Dirty Stimulus Jobs Data Exaggerates Stimulus Impact

November 5, 2009

One of the key talking points for the stimulus that was passed earlier this year was that it would “save or create” jobs. Lots of jobs. Oodles of jobs. Jobs piled so high, we’ll have to hire people to dig us out of all the jobs we will have.

Or, more specifically, the Obama administration stated that they would “save or create” 4 million jobs.

This led to a great deal of mockery over the “save or create” turn of phrase, but the administration set out to actually measure the number of jobs that were saved or created by having recipients of the stimulus funds fill out a form in which they indicate how many jobs that particular chunk of the stimulus created (that form can be found here).

Now, if you look at recovery.gov, you’ll see that the stimulus has “saved or created” 640,000 jobs. That is only 16% of the promised jobs, but it’s still a pretty big number. I was curious how they got it, so I downloaded the raw data and started sifting through it. This is what I found:

  • Over 6,500 of all the “created or saved” jobs are cost-of-living adjustments (COLA), which is really just a raise of about 2% for 6,500 people. That’s not a job saved, no matter how you calculate it.
  • Over 6,000 of the jobs are federal work study jobs, which are part time jobs for needy students. As such, they’re not really “jobs” in the sense that most other federal agencies report job statistics (We don’t count full time college students as “unemployed” in the statistics.)
  • About half of the jobs (over 300,000) fall under the “State Fiscal Stabilization Fund”, which can be described like so: Your state (perhaps it rhymes with Balicornia) can’t afford all the programs it has running, but when the state government tries to raise taxes, people yell and scream and threaten to move. The federal government comes in with stimulus funds and subsidizes the state programs. Consider this a “reach-around” tax in which the state can’t raise taxes its citizens any more, but the federal government can. So the federal government just gives the state the money to keep running programs they can’t afford on their own.
  • There are, scattered hither and non, contracts and grants that state in no unclear language that “This project has no jobs created or retained” but lists dozens, if not hundreds, of jobs that have been “saved or created” by the project. It makes no sense whatsoever.

Finally, there is a statistical problem to the data here that I’ve not heard discussed at all, the problem of job duration.

Because there is no guidance in the forms on the proper way to measure “a job”, recipients are left to themselves to figure out what counts as a job. Some of them fill it out by calculating “man-weeks” and assume one “job-year” to be the measurement of a single job. Others fulfill contracts that only require two weeks, but they count every person they hire for every job to be a separate job created.

As an illustration: Let’s say you have a highway construction project in the Salt Lake City area that takes one month. A foreman is hired for the project and he brings on 20 guys he likes to work with to fill out his crew. That is 21 jobs “saved or created”. While that job is being completed, the funding if being secured for another highway construction project. By the time that funding goes through, the first project is done and they decide to just move the whole crew over to the next project. That is another 21 jobs “saved or created”.

If this happens four more times, on paper it looks like 124 jobs have been “saved or created” when in reality 21 people have been fully employed for six months. But if you judge jobs through a “man-weeks”/”job-years” lens, you have 10.5 jobs.

This is how the Blooming Grove Housing Authority in San Antonio, Texas can run a project titled “Stemules Grant” to create 450 roofing jobs for only $42 per job. My educated guess is that they hired day-laborers, paid them minimum wage or below and only worked them for a single day. Each new day brought new workers which meant more jobs “created”. Either that or they simply lied on the form. (UPDATE: USA Today interviewed the owner here. He says that he used only 5 people on the roofing jobs but that a federal official told him that his original number wasn’t right, so he adjusted it to count the number of hours worked, not the numbers of jobs created.)

Rational people can see that this kind of behavior skews the data upward. How much upward? It’s hard to say, although it is a safe bet that any project that manages to create a job for less than $20,000 is probably telling you some kind of fib.

My ultimate conclusion from looking at the jobs data is that:

  • The jobs numbers reported on recovery.gov are heavily exaggerated
  • The jobs numbers reported are not subjected to any scrutiny or auditing whatsoever; they are a simple data dump and therefore be seen with heavy skepticism
  • The jobs numbers are a laudable transparency effort. I’m impressed that so much work has gone into trying to measure the results of the stimulus funding. Normally, these kinds of numbers would be shrouded in mystery and a normal Joe like myself would be unable to investigate them. Kudos to the Obama administration for implementing this data gathering and display initiative. However, they put too much faith in the data and statements like “The stimulus has saved or created 640,000 jobs” are uttered with a profound ignorance in the nitty-gritty details of what the data actually says.

For more interesting stimulus jobs data, you can see Paul Krugman getting angry about it here and Greg Mankiw responding to that anger here and Brad DeLong calling Allan Meltzer a shameless partisan hack about the topic over here and a story of how $900 worth of boots became 9 jobs over here. Or you can just download the jobs data and look through it yourself. There’s lots of interesting stories in there.

