Economics

Did the Stimulus Create Jobs?

The government's own job creation data reveal the dangers of a second stimulus

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Last week the White House held a jobs summit with academics and lawmakers to come up with a strategy for job creation. The result of their cogitation was presented by President Barack Obama on Tuesday during a speech at the Brookings Institution. The plan includes a wide-ranging new jobs program focused on infrastructure investment, small-business initiatives, and aid to state and local governments.

Sound familiar? It should, because this new plan is nothing more than a repeat of the first job creation program—the so-called stimulus plan—signed into law by the administration back in February.

Back then, the White House claimed that if we passed the $789 billion American Recovery and Reinvestment Act, unemployment would be contained and jobs would be created immediately.

The chart below illustrates how well, or not, that job creation program has worked so far. Using the most recent data from the Bureau of Labor Statistics and data from the Administration's website Recovery.gov, it shows the number of jobs lost and the number of jobs "created or saved" between February and October 2009 by state. This chart also assumes, for the sake of argument, that the concept of a "created or saved" job is not a completely fictitious and unverifiable metric of the effectiveness of the stimulus.

As we can see here, with only the exceptions of Minnesota and Vermont, the number of jobs lost outpaces the number of jobs "created or saved." Since February, the economy has shed 3,179,328 jobs while the Administration claims to have "created or saved" 638,825 jobs. This means that, on average, for each job created or saved, over 6 jobs were lost.

A deeper look into the job creation data reveals that most of the jobs were "created or saved" in the public sector. Based on data from Stimulus Watch, we find that of the jobs the administration claims to have created with stimulus funds, only some 140,765 of them were private jobs.  

Furthermore, according the Bureau of Labor Statistics, since the passage of the American Recovery and Reinvestment Act private industry has suffered a net loss of 2,610,000 employees (or 2.3 percent of total private employment), while the government has only lost 46,000 employees from its payroll (or 0.2 percent of total government employment). In other words, most of the job losses occurred in the private sector rather than in the public sector. This means that on average, the number of private jobs lost for every private job created is far greater than 6.

This chart provides some evidence that the first stimulus has failed to deliver on the promises made by the administration—namely, to stop unemployment growth and promote job creation. Finally, consider the Congressional Budget Office's statement on page 9 of its report, Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009, that "it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package." It seems clear that for the sake of taxpayers and for the sake of job creation, a second stimulus is absolutely the wrong idea.

Veronique de Rugy, Ph.D., is a senior research fellow at the Mercatus Center at George Mason University and a monthly columnist for the print edition of Reason.

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  1. The Stimulus and Job Creation

    The title of a very thin book…

  2. There are only 26 states in that graph… What happened to the other ten?

    1. They joined Canada to have health care.

      1. And the other five?

        1. There are 57 states, you puta.
          Obama told me so.

          1. HUUURRRR DUUUURRR

            CRAYON CAN’T NOTICE A JOKE

            HUUUURRRR DUUUURRR

            1. I don’t understand why you’re using capital letters and no punctuation.
              Is this some Libertarian in-joke?

              1. Is Crayon related to Harold Waxman?

                1. OMG! I love Ghostbusters!

  3. This means that, on average, for each job created or saved, over 6 jobs were lost.

    And of the jobs saved, only one in 6 were private jobs. All bad things come in sixes….

  4. I don’t care how important our lefty friends think public-sector jobs are. More public sector jobs (that require $) and fewer private sector jobs (that provide tax $) create what we call a “snowball effect.”

  5. The [new] plan includes a wide-ranging new jobs program focused on infrastructure investment, small-business initiatives, and aid to state and local governments.

    Sound familiar? It should, because this new plan is nothing more than a repeat of the first job creation program?the so-called stimulus plan?signed into law by the administration back in February.

    Hey, it’s like Police Academy 2 – why stop at only making one when you can have a second just as good?

  6. This means that, on average, for each job created or saved, Veronique has written this article 400 times! At least the stimulus has been good for Veronique!

  7. DUUURP HURRRPP
    IF YOU HAVE NO JOB YOU HAVE NO FOOD
    INVISIBLE HAND BITCHSLAP LOLOLOL
    DERP DI DUUUUURPPP

    1. The job losses are the diorect result of government intervention, pinche joto.

      1. HUUURPI DUUUURPI
        POOR PEOPLE ARE LAZY AND STUPID
        LET THEM DIE AND WE’LL BE IN LIBERTOPIA
        HURRR HUUUUUUR DERP

        http://photos.imageevent.com/b…..r-derp.jpg

        1. Hey, jotito – The job losses were a direct result of government intervention.

        2. HUUUURRR DUUURRRR

          I CAN COUNT CARDS

          HUUURRR DUUUURRR DERP!

