Not-so-Happy Stimulus Anniversary
The Obama administration and its allies are trying their hardest to put a happy face on the first anniversary of the the gargantuan $787-billion stimulus bill — officially named the American Recovery and Reinvestment Act of 2009. President Obama claims that the Act helped “save” 2 million jobs, while Ross Eisenbrey of the union-backed Economic Policy Institute (EPI) argues that the stimulus has worked because jobs are being lost at a slower rate than before the Act was enacted. (It’s worth noting that EPI has a direct line to the administration: Vice President Joe Biden’s chief economic adviser, Jared Bernstein, was chief economist at EPI before joining the administration.)
If Eisenbrey is trying to lower expectations, he certainly succeeds. However, he doesn’t succeed in proving that the stimulus was a success. First, he provides no hard numbers, only the “[m]onthly change in payroll employment.” Things getting worse at a slower pace doesn’t mean that things are about to get better. Jobs are still being lost. Once you’re a hole, you don’t need to keep digging as fast to go much deeper.
Second, Eisenbrey argues that because the rate of job losses slowed down after the stimulus was enacted, then the to the stimulus should go the credit. Yet coincidence in time doesn’t prove causation. The proposition that the rate slowed down despite the stimulus — and would have turned around even faster without it — is just as valid an assertion.
However, once you get beyond mere assertion, the numbers hardly put the stimulus in a good light. Elizabeth MacDonald, of Fox Business, provides a useful summary of the jobs situation:
* The unemployment rate has increased since the stimulus bill was enacted, by +1.5% to 9.7%, from 8.2% in Feb 2009.
* The number of people who are unemployed increased by 2.1 million, from 12.71 million in February 2009 to 14.8 million in January 2010.
* The number of states/federal districts with an unemployment rate of 10% or higher increased from Feb 7, 2009 to December 17, 2009 (latest data).
* Payroll employment decreased by 3.3 million (132.823 million in Feb 09; 129.527 million in Jan 2010). Private payrolls are at levels not seen since 1999.
* The construction sector lost 810,000 jobs (6,435,000 in Feb 2009/5,625,000 in Jan 2010).
* The manufacturing sector lost 837,000 jobs (12,377,000 in Feb 2009/11,540,000 in Jan 2010).
* Employment in the federal government (excluding the Post Office) increased by 113,200 (2.068 million in Feb 09 / 2.181 million in Jan 2010). The number of federal, state and local employees is now about twice the number in US manufacturing jobs.
* Most jobs supported by the stimulus so far are public employees.
Even worse, as Veronique de Rugy of the Mercatus Center points out, “unemployment in the government sector accounted for 5.9% of the increase in the economy’s total unemployment which has occurred in the past year. In contrast, job losses in the non-agricultural private sector have accounted for 81.3% of the total increase in unemployment.”
With more union members now working for government bodies than for private businesses, it’s no wonder organized labor’s allies are so intent on defending the stimulus, while the rest of us pay the tab.
For more on public sector unions, see here and here.
For how to deregulate to stimulate, see here.