17 Responses to “Dirty Stimulus Jobs Data Exaggerates Stimulus Impact”

  1. […] here), the Chicago Tribune, the Denver Post, USA Today, the Wall Street Journal, and blogs such as Political Math (H/T d3ft […]

  2. […] That’s because despite his protestations to the contrary, the the “stimulus” was one, giant earmark.  And it is not having the desired effect despite the bogus “jobs created and saved” numbers. […]

  3. […] Political Math takes a look at the jobs “created or saved” by the stimulus. […]

  4. Jake McKenzie Says:

    So you are saying that Obama is “job farming” so to speak to put up good job creation statistics. what is that saying, Our perceived ‘truth’ is the shadow of fact, always darker, emptier, and simpler.

    Obama convincing people that he created jobs probably will have a more beneficial effect to morale than actual job creation. As crazy as that sounds, that seems more likely with these findings.

    We are a nation of over 300 million people, he would have to ‘create’ 4 million jobs just to reach 1%. Which seems to be what he is going for. I know you are a number cruncher, but I really think you may be overlooking the human element and human error part of this.

    • politicalmath Says:

      No, I don’t think Obama has anything to do with the fact that the data is inaccurate. I think it was a valiant attempt at measuring the impact of the stimulus. But by repeating these numbers mindlessly, he’s doing a disservice to the truth.

      Also, keep in mind that the unemployment rate is calculated off of the labor force, not the general population. As such, 4 million jobs would be about 3% of the overall number of jobs.

    • Ryan Says:

      “Obama convincing people that he created jobs probably will have a more beneficial effect to morale than actual job creation. As crazy as that sounds, that seems more likely with these findings.”

      Disdain for fuzzy math is a bipartisan character trait that once exposed does little for morale. Google “Bush fuzzy math” for more information.

      A more effective way to boost morale is to actually do something you say you’re going to do and prove it with the statistics. Convince people of the good results, and they’ll be encouraged. You can only “boost morale” so long with hand waving and number fudging.

      I think the whole point of raising the “human element and human error” part is that it’s systemic. It’s not like there’s a small margin of error here with otherwise sound statistics.

      What would boost my morale? Someone to say, “Ahh, we tried to do this right but screwed up. Looking at the numbers now, it seems the stimulus isn’t really effective. Let’s stop wasting money right _now_ and re-evaluate how to really make a change and save people’s jobs.”

      Corrective action in the face of dismal results proves a commitment to help people, not just to look good.

  5. Ryan Says:

    Thanks for the analysis. I love the “cost per job” statistic, too. On the top paying, $1.4 billion nuclear plant shut down grant, it works out to something like $1.75 million per job. Now, granted, it’s a pretty technical contract, as I’m sure many of the other DOE contracts will be. But I’m wondering if they were just going to let that languish without stimulus funds… i.e. those 800.3 jobs would not have existed without stimulus funding.

    And if we’re really looking for the maximum economic impact… well, never mind. I just can’t argue with $1.75 million per job. I also can’t figure out whose three tenths of a job was saved and what they’re now doing with the other seven tenths of their time. :-/

    • Ryan Says:

      Oh crap! Shame on me for not looking at the tabs. That’s a $1.4 billion _contract_ paid by the recovery. The largest _grant_ was over $4 billion to bail out California’s educational system, including a bail out of UC and CalState. It’s worth noting that the description of jobs “created” really means “how many people we didn’t have to fire because the state is incompetent at running a business.” I bet with $4 billion I could build a mighty fine academic institution here in Kentucky…

  6. Eddie The Bear Says:

    wow. More jobs lost than Obama caimed to have created.

    Thanks Barry!

  7. […] their own version seen here. So how many jobs has the Stimulus saved? Here is one blogger’s analysis: Now, if you look at recovery.gov, you’ll see that the stimulus has “saved or created” […]

  8. […] here), the Chicago Tribune, the Denver Post, USA Today, the Wall Street Journal, and blogs such as Political Math . Afraid this mess is BO's… __________________ […]

  9. […] Official data here, where it helpfully adds “as reported by recipients”, perhaps to shift the guilt. […]

  10. Justin Says:

    How about this:

    Per Recovery.gov on 8 Feb 2010:

    Stimulus money received in California = $ 7,808,030,000

    Jobs Saved (let’s assume they’re correct and not over-inflated) = 71015

    Cost per job saved = $ 109,949 per job so far.

    That seems very expensive to me. Is this the best use of our money?

    P.S. Nothing against Cali, the numbers just stuck out at me.

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