Wednesday, November 18, 2009

Don't Believe the Stimulus Job Creation Hype

Remember how the Obama Administration first announced that the $787 billion stimulus package had saved or created a whopping 30 thousand jobs? Embarrassed by the absurdly low figures -- which the Associated Press said were overstated -- the Federal bean counters quickly upped the official number to 640 thousand jobs. According to Jared Bernstein, chief economist and senior economic advisor to Vice President Biden, that meant the cost per job saved/created was an amazing $92,000! (Amusingly, CNN published a chart implying that jobs were created by money not yet spent.)

My first reaction was to chortle over the fact that the cost per job is twice the mean annual personal income--it would have been cheaper just to give the money away. Or that the figures fail to account for jobs foregone when government spending crowded-out private sector wealth creation.

But before shuffling off to the spreadsheets, I realized that the Administration's math still is wrong. According to the AP:
Despite White House promises that errors would be corrected, the latest stimulus job count still includes mistakes such as the ones discovered in the AP's earlier sampling of contracts. For example, the Palm Beach County, Fla., water department reported 57 meter readers, customer service representatives and other positions as part of two water projects. That got incorrectly doubled to 114. Some agencies that received stimulus money continue to report saving jobs, despite using the money for employee pay raises. And the new data appeared to include at least dozens of entries in which contractors listed the same number of jobs as created or saved on different projects, which suggested double- or triple-counting of the same workers used on all projects.
The AP follow-up a few days later was even more dismissive:
An Associated Press review of the latest stimulus reports -- which the White House promised would undergo extensive reviews to ensure accuracy -- found that more than two-thirds of 14,506 jobs credited to the recovery act under spending by just one federal office were overstated because they counted pay increases for existing workers as jobs saved.

The inflated job count is at least partly the product of the administration instructing local community agencies that received money to count the raises as jobs saved.

"That's more than ridiculous," said Antonia Ferrier, a spokeswoman for Republican House Minority Leader John Boehner.

Most of the inflated figures were like those cited in the 935 saved jobs reported by the Southwest Georgia Community Action in Moultrie, Ga. The agency, like hundreds of others collecting Head Start money, claimed all its existing employees' jobs were saved because they received a pay raise with the stimulus cash.

Similar claims led to overstating by more than 9,300 the number of jobs saved with more than $323 million in stimulus money distributed by the Health and Human Services' Administration for Children and Families, the AP's review found.

More than 250 other community agencies in the U.S. similarly reported saving jobs when using the money to give pay raises, pay for training and continuing education, extend employee work hours or buy equipment, according to their spending reports.

The Georgia program inflated the numbers even further by claiming the recovery money saved more jobs than the number of people it actually employs. The agency employs 508 people but claimed 935 jobs were saved because of confusion over government reports.
Tallying the various press investigations into the 640,000 jobs figure, the Washington Examiner concluded, "[m]ore than ten percent of the jobs the Obama administration has claimed were 'created or saved' by the $787 billion stimulus package are doubtful or imaginary." Surf over to the Examiner's interactive map of bogus jobs, many with hyperlinked sources. One example is Fayettville, Arkansas where, according to the New York Times, a $1,000 grant to purchase a single lawn mower improbably was credited with saving 50 jobs. Or try North Chicago, Illinois, where $4.7 million was given to local schools supposedly saving the jobs of 473 teachers--except that the Chicago Tribune says the school district employs only 290 teachers. They also showed job growth in non-existent Congressional districts.

No wonder Congressional Democrats want to pass a second jobs bill. And they want similar bureaucrats to run healthcare.

(via Washington Examiner, The Problem With Kevin, Don McKee)


Media Mentions said...

Aside from an unstable economy and current political imbalances, it's also important to make note of such news as the following article:

Best regards,

OBloodyHell said...

> The agency employs 508 people but claimed 935 jobs were saved because of confusion over government reports.

Well, it's obvious what happened there.

They hired 427 people to answer the question, "WTF does that mean?" asked by anyone (everyone, actually) when reading government reports.

Of course, all 427 respond with "How the f*** should I know?", since they're all government employees, you realize.

It's the new IP & Service Economy form of paying one person to dig a hole, and another person to come along behind them to fill it in.


Carl said...

Or pretends to dig a hole, which the second guy claims to have filled.

suek said...

"They pretend to pay us, and we pretend to work"...

Quote by somebody in the USSR at some date in the past...!

Carl said...


A engineer friend of mine who left the USSR in the 60s -- because he wanted to use his brain more -- confirmed to me years ago that this phrase was widely used at the time.