Green Room

The rest of that “jobs saved by stimulus” story

posted at 10:08 am on October 13, 2009 by

The headline of the story is “State jobs saved by stimulus” which tells us:

State finance officials reported Monday that the stimulus created or saved 11,800 jobs through the end of September. The state has spent $1.6 billion, or about a third of the $4.7 billion it stands to get from the American Recovery and Reinvestment Act.

Minnesota’s unemployment rate stood at 8 percent in August, with more than 120,000 jobs lost this year.

Reading the actual press release from the Minnesota Dept. of Finance includes some interesting detail:

MMB’s estimate of jobs is the result of 17 state agencies that have filed more than 200 reports detailing spending and jobs data on all ARRA grants awarded to date. The data submitted on Saturday, October 10 is preliminary and will be reviewed to ensure accuracy and consistency prior to being finalized on October 30.

Preliminary data suggest broad impact from stimulus funding. The biggest effect is from state fiscal stabilization funds, where an estimated 5,900 education jobs and another 1,200 public safety jobs were preserved. Since some schools are drawing most of the funds early in the year, annual numbers may be lower. Initial reports submitted by the Minnesota Department of Transportation show nearly 900 transportation jobs created or saved.

So are these all public sector jobs? Looking at the current employment statistics indicates that while employment fell 4.3% in the 12 months to August 2009, private employment fell 5.1%. Total government employment rose 0.2% over the period. Note that the figures above will include a few private sector jobs, particularly in transportation. But most of these jobs are public sector.

The AP report indicates that rather than 66,000 jobs in Minnesota ‘saved or created’ we’re likely to see only 35,000 (if one extrapolates the current figure to the total amount of dollars to be spent.) This comes out to more than $135,000 per job. The remaining jobs may come from “awards made to cities and counties or tax incentives provided to individuals” and “higher Medicaid matching funds” according to the Dept. of Finance. But wouldn’t that mean that the tax cuts were quite stimulative, and wouldn’t that be an argument for using tax cuts — which is always “shovel ready” — instead of this spending? But that would not lead to an increase in public sector employment, and that appears to be a goal of the stimulus.

And all the numbers being reported should be taken with a grain of salt:

“These jobs figures are the result of a federal reporting process that is completely new and untested,” said Commissioner [Tom] Hanson. “Although there have been plenty of challenges, reporting government activity so broadly and so quickly is an important result of the Recovery Act. All citizens are better served by this commitment to increased transparency.” (emphasis added)

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