Because most philosophies that frown on reproduction don't survive.

Friday, November 06, 2009

I Want One Of Them Stimulous Jobs

There is something in me which, when it sees to related numbers, wants to immediately do a calculation, so when I saw a news story stating that the $215 billion in stimulous money given out thus far had resulted in 640,329 jobs, my first question was, "How much is that per job?"

Answer? $312,339.44

Not too shabby, eh? I'd like one of them jobs just fine.

Now that I've had my sticker shock fun, let me be fair: if you're going to try to create jobs by flooding money into a set of projects, the cost if obviously much more than the cost of a salary. Say I decide to help a bakery create jobs by buying doughnuts. Buying $5000/month worth of doughnuts doesn't create a $60k/yr at the doughnut shop, because although there's need for more work, there's also need for dough, and cooking oil, and glaze, and more doughnut machines, etc. I might well have to spend $200k per year at the bakery in order for them to add $100k to their payroll, perhaps even more.

But what that emphasizes is that simply spending money like a drunken sailor (no disrespect to our naval readers) is not a very efficient way to help people who are out of work in the near term. The two most direct ways to help people out of work would be through providing longer unemployment benefits (and more programs to help people in problem industries to get new training) and to provide companies with direct payroll relief by reducing employer contributions to payroll taxes.

This is something we'll do well to keep in mind as Democrats on Capitol Hill start to get itchy for a second round of stimulous in order to emphasize that they are "doing something" about the increasingly grim job numbers.


Anonymous said...

Creating jobs is not the only purpose of the stimulus bill. It was also intended to, you know, stimulate the economy in other ways as well. As you acknowledged in your bakery example, the $60k spent there doesn't result in a new $60k/yr job, but does result in more dough consumption (which wheat farmers appreciate), and oil (ditto for soy processors), and glaze (sugar cane/beet farmers, or corn farmers and corn syrup processors). Stimulus spending has considerable temporary value in a down economy and should not be discounted.

However, I still maintain that the real test of stimulus spending is whether the money is being spent on things of lasting value: things that will improve quality of life or boost the economy for years to come. I hope your doughnut example is fictitious.


Foxfier said...

As a (occassionally, on accident) drunken sailor, I've got to say that the phrase "spending like a drunken sailor" is very apt-- generally, they will buy anything they run into to try to get a girl to hang around and at least talk to them. (Lonely is a very strong motive.)

More directly on topic: it strikes me as being kind of like communism. It'd work, except that people are involved; gov't always wastes money, because folks choose the wrong point to stimulate, because folks get money and then stop trying... it's like the energy consumed in an engine by drag, so that no matter how great your lubrication is, there's still energy lost.