        3. Pardon me, but I don’t understand how libertarianism implies leaving the poor to die. Could you please explain?

          1. No jobs, no money, no food, you die.
            YOU DIE, MR. BOND, YOU DIE!

            1. You did not answer Dan’s question, crayon – you just flew off a tangent.

              1. No government help, a bunch of selfish Randroids in charge, no jobs, no salary equals no money equals starvation.

                What don’t you understand about it, you fucking spic?

                See here, unlike in Huarez, we don’t steal and kill each other like animals.

                But if that’s what you want, so move back to Spicixo and observe the greatness of the invisible pimp hand.

                1. Crayon,

                  Your repartee is wearing thin. Who said anything about libertarians being “Randians”? Who said “Randians” would leave people to starve?

                  For that matter, who said a libertarian society would NOT have full employment? You’re begging the question.

                  1. No capitalist system in history has ever employed its full population.

                    1. The same can be said of all socialist systems. The People’s Republic of China has an unemployment rate of 9%.

                      Besides, there is nothing in libertarian ideology against voluntary charity. In fact, it is encouraged as a more effective way than government welfare to fight poverty.

                    2. I said a libertarian socienty, Crayon, not a capitalist one (which historically has meant a semi-socialist chimera.)

                      And all socialist societies in history have had very BAD records when it comes to full employment, except maybe Cambodia, with its slave camps…

                    3. Please give me an example of a libertarian society.

                    4. So you are extolling the joys of communism and/or socialism?

                      Fool.

                  2. “Old Mexican,
                    For that matter, who said a libertarian society would NOT have full employment?”

                    Could you please give me an example of a libertarian society and its employment figures?

                2. I’m sorry, those “selfish randtoids” to which you are referring – you must be referring to those actually in charge and those actually responsible for taking hundreds of billions of dollars out of Americans pockets and funneling them to their Wallstreet, too big to fail friends and putting millions of Americans out of work. You must be referring to those pushing for more taxation on the most basic needs of working class Americans and making their lives and livelihoods even more difficult and tenuous. That’s the only way I can begin to decipher what you are trying to say.

                3. While it comes as no surprise, given the fact it is hate and bigotry that is the common thread that unites the various groups that make up the New Left, it would be inconsiderate of me to not let you know your slip is showing.

                  Probably should tuck it back in, being a despicable piece of useless racist filth is one thing, letting it show in public is another.

                  Best take a good look around you, kid, those who escaped the living hell of what you’re helping to install here didn’t die out with Rand, we’re everywhere, entire communities of us. The lie you suck up and ask for seconds of, is one we’ll never accept.

                  If you sincerely believe, if you are one of the faithful, go where it’s being done, prove you mean it. Simple enough, but you don’t have that much faith, right. You just talk a lot of crap, very immature.

                  Old Mexican, personally I don’t know the man, but he has a head on his shoulders, that puts him many miles ahead of you in this world. Jacking your racist lip in his direction does nothing to make you look like more by making him less, it just makes you look like even less. ?A poco crees que era tu chingada madre? Bah, chiquill, me cago en tu puta madre.

                  1. I’m sorry, I don’t speak maid.

                4. No government help, a bunch of selfish Randroids in charge, no jobs, no salary equals no money equals starvation.

                  Can you tell me where does the government get the resources to ‘help’?

                  A related question, why does quality of life and prosperity decline the more a government ‘helps’?

            2. I’m sorry if I’m being obtuse, but it seems like you’re saying that, if we took a libertarian approach to recession, then there would be no jobs (or no additional jobs created)? I think that’s why I’m confused. I mean, maybe there would be *less* jobs created than government stimulus, but it seems like *no* jobs is hyperbole?

              1. If a true libertarian approach were taken prior to the recession it unlikely there’d be a recession worthy an approach. This is purely hypothetical, of course, so about as useful to some chemists as would be a large three necked reaction vessel full of hyperbole.

                Computin’ chemist sounds like interesting work. Does it involve something like using MDL Chime to display molecular models, or is it more along the lines of Matlab and full blown chemical engineering?

            3. Because only government can fix things, provide jobs, and feed people… right, crayon?

              My God, you are about fuckin’ stoopid.

              1. I’m astounded that someone would believe that only government could fix, provide, and feed, and yet it seems like some people believe exactly that!

                1. I’m astounded that someone would believe that only the private sector could fix, provide, and feed, and yet it seems like some people believe exactly that!

                  1. Well, crayon, it’s like this. There was nothing for your people to come along and screw up until the private sector had built it to begin with.

