Lies, Damn Lies and Statistics: Stimulus Job Claims
Updated May 18, 2009
So where, oh where have our stimulus jobs gone? Oh where, oh where can they be? That’s the hot tune in Washington and Raleigh.
In an April 29th prime time news conference, President Obama declared, "We began by passing a Recovery Act that has already saved or created over 150,000 jobs."
Two weeks later, Vice President Biden amplified the claim in a report, in which he stated that the stimulus has so far "created or saved" 150,000 jobs, and that "over 3,000 transportation construction projects have been funded in 52 states and territories."
However, nobody appears to know where the 150,000 jobs are. The Washington Examiner wrote that during a conference call briefing with reporters on May 11, a “senior administration official” seemed unprepared to respond to questions regarding the jobs cited by Biden in his report. "In terms of exactly where and in what sectors, that's not something I have numbers on," the official said, "because, precisely, we don't yet have any of the reporting."
So where did the 150,000 figure come from? In fact, there is no actual count of jobs created - only a hypothetical count based on a theoretical estimate of how many jobs might be created by a given amount of government spending. According to the Associated Press, “There are few hard numbers when it comes to tracking stimulus jobs. The Obama administration numbers are based on estimates by the White House Council of Economic Advisers, based largely on a formula Obama's transition team put forward. It estimates the effect of tax breaks, government spending and social programs on job growth.”
Transfer Payments
According to Biden’s report, $28.5 billion of stimulus money has been spent with 95-percent of the money going to transfers to the states for unemployment and Medicaid payments.
In reality, the Bureau of Labor Statistics, the government’s official job counters, reports 1.3 million jobs have been lost since February, when the stimulus was signed.
Saving Jobs
Yet, the Obama Administration claims more saves than Taakashi Saito for the Dodgers. But questions abound over how saved jobs (layoffs that don’t happen) can be measured. In comments to Secretary of the Treasury Tim Geithner in March 2009, Senate Finance Committee chair Max Baucus of Montana said, "You’ve created a situation where you cannot be wrong. If the economy loses 2 million jobs over the next few years, you can say yes, but it would've lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs." Baucus continued, "You've given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct."
North Carolina Formula
The Perdue Administration cites federal statistics that for each $1 million of transportation spending, 30 jobs are created or saved, leading to a further claim that $200 million in recently announced highway and bridge projects will create or sustain 6000 jobs. But the federal study introduces the idea of person years. If 3000 people get a job on a project for two years, it’s considered 6000 person years or 6000 jobs. Additionally, people who quit their current job for a job on the stimulus project are counted as newly-employed workers.
It’s also hard to see how many jobs are local to North Carolina, since material suppliers could be anywhere. Only a third of highway related jobs are in direct construction.
Finally, the Federal Highway Administration itself, which came up with the formula Governor Perdue is using, admonishes that "This estimate does not represent an estimate for the highway construction expenditures under the American Recovery and Reinvestment Act.”
And even if it did, so-called green researchers dispute the Federal Highway Administration’s numbers, arguing that $1 million in highway spending produces only 19 jobs, not thirty.
Not Good for the Long Haul
The Capitol Monitor has previously explored the similarities between stimulus claims and the disingenuous claims of economic developers. Now stimulus claimers are spinning like tops. It’s easy for them to ignore the fact that all the money politicians are spending in the name of stimulus must be taxed or borrowed away from someone else in the economy, reducing their ability to consume or invest.
According to the nonpartisan Congressional Budget Office, that’s hurting our economy in the long run.
