Jobs, What Jobs?

By Frank Hagan | Related entries in Stimulus

The administration’s claim of nearly 640,000 jobs created or “saved” by the $787 billion stimulus bill continues to be savaged by traditional media outlets for inaccuracies.

From the Washington Examiner:

More 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, according to reports compiled from eleven major newspapers and the Associated Press.

Based only on our analysis of stimulus media coverage in the last two weeks, The Examiner has created this interactive map to document exaggerated stimulus claims. The map, which will be updated as new revelations appear, currently reflects an exaggeration by the Obama administration of about 75,000 jobs, out of the 640,000 jobs supposedly “created or saved.”

From ABC News, a caution about some of the details:

Here’s a stimulus success story: In Arizona’s 15th congressional district, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that’s what the Web site set up by the Obama administration to track the $787 billion stimulus says.

There’s one problem, though: There is no 15th congressional district in Arizona; the state has only eight districts.

And ABC News has found many more entries for projects like this in places that are incorrectly identified.

And the Sacramento Bee notes some problems with the statistics from the Golden State:

Up to one-fourth of the 110,000 jobs reported as saved by federal stimulus money in California probably never were in danger, a Bee review has found.

It would be easy to criticize the administration for lacking the critical oversight necessary to get the statistics right. After all, none other than VP “Nobody Messes with Joe” Biden was assigned to be the official watchdog.

But piddling little details like actual real numbers aside, economics is the dismal science. And its very hard to determine exactly what effect a spending program has on the job market.

The Wall Street Journal, usually not considered a bastion of liberal economic thought, observes that:

It’s easy to ridicule the White House’s estimate that 650,000 jobs have so far been “saved or created” by the $150 billion spent so far from their $787 billion stimulus bill. That’s because while it’s possible to measure jobs created by the stimulus (for example, counting the number of construction workers on an infrastructure project funded by the bill), it’s a lot less clear how you measure jobs saved by it.

“One can search economic textbooks forever without finding a concept called ‘jobs saved’,” said Allan Meltzer, a professor at Carnegie Mellon University, in a memo to House of Representatives Republican leader John Boehner today. “How can anyone know that his or her job has been saved?”

The disparate estimates come down to the multiplier effect. There are jobs directly created, and then there are jobs that are created or saved because the direct beneficiaries are still employed. For example, the stimulus money may have financed a construction workers’ job, but it also may have saved the job of someone at the grocery store where he shops. There’s also the issue of government jobs saved. Many states were planning layoffs that were either canceled or postponed because of stimulus money. But again, those numbers are difficult to quantify.

The Journal’s panel of 46 economists had predicted a loss of 271,000 jobs per month without the stimulus bill, and a less-catastrophic loss of 183,000 jobs if the bill passed. Reality, as if to prove the “dismal science” label correct, chimed in with a job loss of about 400,000 per month with the stimulus.

That panel’s prediction was the basis for VP Biden’s claim that the stimulus will create or “save” a million jobs, according to the Journal.

There’s an old joke that goes like this: If you laid all the economists in the world end to end, they still wouldn’t come to the right conclusion.

And that’s the danger in relying on government to solve economic problems. You hope the predictions are right before the biggest entity in the known universe sucks all the oxygen out of the room.

Cross posted to FrankHagan.com


This entry was posted on Tuesday, November 17th, 2009 and is filed under Stimulus. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

5 Responses to “Jobs, What Jobs?”

  1. Mike A. Says:

    “And that’s the danger in relying on government to solve economic problems. You hope the predictions are right before the biggest entity in the known universe sucks all the oxygen out of the room. ”

    What’s the solution, to have the free market solve our economic problems? No danger there? Their ability to predict the financial collapse served us how well?

    THAT was the big entity that sucked the oxygen out of the room the end of last year.

  2. Frank Hagan Says:

    You have a point, Mike, but only in so far as the balancing act between government intervention and free markets has been done spectacularly poor since the change in banking laws in the 1980s. The specific interventions to encourage the “culture of ownership” by Bush and the “non-discriminatory lending” (to people who can’t afford mortgages) by the Democrats in the past 10 years contributed more to our problems than the actions of the market itself. Big government Republicans have as much or more responsibility as the big government Democrats.

    Time will tell if spending $787 billion to get 650,000, or 630,000, or … how many? … jobs will pan out. You and I will be paying for those jobs for quite a while. Meanwhile, private employers are holding back on hiring decisions while they wait to see how much more an employee is going to cost them with health care reform, cap and trade, and the onslaught of financial regulation that will make the job-crippling Sarbanes-Oxley regulations look like child’s play.

    We are in for interesting times, that’s for sure.

  3. Paul Says:

    Could it be that someone is playing fast and furious with statistics here ? You have to keep both eyes open when the government uses them !

  4. blackoutyears Says:

    Biden was on Jon Stewart last night and JS brought up the fake Arizona district issue. Biden minimized it, saying that there were seventy verifiably false cases out of 130,000 claims and that it was a matter of claims not being properly verified on the website; they’re relying on the honor system IOW, at least until someone can follow up.

  5. Leo Says:

    It does not really matter whether it created jobs or not. The whole thing about the taking tax money and creating jobs is ridiculous. Jobs should be productive as in it produces, not just create jobs for the jobs sake. Its like, you owe alot of money, owe money to creditors, then you decide, yeah lets borrow more money so i could take the money as a salary for a job cleaning the house.

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