                    It’s just baffling to try even imagine how you became so messed up that you or anyone else who puts out nothing of value could feel entitled to having anything provided to you. You’re all just very fortunate those of us who produce have managed still find incentive to do so despite your interference and siphoning off of profits. When we are gone or no longer see a reason to produce you are left without a host to feed off. For people who no longer possess ability to provide for themselves, it doesn’t take rocket science to know you will not fair well.

                    In the old Soviet Union workers used to say “They pretend to pay us, we pretend to work.” Surely with an ego like yours you will enjoy standing in line for a little moldy bread.

                    Your system has proven repeatedly that once in place it’s a downward spiral that even legions of imprisoned forced laborers can’t turn around. Yet people like yourself are so incredibly dull witted you will still sing it praises.

                    BTW my ‘understatement’ comment was in reply Libertarian Guy, not sure why it appeared below yours. Your comment would be impossible for me to agree with.

                    1. Well, if you don’t like it here, you’re free to leave.

                      We won’t miss your bloated and narcissistic egocentric presence.

                      The fact that you think you’re so important and actually contribute to society is just laughable and pathetic.

                      Go Galt, please.

                      Move to a ditch in Colorado, go on a tax strike, do whatever it is you think will be the downfall of our “Socialist” society.

                      Nobody will miss you, nobody will care, and nothing of value will be lost.

              2. If making an understatement was a crime you’d be on your way to prison after that doozie.

                1. Remember, labratarians.
                  Freedumb isn’t free.

                  1. Remember, labratarians.
                    Freedumb isn’t free.

                    I try to imagine how it would be to be this cerebrally challenged and not know it.

    1. The Nickelback one.
      It made me sick.

      1. The upside of forced abortions is fewer human beings subjected to Nickeback?

        1. The living envy the dead when Nickelback is on the radio.

          1. Nickelback? That ain’t metal.

        2. I’m pretty sure reading both of those articles (especially read in succession) are the journalistic equivalent of a hate crime. Although I did enjoy this part of the Nickelback one.

          Despite a distinct lack of critical acclaim, the rock band formed in Hanna, Alta., has sold more than 30 million albums worldwide.

          Oftentimes, the critics know what they’re talking about.

          1. There’s a link, though.
            Nickelback’s encouraged more women to have abortions than any Chinese government policy.

    2. Ah, Malthusian nonsense always rears its ugly head.

      From the Financial Post comments:

      Francis is right. Stick your heads in the sand all you like but population growth is the elephant in the room at Copenhagen. By 2050 farmland will have to double in area to feed the hungry mouths. Potable water is already a huge problem and we have eaten most of the fish in the sea. How are we going to get our emissions below 1990 levels and keep them there in face of a growing population? We’ll all be sitting around under blankets, in the dark singing Koom Ba Yah, I guess.

      1. with Chad Kroeger leading the chorus

  8. In other news, Obama sure knows how to be grateful:

    “Nobel peace prize: Norwegians incensed over Barack Obama’s snubs”

    http://www.guardian.co.uk/worl…..prize-snub

  9. Barack Obama Ensures a Long Depression.

    http://mises.org/daily/3907

    Political success, as reflected in the recent gubernatorial races appears ever-more staked on the state of the economy. Official unemployment recently measured 10 percent, though the more-honest gauge (U-6) shows the nation running unemployment at a Depression-like 17.2 percent.

    In response to high unemployment numbers, Barack Obama has said, “I will not rest until all Americans who want to work can.” Yet Mr. Obama’s policies belie his words. In fact, what his administration is doing will ensure massive unemployment and endless economic stagnation.

    To understand why I make such a sweeping assertion, it is necessary to comprehend how our economy ended up in this predicament in the first place. For this, I must give a cursory explanation of the Austrian theory of the business cycle.

    The interest rate is a price signal, no different from the price tag on any good. In a free market (which the United States most certainly does not have), the interest rate is determined by the supply of and demand for capital. Individuals choose to consume or invest, and this dictates the amount of loanable funds, which businesses will use to undertake projects to bring goods to market for future consumption.

    However, when a central bank like the Federal Reserve prints money, artificially lowering the interest rate and expanding the loanable pool of funds, producers are left with a false price signal. The interest rate will tell producers that consumers want them to undertake long-term projects to bring goods to market. This artificially lowered rate will also induce consumers to save less and spend and borrow more.

    The conflicting actions of consumers and producers in response to the government-distorted price signal of the interest rate cause the mass misallocation of resources. This leads to the bust manifested, for example, in the empty houses and office buildings throughout the country.

    Logically, one might think that the best way to fix this mess would be to liquidate the malinvestments of businesses, pay down our debts and start fresh; in other words, allow for the market to correct the imbalances and distortions created during the artificial boom.

