James Pethokoukis
Politics and policy from inside Washington
Cost-benefit analysis of jobs stimulus
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Hopefully any new plan will have a better ROI than the current stimulus package. Economic analyst Ed Yardeni runs the numbers:
The Obama Administration is touting that their stimulus program has saved or created 640,329 jobs since it was enacted back in February through the end of October. This number is updated and posted on the Administration’s recovery.gov web site. That amounts to $246,436 per job based on the $157.8bn that has been awarded so far! Total compensation earned by the average payroll employee during October, on an annualized basis, was $59,867. If the government had simply used the funds awarded so far to pay for a year’s worth of labor, that would have paid for 2.6mn jobs!
James Pethokoukis is the money and politics columnist/blogger for Reuters Breakingviews. Previously, he was the economics columnist for U.S. News & World Report where he wrote the monthly Capital Commerce magazine column. Pethokoukis was also the managing editor of the magazine’s Money & Business section. He has written for many publications including the New York Times, the American, USA Today, Investor’s Business Daily, and TCS Daily. Pethokoukis is also an official CNBC contributor and appears frequently on that network’s Kudlow & Company, Power Lunch, and The Call shows. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, CNN, and Nightly Business Report on PBS. A 1989 graduate of Northwestern University where he double majored in Soviet politics and American history and a 1991 graduate of the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! champion.james.pethokoukis@thomsonreuters.com
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that’s probably over estimated as well.
my guess is the actual number per job is worse.
I’m sure the Democrats will defend this with the old cliche:
“If the Economic Stimulus had only saved or created one job, it would have been worth it.”
The stimulous money went to thinks like building roads and bridges. Last time i checked the resources to do this were not free. Thats where most of the difference in the money goes and that helps to stimulate the economy too since it has to come from somewhere.
This is such a stupid “analysis.” Stimulus money went to tax cuts and safety net programs, which aren’t supposed to create jobs immediately.
The government (Republican or Democratic) never spends money well, that’s why we need less government!
This number is appalling! Nepotism is running rampant, and ‘stimulus money’ is being wasted like so much confetti at a popularity parade. Give a man a fish, and he’ll eat for a day. Teach a man to fish, voila! You’ve just created a job. Probably for much less than a quarter-million $$. For shame, all you ‘job-creators’!
We would have been better off if they just dropped the money from space.
I guess that means we could get 4 jobs for the cost of every soldier we send to Afghanistan for a year.
This is such a stupid “analysis.” Stimulus money went to tax cuts and safety net programs, which aren’t supposed to create jobs immediately.
Really??? Tax cuts? Oh yah, for those who don’t pay tax, that makes total sense, that will create jobs…wait, huh?
The analysis is fair in as much as the cost per job, however the value gained will be larger as value is added on some of these projects. Sadly, a complete boondoggle. Prepare for rounds 2 and 3. The EPA is out for blood. We all now exhale harmfull gas which needs to be regulated. The government takeover of healthcare.
Being that the first stimulus did not succeed, and the 2010 elections are coming soon… try, try again!… the doo daa, do nothing corrupt radicals in Washington DC!
First of all, Stevedave (3:25PM) is incorrect… The vast majority of the money already spent has NOT been spent on infrastructure, which is why some Democrats are talking about another $200 billion (+ or -) stimulus – so they might have something to show for all the money down the drain come election time. And, while Rueters is running fact checks… I wonder how many of those “created or saved” jobs are held by union members whose leaders virtually always donate to Democrats? Just wondering…
“A government big enough to give you everything you want, is strong enough to take everything you have.” ~ Thomas Jefferson
ENOUGH SAID…
Have they yet calculated the cost per job lost. We have lost millions of Jobs since the stimulus pass…seems rather cheeky to be bragging about saving jobs when unemployment is rising like water on a sinking ship. Le
I formerly worked with a company that sold food service equipment, often times to government entities. I remember being called to give information for an Illinois state agency’s report on the effectiveness of the stimulus money that a lot of schools were using to purchase equipment. When asked how many jobs had been created where I worked due to the ARRA funds, I truthfully responded “none.” The lady questioning me said, “Are you sure?” I assured her, “No new jobs here.” “Oh, come on,” she said, “there have to be a few peoplethat were hired because of this where you work.” I had to repeat my answer of “none” several more times, even at one point giving her the staffing numbers in a before and after manner.
“Fine,” she finally said. “I’ll just put down 10.” And then promptly hung up on me. No surprise here when I heard that the reports were rife with inaccuracies.
I agree with nmh – the jobs are over-estimated and the costs are under-estimated. This number is only goingto get higher.
You math is a little faulty. If you look $156 billion has been awarded but only $37 billion has been received (www.recovery.com).
