Where are the Stimulus Jobs?

Who can forget those beyond incredible job creation projection numbers of the Stimulus Bill.  3.5 million jobs, 4 million jobs, the promise was high and never mind spending almost a trillion dollars for these jobs.  Recently the Council of Economic advisers issued a report on job creation from the Stimulus, at the same time, the White House claimed to have saved 750,000 jobs by August, 2009.

So, what's the catch?  There is no real world, real data on the truth of these claims and there may never be.

We still have theoretical calculations on job creation, based on Stimulus spending as a ratio of GDP, and thus indirectly jobs.

As ProPublica noted:

In other words, if the job-creation numbers the administration gets from real-world data disagree with its estimates, they reserve the right to blame the data.  From an accountability perspective, this will make it difficult to assess the stimulus' successes and failures.

Blame the data?   How about blame the methodology and the fact that the government refused to tie the jobs to U.S. workers from the U.S. taxpayer funded (China debt) Stimulus?

Lest we forget, we live in an offshore outsourced world, where multinational corporations obtain large federal and state contracts, only to create jobs.....in India. GM, after receiving U.S. taxpayer funds to stop it from being liquidated, is offshore outsourcing the jobs, thinking Americans will support a very un-American car that is imported. It's so bad, offshore outsourcing companies literally estimated their Stimulus cut, as repeatedly warned about in past posts.

It is even estimated that illegal workers would get 300,000 of the new jobs created, simply because of Congress's refusal to use a simple system to check if a potential employee is authorized to work in the United States.

Where our taxpayer dollars are going is so outrageous, even food stamps are creating jobs in India. Meanwhile politicians talk about jobs, when they have vested financial interests in offshore outsourcing!

Factcheck.org is calling the Council of Economic advisers job calculation methodology fantasty job creation:

At President Obama’s April 29 news conference, he claimed that the American Recovery and Reinvestment Act has “already saved or created over 150,000 jobs.” Wait a minute. Isn’t the number of jobs actually plummeting?

According to the Bureau of Labor Statistics, the economy lost more than 1.3 million jobs in the two months after he took office, and it has probably lost at least another half-million in April. The day after Obama spoke, the Department of Labor announced that another 631,000 workers (seasonally adjusted) had filed new claims for unemployment insurance the previous week.

So what 150,000 jobs was Obama talking about?

It turns out the president’s claim is really an estimate of what his economic advisers think the stimulus bill is doing, and not based on any evidence of its actual effects.

Let's look at the Council of Economic advisers methodology again:

We therefore use the relatively conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately 1 million jobs, or about three-quarters of a percent. This has been the rough correspondence over history and matches the FRB/US model reasonably well.

The effect on jobs using the estimates from most private sector forecasting models would be somewhat larger. The effects on employment, however, lag slightly those on real GDP. To capture the usual pattern, we assume that one-half of the employment effect occurs in the contemporaneous quarter, one-third occurs in the subsequent quarter, and one-sixth in the quarter two quarters ahead.

Now that's all fine except for one small problem, in today's global labor arbitrage world, these rough multipliers are not proven.

Indeed, it has been shown that offshore outsourcing is affecting GDP and now it is inflated with numbers that should be attributed to other economies....where our jobs moved to! The rough estimate of phantom GDP, which is really offshore outsourcing, is 0.5%. That is 0.5% of the United States Gross Domestic Product growth, from 2007. Bear in mind, offshore outsourcing has increased since that time. This is economic growth which does not really exist because the jobs are offshore outsourced. The economic growth is really in other nations. So, note, the council of economic advisers seemingly is not taking this into account!

The Economic Policy Institute concludes we need 7 million jobs just to get back to pre-crisis employment levels.

Realize 25% of the Stimulus jobs are I.T. related. The I.T. industry is heavily targeted for takeover by the outsourcing industry.

Maybe it's time to demand our taxpayer money go to U.S. citizens, the U.S. labor force for some real investment and to generate U.S. income. Maybe a WPA is precisely what is needed, only tied to American workers this time.

Meta: 

Comments

Great Post. Libertarians and Lefties need to work together

somehow. Libertarians don't like government involvement because of slip ups like hiring 300,000 illegal workers instead of American workers. They say "give the money directly to the people". A WPA program could satisfy both although the libertarian callers I have on my radio show would want the money to be placed into the hands of the "small businessman" rather than a worker, especially a Union worker. And they think it's perfectly fine to outsource in order to make a profit. Okay, forget the idea of getting together with them. But is there anyway of kicking the capitalists out of the Democratic Party? I don't see it. I see rather Labor and Green getting together for a Green Labor Party.

Sorry for the rambling.

The Obama administration and its economic team are unrepentant believers in the religion of mathematical formulas with no human elements taken into all the fancy equations. Witness the foolish Adam Davidson and his snotty treatment of Professor Elizabeth Warren as he derides her for her "pet issues" like the welfare of families. He can't see a connection between salaries and his vaunted financial system. He can't see that inequality of salaries led overpaid CEOS to gamble with their money and the companies' profits instead of investing in the workers and more research and development.