    But the enlightened Barack Obama and his team of trusty economic advisers, along with the ever-compliant Messrs Bernanke and Geithner, have other ideas. Practically every single policy they have enacted is intended to stop the market from clearing out the wastes and excesses of the boom.

    In other words, printing money and giving it away does not create prosperity, or jobs.

    1. No, Hoovervilles and dustbowl migration is the only way to ensure prosperity.

      The cleansing steel bath of economic freedumb will weed out the weak.

      As for crime caused by poverty, well:

      The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.

      1. Uh, crayon, why these non sequiturs? What does Dust Bowls and Hoovervilles have to do with anything?

        Who mentioned anything about crime being caused by poverty? That’s nonsense.

        1. Old Mexican, you really are an idiot, aren’t you?

          1. Gee, you answer a valid question with an insult . . .

            What was I thinking, trying to argue with a lefty?

            Note to myself: “They” “Think” “Like” “Children.”

            There.

            1. Just because you come from a society where stealing food is OK, doesn’t mean that we, who are not spics, have to accept that type of behavior.

              1. Ok, you’re clearly a regular. Suspect #1: The Angry Optimist.

                1. Old Mexican steals food because he thinks it’s fun.
                  Other people only steal food when they are poor and have no other choice.

              2. Which society is that, Crayon? I have never acted like a lefty – I mean, stole food.

              3. Racist!

                1. “Just because you come from a society where stealing food is OK, doesn’t mean that we, who are not spics, have to accept that type of behavior”

                  THAT, not OM’s post. Damn thread squirrels.

        2. crayon is one of those retarded liberals who compare anyone who isn’t liberal to hicks – then say “but we’re not elitists”.

      2. They’ll be called Obamavilles soon.

      3. No, Hoovervilles and dustbowl migration is the only way to ensure prosperity.

        Well that’s exactly what Obama is creating.

  10. And that’s why, my friends, we should cut military spending.
    The government is the problem, not the solution.

    1. Mmm … misplaced sarcasm. You’re confusing libertarians with conservatives. Bad crayon! Libertarians do favor reduced military spending!

      1. Depends. There are the ‘right-leaning’ libertarians who support military spending. Neal Boortz comes to mind. There’s a guy on here named Eric Dondero whose blog advocates the same. They are examples of whom crayon was referring to.

        However, I’m with you.

      2. Libertarians are just closeted Republicans.

        1. Then why did they hate Bush and Bush 2 so well?

  11. The living envy the dead when Nickelback is on the radio.

    I gotta say i agree with crayon on this one.

  12. Wait.

    What was that definition of insanity, again?

  13. Nickelback: ‘Band of the decade’, according to Billboard

    And people wonder why I don’t believe in a benevolent deity.

  14. And people wonder why I don’t believe in a benevolent deity.

    What about evil deities? I could see you as a Chernobog worshipper.

    1. Ialtabaoth should get his vote. Then he could believe in all sorts of evil Archons too.

  15. “There is no Devil, only God when he’s drunk.”

  16. This means that, on average, for each job created or saved, over 6 jobs were lost.

    In DC, this will be taken as proof that the stimulus was only 1/6th as big as it should have been.

  17. “Since February, the economy has shed 3,179,328 jobs while the Administration claims to have “created or saved” 638,825 jobs. This means that, on average, for each job created or saved, over 6 jobs were lost.”

    That should more accurately read ‘almost 5 jobs were lost,’ since the larger number is divisible by the smaller number only 4.9 times. Not that that makes the ‘stimulus’ a good idea or anything…

  18. Does anyone else find this to be a really bad point to make, since it concedes the initially horrendous premise that the government had anything to do with jobs “saved or created” or that number can even be calculated?

    Don’t accept the premise – ATTACK the premise, all the time. It’s retarded, and only bad logic flows from it.

  19. Anyone who uses the non-word “freedumb” must surely hate the concept of freedom itself.

    Typical RepubliCrat.

  20. “Last week the White House held a jobs summit with academics and lawmakers to come up with a strategy for job creation.”

    We are ok, the academics are on it….That single sentence is much more disturbing to me than any 2nd/3rd/4th/5th stimulus.

  21. Today I read an anlysis done by AP News which stated that they extensively audited the ClimateGate “stolen’ emails and stated that basically no science was faked.

    I am wondering if the AP service can be trusted to be an independent and unbiased news agency, this being the News Agency that devoted 11 reporters to slice and dice Palin’s new book, while assigning one to review Obama’s and Kennedy’s tomes.

    Any honest insight would be appreciated.

  22. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets

  23. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…

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  28. i agree, we should cut military spending

  29. we should cut military expenses !

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