Associated Press is starting to notice,
Stimulus cash doesn’t create local jobs
An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.
For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus such as tax cuts, unemployment benefits or money for states.
Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.
The stimulus money was ineffective, everywhere:
The Obama administration has argued that it’s unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all.
For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, as well as the Labor Department’s monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.
There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.
Under the old rules, only jobs that were actually newly created or not lost because of stimulus money were counted. Now the administration plans to count all jobs for projects funded by stimulus money—even if that job already existed and the person was never in danger of losing the job.
Or, get this, if the person who was already employed gets a pay raise, all for the sake of hiding the real costs of the stimulus:
The new methodology, however, will do more than just make the stimulus program look like it is creating more jobs than it actually is. It will also conceal an important cost of the stimulus—the economic distortion that comes from diverting labor away from projects favored by the market toward projects favored by the government. In the past, the government didn’t get credit for drawing jobs away from market based projects—limiting its incentives to do so. Now that it gets credit for those jobs, the distortive effects are likely to become greater.
One effect is already felt: How The Government Payroll Replaced Goods-Producing Jobs,
We’re now smack in the middle of the government payroll economy; good-bye profit-making, hello profit-eating.