This would be ~ $55,000 to $59,000 depending on rounding.
Plus not all of it went to jobs. A lot went to energy audits or construction projects, of which only a portion is labor.
Now I agree that the numbers are faulty in terms of the process for counting jobs saved, but until the money is received a job isn’t counte I believe.
I also think that there are payouts to unions occuring behind the scenes, but more accurate reporting should be done before publishing an article about this.
Safety nets like the extension of unemployment benifits only succeed in creating govt. Jobs.
Which in turn cost even more. In a tax based economy heavy handed politics results in the loss of a limb to fund the painting of a fingernail…
Its plainly obvious that Obama’s claim of 600k jobs is vastly overstated. The real # of jobs “saved or created” is far less, probably actually in the negatives.
I’m guessing that the figures on the WH website are exaggerations or outright deception. Most likely the cost per job is vastly higher.
I’M MAD AS HELL AND I’M NOT GOING TO TAKE IT!
640k jobs created….where? The math is faulty, simply becasue the premise is wrong. Its common knowledge that there was no place for businesses that received our tax dollars to record a zero, for the number of new jobs created. Hence, a multitude of jobs were created, when in reality, those monies went to payraises.
Looks like someone should have gone to real school for math instead of home school. Seems like conservatives don’t want to give a man a fish when they can teach him how to fish, then let the nearby power plant pollute the lake and kill the fish. So at least when the libs are done the man has dinner. When the republitards are done the lake is destroyed the cost of bait is through the roof and whatever savings he may have had are no longer his but in the pockets of some Wall St banker who repossessed his fishing rod. And then they’ll try to convince you that’s freedom.
i wouldn’t expect a writer to understand, but as a guy that works with million dollar equipment everyday, i can tell you that labor isn’t the only cost required for creating a job. congratulations on attempting to make up your own statistics… but maybe now you found out why you comment on economics, not advise.
Wow, talk about a flawed “analysis”…
What’s the point of using the stimulus to pay someone’s salary for just one year and then dropping it? Let’s assume for a second that the numbers here are in fact accurate. $246K per job doesn’t seem so bad if you consider that it’s not a 1-year temp contract as the article suggests would have been a better idea. If the job is sustained for 2 years, that’s $123K per year. 5 years? $49.2K per year. 10 years? 20 years? you get the point.
Let’s ignore facts, and stop our analyses short, lets make these numbers look as bad as possible. After all, we don’t want the truth. We just want to make Democrats look bad, right? They can’t possibly get credit for doing anything positive for this country. Hail Reagan!
We would have been better off just handing those 640,329 job seekers $50,000 and saved 80%. Or at $50,000 per head, we could have handed out the same $157.8bn and helped out 1.25 million people instead…and they would have all been spending.
Also, why has only 20% of the entire stimulus package has been spent? Most won’t be spent until the recovery is well under way. Shows what the real purpose of the Stimulus Package was for…Christmas for Liberals…get all the items on their wish list checked off.
Spain has been playing the green job farse for over a decade. Economists at the University of Madrid costed out their value. For every one green job that was established it eliminated 2.2 jobs in the private sector, and cost every man, woman, and chiled over $24,000.
Government has gone insane. It is all about controling as much of the sectors of the free market as possible, and controling every element of the U.S. citizens lives as possible. It is Liberal social engineering at its best. The only question is whether it will take a Maoist or Stalinist form.
Wow…so many foolish lemmings we have in this country. I’m not speaking to the article but rather to some of the various posters here….entertaining but frightening. Let me know how your noble government suppoted businesses work out.
In the school district where I live math aides were laid off on one day and rehired the next and were explicitly told this was to claim a bigger share of stimulus money. The district had no plan to lay these folks off until they realized what a cash cow they had. These would be some of the “saved jobs” we hear so much about. Disgusting.
Anyone who thinks that “the money” went to roads and bridges is a fool. You have been duped! A trillion dollars later our economy and the dollar is weaker as the money went to political cronies!!!!!!!!! Obama the little boy president will collapse our dollar! What was it those crazy republicans said – HE DOESN’T HAVE ANY EXPERIENCE!
Open your eyes! He is already giving terrorists the same rights as US citizens! WHEN WILL IT END? WHEN WILL IT END?
@Stevedave….tax cuts do NOT stimulate the ecomony. No small business hires people because of some $1,000 tax break. It is all about cash flow. Tax breaks/credits are pretty much useless for any small business when it comes to hiring new workers.
Does anyone remember tObama bragging about how the Stimulus would “jump-start” the economy, and that it would limit unemployment to a max of 8%. Here we are almost a year later. Where’s the “jump-start”?
Hey Pog….tax cuts sure worked back in the ’80s.
