Saturday, October 2, 2010

White House says stimulus is working

I saw an article in the paper today about the stimulus package, and how it appears to be on track to create or save as many as 3.5 million jobs at a cost of $862 billion, as promised by Congress. Now, that may sound like success to a lot of people, and I'll even ignore the whole "on track" bit and assume it's true. But let's do a little bit of math and see what that means.

Doing some simple division, you get $246285 per job, give or take a few cents. Now, we need to quantify what "a job" is just a bit, so I went out to the Bureau of Labor and Statistics and found a 2010 jobs report. In the report, you find this quote:

The average person born in the latter years of the baby boom held 11 jobs
from age 18 to age 44

So it's time to break out the calculator again. The study says men were employed on average 85% of that span of years, That gives a span of 21.84 working years, (26 years times 84%), and eleven jobs. One more divide tells me that the average job lasted 1.98 years based on the info provided by the BLS. That's somewhat below my own average job duration, but I'm in high tech which pushes average job lengths up a bit.

Now the magic begins. Taking our dollar amount, and the average job length, (and dividing once again. Am I being too divisive?) we get an annual wage of $124386 per year. There are several professions with high education requirements and detailed skill sets where that is a reasonable annual salary.

I haven't mentioned yet is that this would be the cost if they were paid TO DO NOTHING, as if they were a little monetary black hole, sucking in government funds. The government can, of course, employ them with government labor and get some value from them on things like road construction or hiring new IRS agents to handle foreclosure paperwork, but those are by definition not private sector jobs. We need jobs in the private sector.

Even assuming the government pays 3.5 million people to pick their noses, they can do better with minimal effort. The average personal income in the US is about $43000. By applying this wage to the amount being spent, and assuming the same average job duration, you can employ 10.1 million nose pickers. I assume it would be a simple matter to triple that to 30 million if people were hired to do actual work with value near their pay.

Then there's the trickle down effect of jobs, um, created or saved by the majority of that money going back into the economy as rent, house payments, groceries, and so on. This should make jobs per dollar go up.

I know this is counter to the way government is designed to work, but isn't it about time for the government to spend efficiently? They could have done better by randomly mailing out stimulus checks. Oh, wait. They did that already. My bad. If I remember right, members of Congress complained about how too many people paid off debt or invested their stimulus check, rather than buying stuff. People did things which take longer to show an impact, and that irritated those who wanted immediate gratification.

We as citizens can fix this problem, and we are fixing it gradually. It takes time, hard work, and thinking as much about your neighbor's job as you do your own. Small businesses are the engine of the economy. As a group, we provide the goods, services and jobs which will bring us back to a stable economy which is capable of sustaining a lower and healthier unemployment rate. If we wait for the government to bail us out on this one, it will be a long wait and a burden to be shouldered by our children and grandchildren.

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