Below is the estimated change in jobs per State (through December 2010) given by the White House in February of 2009 compared to the actual change in jobs per State from through September 2009.
The numbers are striking. It shows that either the American Recovery and Investment Act is not working (and that we have lost 2.7 million jobs rather than gaining 3.5 million jobs as predicted) OR that, on top of adding these new jobs from the Act, we are still losing jobs faster than we can create them. In reality it is a combination of the two.
It should be fairly easy to tally the jobs created from the Act, and from loose reports we hear that so far only 30,083 jobs have been created or saved after spending only $16 billion of the $789 billion package thus far.
According to the Wall Street Journal, the administration is pleased with the numbers thus far:
“The data posted Thursday was the result of the government’s initial attempt at counting actual stimulus jobs. Obama administration officials stressed that data was partial — it represented just $16 billion out of the $339 billion awarded — but they said it exceeded their projections.”
Let’s step into the math quickly. The overall Act will spend $789 billion to create 3.5 million jobs. This comes to roughly $225,000 per job; or if we consider them all average income jobs of $50,000/yr, then they are targeting to create 4.5 years worth of jobs for those 3.5 million people. Thus far, we’ve spend $16 billion to create 30,083 jobs, which equates to $531,861 per job, or 10.6 years worth of jobs for those 30,000 people.
The plan is either creating jobs too innefficiently or creating too sound of jobs. Either way, I do not understand how the efforts thus far can “exceed their projections”.
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We were talking about this the other night. A report recently indicated that home sales fell 4.5% (I think that was the figure) in September at a time when the government was giving all first time home buyers an $8,000 tax credit. What’s going to happen when there is no incentive?
It seems to me that all the tax credit has done is pull first time home buyers into the market a little earlier than they would have come, and once the incentive ends, home sales are going to plummet. A good percentage of the buyers will already be out of the market because they bought already.
This will be similar to what we saw when the Cash for Clunkers program ended. These programs simply borrow buyers from the future, which results in fewer buyers in the market later on. They don’t create additional buyers. It also costs a heckuva lot of money.
Once all of the incentives have run their course, what will the employment figures look like then? I’m no expert at this, but it seems to me that the stimulus money simply postponed the pain for a short time, but the pain is still on its way.