Can’t any of you idiots spell?
TRANSLATION: (for those who can’t):
Cannt’ eny off eu idiuts sppel /
Ben???
“Stimulus went to tax cuts ….”
????
where?
I must have missed it because whatever tax cuts were received are a far d=cry from the expenses.
Best to see a proctologist as your head is stuck
Where is the outrage from the Republican leadership?
We currently have what, about 36 million people out of work now??? That means instead of all the farcical “stimulus programs”, the government could have given each person who has lost their job roughly $25,000 (if they spent all the stimulus money). If Healthcare and Cap & Tax passes — we’ll have 75 million out of a job. When is somebody going to wake up and stop the train wreck????
Where are the shovel ready projects? All lies. All distortions. All corrupt. People’s mortgage’s should have been paid off so that people could remain in their homes. Foreclosures are still occurring. Obama is now at 47%. And the hits just keep on coming.
Does anyone believe the 640K jobs created figure? Remember folks some of these jobs supposedly were created in the 99th Congressional district of N. Dakota which would be fine except ND has 1 district, not 99.
The stimulus is nothing more than a slush fund for Democrats and their cronies in the unions.
If they had just given all taxpayers a tax break the recession would be over. But no…they have to control the whole deal. We can’t be trusted with our own money. How do we elect these yahoos in the first place?
Our elected officials are doing everything they can to mess up the best economy, the best health care, the best people on earth.
Folks…the government is just people. They may posture and pose and feel that they know more about what is best for us than we do…but it is all baloney.
Throw them all out. Let’s start over. Better yet, a moratorium on new laws!
STIMULUS MATH: $246,436 cost per job so far… – that would have bought 5 Mercedes per job created and we wouldn’t have needed cash-4-clunkers
At-least we created jobs here in Arizona’s 15th Congressional District.
(Only problem is Arizona ONLY has 8 Congressional Districts. Guess it like the 52 States he visited with only 5 more to go!)
This is so sad. Obama has taken a downturn in the business cycle and turned it into a long-term economic disaster. Things are far worse than they were ten months ago, thanks to this “job stimulus” program. Not only do we have way fewer jobs, but we have this huge debt that could take a decade to pay back. I’m a retired person, so I’m not too worried about myself. Who I worry about are all the young people who naively believed this “hope and change” garbage. Now, they will be paying back the debt their entire lives with higher taxes and with fewer opportunities. It can be reversed, but I’m not sure young people today have the ability to admit they were wrong and vote for conservative government.
640,329, that number is so precise its comical…this is just like climate change. Both Climate change and ‘jobs saved or created” are based upon a theory that seems reasonable, but is unsupported by actual hard data and the data available is subject to manipulation.
what is truly disconcerting is that the Oblama administration has no apparent idea how badly their credibility is damaged when they ‘promote’ like this. these guys are no different than the jugheads who pushed CMO’s earlier in the decade: “everything is fine, these are great investments, rating agencies gave it an investment grade rating” and we know how that turned out.
I wonder how much each of the no-show patronage jobs created cost?
Lets raise taxes giving the people less money to spend to stimultate the economy, so that Nancy Pelosi can spend $3,000 on flowers and the govt. as a whole can waste $98 billion in taxpayer’s money. Cut taxes for small businesses and this will allow them to hire more people, it’s common sense not politics. If a business has less money obviously they cannot hire new employees.
There were minor tax credits, NOT cuts, thrown into the stimulus bill. This was all a clever strategy. On one hand, you can get Republicans to help support the stimulus bill because it was “bi-partisan” and had “tax cuts” in it. If this occurred, you had Republicans to help share the blame if the bill was a failure. You then get to claim that “tax cuts” weighed on the effectiveness of the stimulus. On the other hand, if Repubs did not vote for the stimulus even with their preferred economic strategy of “tax cuts”, you can still proclaim supply-side tax cuts as a failure because Republican’s would not vote for it.
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JUST GIVE ME THE $246,436 AND I’LL HAPPILY JOIN THE RANKS OF THE UNEMPLOYED.
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But the reality is $246,436 was spent by the federal government on one person so the individual could earn a small fraction of that in wages. Talk about excessive government waste.
If these awards went to Govt contractors, and the individuals only get around $60K, the overhead and profit are apparently huge – what were these? Healthcare companies? Doctors and hospitals?
Vote out the incumbents! There is no difference between the two party’s! They take turns ripping us off and controlling us!
Vote 3rd Party! Send a message! No more rigged two party system!
I’M MAD AS HELL AND I’M NOT GOING TO TAKE IT!
I’M MAD AS HELL AND I’M NOT GOING TO TAKE IT!
I’M MAD AS HELL AND I’M NOT GOING TO TAKE IT!