Expensive Jobs

Through June, the government spent about $620 billion of stimulus money. The Obama administration claims that the spending has saved or created 2.3 to 2.8 million jobs.

For the sake of argument, let’s assume those job creation numbers are true. In fact, let’s pick the rosiest number — 2.8 million jobs.

At a price of $620 billion, that comes out to $221,428.57 per job. Startlingly inefficient.

Now consider that that $620 billion had to come from somewhere else. Some of that money came from taxes. That leaves less money left over for consumers and businesses to spend. Some of the stimulus money was borrowed. That leaves less capital for private companies borrow.

The private sector tends to spend less than the government to create a job. Since stimulus spending is spending more money to create fewer jobs than the private sector, it is actually causing net harm to the job market.

In place of the spending stimulus, I humbly offer a deregulatory stimulus. CEI VP Wayne Crews and I offer some specific proposals here.


4 responses to “Expensive Jobs

  1. Sorry I only ever comment to disagree with you, but you’ve only assumed that the purpose and results of the stimulus were to create jobs. And by that measure alone, sure, they were costly.

    What you’re not taking into account is everything else of value that was produced by the ARRA – the road and infrastructure upgrades, housing, transit, routine maintenance that would have otherwise languished. And more than that, if the government hadn’t paid for highway repairs, who would have? The private sector? I don’t think so.

    That’s the beauty of an infrastructure-focused stimulus and/or works program. Not only does it give people a job and put them back to work, but it also produces something tangible and long-lasting; an investment in the future.

    • I don’t know if you’ve traveled much in Germany, but despite changing climates and heavy truck traffic, their roads are almost always i n mint condition without the constant inconvenience of road repair. Why? They build them thicker and more durable so they last longer and hold up to the wear and tear that ours don’t. We don’t need Stimulus money to rebuild roads – which on it’s face is nothing more than busy work for contractors. What we need to do is build roads properly and stop wasting our money – OUR money, not the government’s – on things that will deteriorate in a couple of years, restarting the cycle.

      Made in America. Right.

      • Oh, I absolutely agree (and I find it ridiculous that we’re still using asphalt instead of concrete), but we still need to build THOSE roads in the first place. But either way, our deteriorating roads need replacement, and something is better than nothing. And to get those roads we’ll still need the one-time inconvenience of road work.

        What I’m saying is that a stimulus can be used for good if it’s an investment in these long-term projects. And why would it matter if it’s stimulus money going to these rebuilding projects?

  2. They are currently in the process of (quite pointlessly) tearing up some bridge by my suburban townhome in order to “stimulate” the economy. Every time I drive by the accompanying “stimulus” sign (as shown above) I cringe and mourn the loss of the innumerable (or “unseen” — as Hazlitt would say) real jobs that it prevented.