Stimulus jobs are just about over

An illustration of the futility of creating jobs by just spending government money for construction projects.  Once the projects are finished, we are back to unemployment.  And all of those “shovel-ready” construction jobs are just about finished.  From The Washington Post:

The stimulus was here.

Those words should be embossed on a stretch of Route 29 outside of Charlottesville, where paver operator Clifford Carter poured hot asphalt one year ago.

The $885,000 project, funded by federal stimulus dollars, took two days in November 2009. A few weeks later, he was laid off – temporarily, he thought, until paving season resumed in the spring. But in April, he received his first permanent layoff notice. Without a job, he couldn’t afford to keep paying for life or health insurance, so he let both lapse.

“When they kicked me out the door, I lost everything,” he said.

The end of the stimulus – the $787 billion that Washington approved last year in an effort to forestall another Great Depression – is more than a year away. But for Carter and thousands of other workers in the road construction industry, it has already arrived.

Road construction workers were among the first to benefit from the 2009 American Reinvestment and Recovery Act, which pumped hundreds of millions of dollars into “shovel-ready” road resurfacing projects in order to save or create millions of jobs.

The bulk of highway-related work will be done within a year and more than half of the funds for it have been paid out, said Ken Simonson, chief economist for the Associated General Contractors of America, an Arlington County-based trade group.

But with the economy continuing to lag, private-sector work has all but disappeared, and many states have cut back on road work in an effort to plug gaping deficits.

Without the stimulus, thousands of workers who build and maintain America’s roadways could soon join the 1.6 million construction workers who are unemployed. The construction industry lost an additional 5,000 jobs in November, the latest U.S. Labor Department data show, bringing the sector’s unemployment rate to 18.8 percent.

via After stimulus, construction industry seeing private-sector and state projects drying up.

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About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • WebMonk

    I briefly mentioned this in another post’s comments, but a lot of these jobs cost a ton of money to create – some over a million dollars per year per person employed. That isn’t completely typical, but it does illustrate that the cost per job created by the government stimulus money was much more than the normal market rates.

    I won’t track down the study again (I think it was a Cato paper) but the average job cost to the government was nearly $300,000 per job. That is WAY more than what the market would be paying for those services, and so obviously as soon as the stimulus money stopped, the jobs were discontinued.

    The theory espoused for the bill was flawed and there were precious few economists who thought it was a good idea. Sure, there was a bit of extraneous job creation (or preservation) beyond the immediately created jobs, but that sort of effect gets smaller very quickly the further from the directly created job, it certainly doesn’t get magnified over time like claimed. (I think I wrote a few comments along these lines too way back when.)

    They were banking on the hope that the economy would turn around before the stimulus ran out. It didn’t. So, things are going right back to where they were before the stimulus. Surprise, surprise.

  • WebMonk

    I briefly mentioned this in another post’s comments, but a lot of these jobs cost a ton of money to create – some over a million dollars per year per person employed. That isn’t completely typical, but it does illustrate that the cost per job created by the government stimulus money was much more than the normal market rates.

    I won’t track down the study again (I think it was a Cato paper) but the average job cost to the government was nearly $300,000 per job. That is WAY more than what the market would be paying for those services, and so obviously as soon as the stimulus money stopped, the jobs were discontinued.

    The theory espoused for the bill was flawed and there were precious few economists who thought it was a good idea. Sure, there was a bit of extraneous job creation (or preservation) beyond the immediately created jobs, but that sort of effect gets smaller very quickly the further from the directly created job, it certainly doesn’t get magnified over time like claimed. (I think I wrote a few comments along these lines too way back when.)

    They were banking on the hope that the economy would turn around before the stimulus ran out. It didn’t. So, things are going right back to where they were before the stimulus. Surprise, surprise.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Monk, I’d say it’s far worse; taking all that capital out of the markets probably destroyed a lot more jobs than were created. Yes, I’ll say it; the 2% jump in unemployment we’ve seen is likely largely the result of the spendumore plan.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Monk, I’d say it’s far worse; taking all that capital out of the markets probably destroyed a lot more jobs than were created. Yes, I’ll say it; the 2% jump in unemployment we’ve seen is likely largely the result of the spendumore plan.

  • WebMonk

    Bike, it’s not quite that bad since the stimulus was entirely debt funded. That’s definitely bad in its own way, but it isn’t directly removing capital from the markets.

  • WebMonk

    Bike, it’s not quite that bad since the stimulus was entirely debt funded. That’s definitely bad in its own way, but it isn’t directly removing capital from the markets.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    When my husband saw the total cost and total jobs, he said, “Forget the jobs, just give them the money. It would be cheaper.”

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    When my husband saw the total cost and total jobs, he said, “Forget the jobs, just give them the money. It would be cheaper.”

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg
  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg
  • DonS

    Yes, Bike, debt-funded stimulus doesn’t take jobs away from us. It takes jobs away from our children. But, that’s OK. We don’t really seem to care much about what we are doing to our children.

