Everyone is talking about the stimulus package and job creation. Depending on which side of the political fence you’re on it’s either a great success or a total flop.
Unemployment is at 9.5%, some say it’s higher than that but somewhere in the neighborhood of 1 million folks have simply stopped looking. At any rate was the stimulus needed and is it working?
Well as to the first question there is no doubt it was and is needed. That only leaves one question did we spend the money wisely, or in my simple business outlook did we get an adequate return on investment?
Well if you look at the money allocated, $787 billion dollars, that seemed to me a significant amount of money to invest. Of that total about 57% of the money of $453 billion has been used. It seems a simple math step would be to simply divide the amount used by the number of jobs created and you could get a feel for it’s success.
That unfortunately is where it gets murky. The Congressional Budget Office has estimated the package to date has created 800,000 to 2.4 million jobs. Not a confidence building estimate was it. Obama said in February it will create 1.5 million to 2 million more. More than what? OK based on these two figures we have a range of cost per job. If we take the low estimate it cost the government $453 billion to create 800,000 jobs or about $566,250 per job. If we take the highest possible estimate it breaks down to about $188,000 per job.
Most of these jobs were created repairing infrastructure, we’ve all seen the signs on the highway, “Project funded by the American Recovery and Reinvestment Act”. Most of these we can assume are worthwhile projects. However they are projects, they’ll be completed and the jobs will go away. We’ve spent somewhere over $453 billion and created no lasting value, or worse yet no lasting employment.
To me that’s a short-term patch and no lasting impact. I read in a newspaper a few weeks ago that the total budget shortfall for all 50 states in healthcare and education is a combined $55 billion dollars. Wouldn’t it have made sense to put some of that money into hiring teachers and improving education at the state level?
Investment in quality education is the only lasting way to create jobs. Now I realize that’s a long term look and we need jobs today. Are highway paving projects the highest thing on our priority list?
What about manufacturing, medicine, research? Funding projects that create value and good paying long term employment.
I guess is you sum it up the stimulus is sorely needed, but like everything else driven by Washington it was lost in the execution. Congress and Obama were more interested in getting job numbers up quickly to make a positive impact in time for elections.. Like American big business, government is making short-term decisions for quick fixes and further mortgaging our future.
So you tell me, did the $453 billion provide an adequate return on investment?
Like so many other things nobody knows.