Stimulating The Economic Numbers
Statistics can be tricky
Statistics can be tricky. It all depends on who is doing the math and for what purpose. The latest report on how many jobs can be attributed to the workings of the stimulus package is a perfect case in point. The Obama Administration came out at the end of October with the announcement that the stimulus package has created 650,000 jobs.
To give the government credit, it didn't just pull that number out of a hat. The Recovery, Accountability, and Transparency Board (RATB) is an independent entity that has tracked the money being spent for the Recovery Act. Every dollar being spent can be seen in an array of charts and information on the Recovery.gov website.
According to the White House website, $340 billion of the stimulus money has been committed to infrastructure projects, small business loans, unemployment benefits, state fiscal relief, tax cuts and etc. The administration says all this spending has saved or created one million jobs. The catch is that not all the entities that have received government funds are required to report job information to the RATB. The jobs saved claim can be a particularly tricky one to pin down. Much of those numbers are attributed to teachers and healthcare workers that didn't have to be let go.
The 650,000 jobs created also don't include what is considered indirect jobs. "...those created when the directly hired contractor orders some cement, the school teacher orders classroom supplies, or when both of them spend their paychecks in the economy, generating more economic activity and jobs than would have occurred if they were unemployed," said Jared Bernstein, chief economist to Joe Biden.
The Obama administration says that only about half the stimulus money that was dedicated to job creation has been spent and they are still on track to create or save 3.5 million jobs by the end of next year. Even then, the White House admits, that will not completely offset the number of jobs lost during the recession.
While the president's math may be overly optimistic, it's based on hard numbers and has been tracked with relentless transparency. What is a little fuzzier is the Republicans argument about what those jobs created through the stimulus package is costing the American taxpayers.
According to the Associated Press, some Republican lawmakers who are critical of President Obama's stimulus package are dividing the stimulus money spent so far by the estimated number of jobs saved or created. That kind of equation makes it look like each job saved cost the taxpayers over $246,000.
Here is why that statistic is misleading. First, the AP points out that each job is more than just the worker. It is also the materials and supplies needed to do the job, as well as the actual output of the job. So, the money funds the construction worker, the supplies as well as a portion of the bridge repaired, for example.
Also, that number is based on jobs produced to date and doesn't take into account that these jobs have the potential to last for years. Some of the jobs created thus far will also create other jobs, like hiring one engineer to design a product will produce more jobs down the line. As mentioned before, lots of indirect jobs created and saved aren't included in the 650,000 jobs. The effectiveness of the stimulus package may be debatable and statistics can be confusing, but they shouldn't be misleading.
by: Ki Gray
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