Posted by: The moderator | October 30, 2009

Measuring Jobs Saved

We’ve heard it countless times from Obama administration officials… the stimulus is working because millions of jobs have been “created or saved” by decisive government action. It’s not difficult to measure how many jobs are created by government funding, especially if the government and government contractors are doing most of the hiring. But how does the administration know how many jobs have been “saved” by the stimulus?

The consensus seems to be that the administration doesn’t know. After all, how can anyone determine the number of job losses that could have happened after they didn’t happen?

On one side, there’s William McGurn’s WSJ article which argues that the number of jobs saved is completely fabricated. There’s no way to measure something that didn’t happen and no way to verify the administration’s numbers. Even Max Baucus (D-Montana) saw a problem with jobs claims like these, saying that Treasury Secretary Geithner had “created a situation where you cannot be wrong.”

On the other hand, Jon Ward at The Washington Times has found the data used by the administration to make these job claims, proving that the numbers weren’t pulled out of someone’s ass. The only problem is, these estimated numbers use assumptions about the amount of money needed to “save” a job rather than actually measuring jobs saved. The result is a formula that’s all hypothesis and no legitimate conclusions.

For an even more nauseatingly detailed view of the meaningless numbers, take a look at the White House’s official report.

To further complicate matters, Caroline Baum at Bloomberg claims that the number of jobs reportedly created or saved is a “fantasy” because any job gains would be made from furthering job losses. Government money spent to create or save jobs comes from taxing people and businesses, potentially causing job losses in one sector while the stimulus spending props up another sector.

Greg Mankiw described the use of “jobs created and saved” as “an act of political genius.” There’s no good way to check the administration’s math and it offers “proof” even when all the other indicators dispute your claims. Baucus was right… Obama can’t be wrong when he makes up his own indicator.

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