My grandfather worked on the Ford motor line and was a Republican. Then he began bleeding from the nose (probably because of spraying paint) and he was laid off. He worked for the WPA for $15 a week which saved the family. When he was well, he went back on the Ford line. Oh, and he became a Roosevelt Democrat.

We need a new WPA. Thanks for the post and posting on Paul's essays.

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I've been compiling a state level database of job losses

from the start of the recession in Dec. 07 to the latest numbers from March, and it's surprising. These are not month over month numbers, so they don't capture any job gains in recent months. I calculated them using the Dec 2007 and March 2009 job employment numbers. At the national level, since the start of the recession employment is down 4.93 million jobs. Only two sectors have seen modest increase in employment: Education and Health (2.7%) and Government (0.8%).

Looking at the distribution of employment shrinkage in falling sectors, we get this graph.

Notice that three sectors dominate here. Construction employment is down 13.4% since the start of the recession. Manufacturing is down 10.5% in the same period. And, finally, trade, transportation and utilities is down 4.1%.

The relative size of the sectors matters in looking at what part of the overall employment shrinkage can be attributed to any one sector. For example, even though the rate of shrinkage is more severe in construction, the greater size of the manufacturing sector means that it has contributed to a greater percentage of the overall shrinkage.

Looking at the three sectors above as a percentage of overall employment shrinkage, what we find is that they make up nearly 2/3rds of overall shrinkage.

The question with the stimulus then, should be how to restart employment in these falling sectors. And in particular, these three sectors making up 2/3rds of employment shrinkage.

Think now about the amount of money spent to save financial employment (6% of employment shrinkage) and compared to manufacturing (26% of employment shrinkage).

I'd really like to get the total amounts given to the financial sector and manufacturing sector and compare them on a per job basis.

I'm putting together a series of diaries with this database I've built.

Oh, and Bob.

It looks like the reason that unemployment is so high in Oregon is because of continued growth in the labor force in the state. People are moving to Portland because they like the city, but can't find jobs.

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middle, you want to write this up as a blog or Instapopulist?

This comment is great and if you could go look at today's unemployment stats along with it, make a dynamite post.

I saw today it's 6.6 million on UI.

Oregon? hmmm...I'll have to go see if a legitimate estimate by CIS or a labor economics report has anything on illegals in OR with social services/UI. It seriously wouldn't surprise me that OR counted illegals in stats, plus gave them UI, all the while denying they were.

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It is illegal for a State Worker

In the State of Oregon, other than DMV (and that only due to RealID standards) to question the immigration status of a resident.

Let me restate that in case somebody didn't get the picture: By executive order in Oregon from the Governor's Office, unless you are working for the DMV (and then must for RealID standardization), you may not question a person coming to you for benefits about their immigration status. Doing so can get you fired, and possibly sued for discrimination.

So yes, I do believe illegal immigrants are collecting unemployment in Oregon.
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Executive compensation is inversely proportional to morality and ethics.

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Maximum jobs, not maximum profits.

stuck on stupid

That is just unreal, so out of reality and out of line with budget deficits to denial of social services to the residents (legal) who need them.....

This special interest crap pushing agendas that are completely out of reality with economics of the situation...
well, I do not have statistics but I really wonder about California in particular and how much this is bringing that state to insolvency.

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We need some negative publicity out there

"It looks like the reason that unemployment is so high in Oregon is because of continued growth in the labor force in the state. People are moving to Portland because they like the city, but can't find jobs."

Maybe us Tom McCall Republicans need to put together a youtube spot about the effect of anti-sprawl legislation on jobs and home prices.
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Executive compensation is inversely proportional to morality and ethics.

You must have Javascript enabled to use this form.

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Maximum jobs, not maximum profits.

I wouldn't blame anti-sprawl

legislation. The problem with Oregon here is that they're almost alone in this approach. What's needed is a national anti-sprawl policy. A sustainable future is walkable, so that cars can be a luxury, not a necessity.

What's more at issue here is that Portland and Seattle are continuing to attract new residents even when they can't find jobs. There's a story about how the talk of the "creative class" as the engine of economic growth is fundamentally wrong. The denigration of manual labor and manufacturing has led the "creative class" to kill off the economic engine that they were parasites on.

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Economic reality- supply/demand curve

You're right that it is the right way to go- but with both housing and jobs, there's definitely a supply/demand curve, and Oregon's land use laws (which, BTW, I'm for, don't get me wrong here, I'm a life long 'gonie and I like my open spaces) do have a tendency to limit development (as they are supposed to). Less supply, raises the price on housing (even RENTING here is expensive) and keeps a lid on the total number of jobs available (though the current downturn is doing more of that).

As to the creative class- well, Wieden-Kennedy is a major employer in Portland because they can tap into that creative class.
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Executive compensation is inversely proportional to morality and ethics.

You must have Javascript enabled to use this form.

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Maximum jobs, not maximum profits.