No Unemployment Stimulus, Thus Far

So far, most American workers have received little to no measurable benefit from the American Recovery and Investment [Stimulus], Act, especially  the unemployed people and their families in the poorest parts of the country.

On January 8th, then President-elect Obama gave a well-received speech to build congressional and public support for the Stimulus, at that time carrying a taxpayer-funded tab in the neighborhood of  $819 billion. At the time, President-elect Obama stated:

[W]e need to act boldly and act now to reverse these cycles. That’s why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That’s why we need to re-start the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again. That work begins with this plan—a plan I am confident will save or create at least three million jobs over the next few years [emph added].

Remembering that even proponents of stimulus admit the “save” part of that often repeated canard will always be difficult to measure, it is interesting to note what the Administration actually DID predict, and how those predictions are faring thus far. From Impact of The Job Impact of the American Recovery and Investment Plan a pamphlet issued to market the immediate effects the stimulus would have to alleviate unemployment and create job growth:

[W]e expect the [Stimulus] plan to more than meet the goal of creating or saving 3 million jobs by 2010Q4. There are two important points to note, however: First, the likely scale of employment loss is extremely large. The U.S. economy has already lost nearly 2.6 million jobs since the business cycle peak in December 2007. In the absence of stimulus, the economy could lose another 3 to 4 million more. Thus, we are working to counter a potential total job loss of at least 5 million. As Figure 1 shows, even with the large prototypical package, the unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the approximately 8.8% that would result in the absence of a plan.

Here is the graphic that the administration used to illustrate the stimulus’ effect on the unemployment rate:

Stimulus 3

So how have the administrations predictions fared thus far? Take a look:

stimulus effects

The April unemployment rate was 8.9 percent, well over a percentage point above the administration’s predictions. While economic conditions are notoriously challenging to predict, the fact that this stimulus was supposed to dramatically alleviate job loss over a 1-3 year period beginning as early as RIGHT NOW  nonetheless calls many of the other predictions used to market the stimulus bill into question.

Where the stimulus will actually, well, stimulate the economy, if anywhere, is another valid question. It has done little to alleviate economic stress in some of the poorest regions of the country. For instance in Alabama, unemployment

has doubled in the past year from 4.5 percent to 9 percent. But here in Dallas County, it is 18.2 percent. In neighboring Wilcox County, is it more than 22 percent. That is staggering: One in five people you pass are unemployed.   .   .Selma [Alabama] would appear, in the short term, a perfect target for the Obama stimulus plan. Selma has a wish list of $40 million in projects, from street repairs and other infrastructure to help with the new riverfront development. But not a dime has reached here yet. “We have not gotten a response on it at this point,” [Selma Mayor George P.] Evans says. “It is very frustrating. The entitlement cities with greater populations have gotten a lot of theirs, but the smaller cities like Selma have not gotten theirs yet. …[emph added].

Downtown Selma, Alabama
Downtown Selma, Alabama

Of course there are always exceptions, and one city that is likely to benefit from this stimulus is the perpetually stimulated Washington DC metropolitan area:

[The Federal Government could hire] as many as 600,000 [people], according to the Partnership for Public Service. That’s across the federal public sector over the next three to four years. President Obama’s proposed budget for FY 2010 could create all of those jobs, maybe more, according to the Partnership for Public Service. They’re adding up the numbers of retiring workers, plus the number that will be made available because of contracted work that’ll be done by government, or brand new jobs created by the stimulus. .  . The Pentagon workforce will increase by 14,000 employees. Social Security is looking to hire more than three thousand people. In addition, they’ll have to replace any retiring workers, which could add up to more than 4,200 hires. The Department of Veterans Affairs is hiring 10,000 new employees. The Department of Homeland Security is hiring 7,000 to 10,000 new employees.

Cranes are a Ubiquitous Part of the DC Skyline
Cranes are a Ubiquitous Part of the DC Skyline

Even the recent April unemployment numbers, dismal as they were, were alleviated considerably by growth in the government sector:

April’s net job loss total actually was somewhat misleading: Private-sector employment actually fell by 611,000 jobs, but government hiring, which added 66,000 jobs, mostly for the upcoming census, offset some of them. Although April’s job numbers reflect a welcome slowing of the downturn, a deeper look suggests that it will be a long, hard climb back to full employment. The number of long-term unemployed — those out of work for 27 weeks or longer — continues to rise alarmingly.

So if you live in a part of the country that is not Washington DC, or have no desire to spend the rest of your working days as a GS-11 in the bowels of the Census Bureau, Department of Transportation, or the Pentagon, then you are probably not yet partaking of the stimulus’ bounty. So watch the numbers,  count the cranes on the skyline of your hometown, and ensure you let your local/state/federal representatives know  how well they are spending your hard earned money. And your children’s money.

Post Script: I lifted the chart juxtaposing the actual unemployment numbers from this site HERE.


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