Creating Jobs or Making Work?


President Obama says the $787 billion American Recovery and Reinvestment Act, which he signed today, "will create or save 3.5 million jobs." That works out to roughly $225,000 a job, which seems pretty pricey, especially since many of these jobs are temporary. (Let's put aside, for the time being, the question of whether the jobs will materialize during or after the recession.) The 835,000 or so projected jobs in bridge and highway construction, for instance, will last only as long as the projects do. Likewise the 500,000 jobs in energy-related projects such as weatherizing homes and modernizing the electricity grid, and the 375,000 jobs in environmental projects such as installing water systems and cleaning up pollution. (These estimates are all from a New York Times summary.) And the public-sector jobs "saved" by the stimulus package will be funded for just a few years. So unless a lot of these positions are paying six-figure salaries, this does not seem like a very good deal, job-wise.

That's where Obama's secondary justification comes in. The central idea of the stimulus plan, he said last week, is "to put Americans back to work doing the work America needs to be done." These are "not just any jobs"; there are "jobs that meet the needs we've neglected for far too long, jobs that lay the groundwork for long-term economic growth; jobs fixing our schools; computerizing medical records to save costs and save lives; jobs repairing our roads and our bridges and our levees; jobs investing in renewable energy to help us move towards energy independence." In other words, these are jobs that are totally worth doing on their own merits, because they will deliver benefits that exceed their costs. Regardless of the economy's condition, according to Obama, this money would be well spent.

As I noted last week, that position seems to be at odds with Obama's claim that he wouldn't be spending all this money if it weren't for the recession. That's plausible when it comes to temporary relief like unemployment benefits and food stamps, but it does not apply to all the spending he says is necessary to "meet the needs we've neglected for far too long." The beauty of Obama's dual argument is that he can say the stimulus package is all about putting Americans back to work and then, when challenged on the question of whether this is an efficient way to do that, he can say all the work needs to be done anyway. Conversely, when challenged on the question of whether all these projects are really worth the money being spent on them, he can cite the jobs they "create or save" as a backup justification.

If the projects really were cost-effective, of course, there would be no need to cite the jobs they create. And if creating jobs were an end in itself, as Obama often seems to think it is, there would be no need to find projects that are worth doing because of the public benefits they deliver. In fact, it would be better to throw money around willy-nilly so as to maximize job creation, in which case we surely could get more than 3.5 million jobs for $787 billion.