  • DonS

    Yes, Bike, debt-funded stimulus doesn’t take jobs away from us. It takes jobs away from our children. But, that’s OK. We don’t really seem to care much about what we are doing to our children.

  • WebMonk

    sg, I got a kick out of that article:

    “cheaper than Washington, cooler than Texas, as outdoorsy as Colorado … and not California.” (emphasis theirs)

    LOL!!

    On a more serious note, if Nevada had ever bothered to focus on anything other than Las Vegas, they would have been the natural destination for companies looking for near-California but not-California. As it is, Utah is picking up a lot of that action.

  • WebMonk

    sg, I got a kick out of that article:

    “cheaper than Washington, cooler than Texas, as outdoorsy as Colorado … and not California.” (emphasis theirs)

    LOL!!

    On a more serious note, if Nevada had ever bothered to focus on anything other than Las Vegas, they would have been the natural destination for companies looking for near-California but not-California. As it is, Utah is picking up a lot of that action.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Yeah, and what is the difference between Nevada leadership (not just gov’t leadership) and Utah leadership? A short sighted vision for the future generally doesn’t lay a foundation for enduring strength. Utah has stronger family structures than Nevada does, at least according to statistics. That can’t hurt and a strong family culture is healthier than uh, well one that is less family oriented.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Yeah, and what is the difference between Nevada leadership (not just gov’t leadership) and Utah leadership? A short sighted vision for the future generally doesn’t lay a foundation for enduring strength. Utah has stronger family structures than Nevada does, at least according to statistics. That can’t hurt and a strong family culture is healthier than uh, well one that is less family oriented.

  • http://www.bikebubba.blogspot.com Bike Bubba

    WebMonk, reality here is that if the loans had not been made to Uncle Sam, at least a portion of it would have become working capital for companies here. Ever heard of “bonds”?

    So while it is certainly true (thanks Don) that we’re taking away jobs from our children by deficit spending in this way, it’s also true that we’re taking away jobs from people today by sucking up available capital.

    I’m guessing, again, about the 3 million or so additional jobless since Obama’s inauguration.

  • http://www.bikebubba.blogspot.com Bike Bubba

    WebMonk, reality here is that if the loans had not been made to Uncle Sam, at least a portion of it would have become working capital for companies here. Ever heard of “bonds”?

    So while it is certainly true (thanks Don) that we’re taking away jobs from our children by deficit spending in this way, it’s also true that we’re taking away jobs from people today by sucking up available capital.

    I’m guessing, again, about the 3 million or so additional jobless since Obama’s inauguration.

  • WebMonk

    Bike, ehhh……. maybe a tiny bit of money was taken away from corporate bonds to finance the stimulus debt, but it would be a really tiny amount.

    Over 80% of the US debt is owned by either the federal government, foreign owners, or State governments, leaving only 20% being bought by others who might be looking to buy US corporate debt.

    For those others, one of the reasons that investors buy federal bonds is that they are searching for a safer location than corporate bonds. Those who buy federal bonds have already ruled out buying corporate bonds, for the most part.

    As a general rule, government bonds don’t really compete with corporate bonds and other forms of investing in businesses. They affect corporate/business investment, but not in a competing manner – they don’t typically take from the same pool of investment money.

  • WebMonk

    Bike, ehhh……. maybe a tiny bit of money was taken away from corporate bonds to finance the stimulus debt, but it would be a really tiny amount.

    Over 80% of the US debt is owned by either the federal government, foreign owners, or State governments, leaving only 20% being bought by others who might be looking to buy US corporate debt.

    For those others, one of the reasons that investors buy federal bonds is that they are searching for a safer location than corporate bonds. Those who buy federal bonds have already ruled out buying corporate bonds, for the most part.

    As a general rule, government bonds don’t really compete with corporate bonds and other forms of investing in businesses. They affect corporate/business investment, but not in a competing manner – they don’t typically take from the same pool of investment money.

  • utahrainbow

    That article is pretty funny, sg…
    and then funny when I opened my credit union statement, and lo and behold, in the newsletter, that same article was touted– well, part of it anyway. My favorite quote they did not include:

    “The large number of young Mormons who spend two years on a conversion mission also means a huge swath of the population earned its sales stripes in hostile terrain.”

    But, hey, if you all are convinced by the head of Utah’s Economic Development Corporation, by all means, move in! We need all the Lutherans we can get!

  • utahrainbow

    That article is pretty funny, sg…
    and then funny when I opened my credit union statement, and lo and behold, in the newsletter, that same article was touted– well, part of it anyway. My favorite quote they did not include:

    “The large number of young Mormons who spend two years on a conversion mission also means a huge swath of the population earned its sales stripes in hostile terrain.”

    But, hey, if you all are convinced by the head of Utah’s Economic Development Corporation, by all means, move in! We need all the Lutherans we can get!


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