Friday, August 28, 2009

Stimulus Counting

"But counting the money coming in is a much simpler task than trying to measure just how many jobs the stimulus money will create...[T]he city estimates that 30,776 jobs will be created by early 2011. The amount that has actually been spent and the jobs that have already been created are a fraction of those figures...though no precise figures are available."

Patrick McGeehan, "Counting Up Stimulus Jobs Is Not So Easy in New York, The New York Times, August 27, 2009.

The great thing about a jobs goal is that it's an understandable indicator about impact and effectiveness. The bad thing about a jobs goal is that everyone will be counting -- for good and bad reasons. There's a couple of inherent problems.

First, the timing problem. Money on the street, money creating jobs, etc. There's also a timing problem in counting the jobs -- projects take a while.

Second, translating projections into real time jobs is difficult and maybe impossible at the local level. Job projections have to be annualized as a start; then there's the "multiplier question," indirect jobs,imputed jobs. Macro models look pretty sensible when applied in macro contexts; they don't look so sensible when applied to a specific project.

Third, do these jobs represent new hires. If a contractor is keeping their crew working without hiring do we count those jobs -- more job retention than creation. Remember the slippery slope of "jobs created or saved" in the stimulus discussions.

Fourth, who gets the jobs? Enough said.

Fifth, when I worked in local government and counted jobs I almost always discounted projections by 50 percent. Maybe the world is a better place, but I suspect projection inflation is a fact of life.

A final question: Is the jobs indicator a good measure of the impact of ARRA? It depends. More confidence, spending and investment are key for a recovery in the short run. That's what we want. We also want to stem job losses and create jobs -- especially for those unemployed.

The economy may indeed be improving while we try and count job impacts from ARRA. Maybe we should have created a jobs program.

1 comment:

JN said...

I've been worried about this as well ever since the administration's claim on keeping unemployment down went unfulfilled.

Seems to me there are so many factors involved in job creation that making projections about the impact of any given policy is a foolish endeavor.