The State of The Stimulus: Not So Stimulatin' When It Comes to Jobs


Over at The American, Reason columnist and Mercatus Center economist Veronique de Rugy takes a look at whether the Obama administration's claims about stimulus spending and job creation/retention hold water.

The solid green line estimates what the number of jobs created or saved should look like if the administration were allocating relatively more money to the states with higher unemployment rates and if that money, in turn, created more jobs.

However, the data show that this is not the case. The chart shows that many higher-unemployment states (the states on the right) saw similar numbers of jobs created as lower-unemployment states (the states on the left), or even worse, saw relatively fewer jobs created….

So what does it all mean? At least three things, none of them good:

First, the data show that much of the money has been allocated randomly among states without regard for the level of unemployment in those states.

Second, much of the money has been spent to close budget gaps in the states, which often means keeping union-protected school teachers in their jobs and paying for public-sector jobs rather than creating jobs in the private sector. For instance, according to Recovery.gov data, so far a little over 13,000 contracts went to independent contractors and over 116,000 grants went to public agencies. Also, reports have shown that the stimulus funds have been used to pay for employees whose jobs were never in danger (see California for instance).

Finally, the data on Recovery.gov reveals that many private-sector jobs were created at very high cost to taxpayers. For instance, $437,675,000 was awarded to CH2M WG IDAHO, LLC, in Washington to create 496 jobs. That's $882,409 per job. That's not as bad as the $257,613,800 awarded to the Brookhaven Science Associates, LLC, in New York to create 25 jobs. That's over $10.3 million per job.

Whole thing here.

Back on November 3, de Rugy decoded "The Secret Message of Stimulus Spending" for Reason.com. (Note to surly commenters: That article looked stimulus funds spent per person and unemployment, which generates a chart similar in shape but different in detail. Which also affirms a basic point: This stimulis spending ain't what it's cracked up to be.)