Jobs - Real and Unreal

The White House has wagered an enormous amount of its credibility on the Stimulus package and its ability to create jobs. As I mentioned in this blog previously, the pork-ulus that was the stimulus bill was a laundry list of Democrat programs that had very little to do with job creation. As that became more obvious, the tag line for the program changed from a plan to "create jobs" into "create or save jobs." Note the "or save." That part is practically impossible to track or let alone substantiate. However, as Catwoman might say, "prrrr-fect." Having "fuzzy math" (as one might call it) makes public talking points easier than hard facts. But when hard facts emerge, the talking points become more difficult.

White House economists originally floated the following graph to show how their stimulus plan would improve the jobs situation if passed. Superimposed are red dots that show exactly where we ended up even though Congress passed the plan.

Needless to say - thanks for THAT.

Knowing clear well that it hasn't created jobs, White House moved on to hanging their hat on the "saved" part. They sent out forms to all Stimulus participants asking them how many jobs were gained or saved due to the money. Results: 1,000,000 jobs created or saved! Wahoooo!

But then the digging began. Even using their results, the spending doesn't look too good. At the time of the survey, $250 million of stimulus money was spent and $288 million of tax credits were given. So....that works out to $538,000 per job saved. Those better be pretty good jobs! But if that weren't enough - Local and national news services started to dig too, and found out that many of the supposed jobs "saved" don't actually exist.

The Sacramento Bee newspaper reported, "Up to one-fourth of the 110,000 jobs reported as saved by federal stimulus money in California probably never were in danger." A Florida paper reported that a Florida day care center that claimed stimulus money "saved or created" 129 jobs when in fact the money they got was simply used to give all existing employees raises. The Wall Street Journal reports that a Kentucky shoe store owner, Buddy Moore (no relation), saved nine jobs with $889.60 in federal stimulus money. How? Well, he supplied nine shoes to the Army Corps of Engineers. Somewhat confused, he determined that those nine engineers couldn't do their jobs without shoes, so 9 shoes = 9 jobs. Even The Boston Globe reports today, "While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated." They go on to cite a specific instance,

"One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But Bridgewater State spokesman Bryan Baldwin said the college made a mistake and the actual number of new jobs was “almost nothing.’’ "

The list goes on.

The problem stems from how people were supposed to count "saved or created" jobs. Simply stated: If any employee's salary is paid, in whole or in part [any part!], count that as a job "saved or created" by the spending. So, if a factory gets $5000, and divides that, $50 a worker, among 100 workers, thats how many jobs were "saved or created."

I liken this "jobs" survey to auto dealership customer surveys. If you have purchased a car, or had a car serviced in the last few years, I'm sure you have been subjected to the dreaded customer service satisfaction survey. On it's own, it sounds like a good idea. OEMs want to rank their service providers in terms of quality. However, on their scale of 1-5, nothing is good except a perfect score, a five. Therefore, after you've purchased/serviced a car, you get the salesman speach, "you will get contacted to take a survey. Only "5" matters, so please tell the survey taker '5' on all items. Anything less than '5' is a failing grade." In many cases, they offer you a benefit for giving all fives - free oil change, etc. So the OEMs take the time to conduct these surveys, but the data are worthless based on how the survey is constructed. Nevertheless, the OEMs don't care! They get to promote "perfect customer satisfaction."

The "saved" jobs report is the same thing. Participants who received money, don't really know how many jobs they "saved," so they provide the most optimistic scenario. There is no incentive to be conservative, because those that created the survey want to see the most amount of jobs possible. They WANT to be told what they WANT to hear.