?
The 650K jobs is not the impact of the stimulus thus far (as you say in your first paragraph), it is the impact of the grants and contracts (as you do in fact say in your second paragraph).
And it didn't take $150 billion to create 650K jobs alone - that money also bought materials and created capital - the purchase of which is responsible for the creation of even more jobs. Not to mention the fact that not all of that $150 million has been spent yet - and as it gets spent, the job creation estimates will increase. So dividing 650K by $150 billion as you do is meaningless.
And none of this includes the special impact of fiscal stimulus under depressionary conditions that economists emphasize when they suggest that stimulus has a "multiplier of greater than one". None of these numbers counts the people that are getting put back to work when the construction workers or weatherizers that receive these grants go out and spend the money in their local communities.
Fiscal stimulus is always dicey. I'm not advocating a happy-go-lucky optimism abotu what this stimulus is doing. We should proceed skeptically. But this post does a very poor job at even assessing the little that we do know this early on.
A better post to inform readers would have been explaining what the 650K jobs AREN'T to clear up some of the confusion about what exactly a "created or saved job" is. That would certainly be more useful than critiquing the stimulus on the basis of a White House-reported metric that is almost universally considered to be problematic as a real measure of employment impact.
Another suggestion - recovery.gov reports money awarded and money received. $36 billion is received so far, out of $150 billion awarded. Now, clearly some places are going to hire before all the awarded funds are received, but a lot aren't. So a better measure MIGHT be dividing 650K jobs by the $36 billion received - which comes to $55K per job by my count (and that's before taking into account that some of that is going towards capital expenditures and material expenditures). Who knows how it washes out - it's an overestimate because capital expenditures are included in the numerator, but it's an underestimate because there is definitely some anticipatory hiring. But it seems to me to probably make more sense than your $230K per job figure.
Somehow.
This is just another piece of evidence of the spectacular inability of journalists to understand and explain complex economic issues. Among the many problems with analysis are:
1) the difference between direct and indirect jobs (as noted above there are multiplier effects);
2) the cost per jobs created is not a simple division (if you pay $10 million to fix a bridge which requires only 100 direct jobs, it doesn't mean that each job "cost" $100k. You also have the added economic value of a fixed bridge.); and
3) the initial forecast was based on assumptions that have now been found to be wrong (i.e., assumptions that implied the economic situation wasn't as bad as it was). One would need to re-run the forecast with the underlying assumptions updated for the correct data.
I work for a agency that has been told we are receiving funds...for months, and guess what, we haven't seen any...This administration and congress has not been transparent, has not been truthful, and when push comes to shove has not been effective.
It takes a lot more than being a great speaker to govern.
jb - are you kidding? Have you been to recovery.gov? It's transparency is unprecedented - it reports an unbelievable amount of detailed information on grant recipients. I'm not sure what's holding up the funds for your agency, but I doubt it's due to deceit and I'm sure you'll see the money. $700 billion is a lot to get out the door - don't make the perfect the enemy of the good.
I am talking about transparency overall...
I thought we were going to see healthcare negotiations on C-Span.
I am talking about czars put in power with out congressional oversight.
I am talking about a claim of 650,000 jobs with nothing to back up how they come to the conclusion that jobs were "saved".
I am talking about a promise to post bills on the White House website before being signed.
I am talking about no lobbyists in the administration.
Okay, so the underestimated the economy...but whoever provided him information that was that far off should be fired.
Everyone was that far off; if they'd come out with a more pessimistic prediction they would've been assaulted politically for lowballing to make themselves look good in the future and also by Wall St folks for driving down the market with doomsdayism.
Before even counting the stimulus jobs, shouldn't we also count the "anti-stimulus" jobs to be lost? After all, we had to borrow all that money from the Chinese to pay for this bill. Someday we have to pay back that money with interest. So, how many jobs are destroyed when we send a trillion dollars to China? It is clear that this shadow "anti-stimulus" bill which was, in effect, passed at the same time as the stimulus bill will cost far more than 650,000 jobs. Net jobs created is clearly a negative number.