BROTHER, CAN YOU SPARE $92,000?
The White House released some new numbers on the stimulus today. The one that's getting the most attention is $92,000. That's how much it will cost to create or preserve each stimulus-related job. Do I even need to relay the snarky rejoinder to this?
But the number is more complicated than it seems. Building a bridge creates a certain number of jobs. But it also requires you to buy a lot of cement. Cutting taxes for small businesses helps preserve jobs. But it does that by helping them pay the rent. Pumping billions into Pell grants helps kids secure better jobs because they can graduate from college. But it really just replaces tuition that would otherwise be paid by richer families.
The stimulus was primarily, but not only, a job creation package. It also spread broadband and strengthened universities and built trains and helped schools. Much of the fear in a recession is that investments important to tomorrow's economy stop happening. Fewer students go to college and fewer roads get repaired. The stimulus spent quite a bit paying for the ongoing investments that mean tomorrow's economy will have jobs, and many of them will even be good jobs.
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COMMENTS (39)
That's actually not bad, assuming the average salary is about half that. The cost of an employee is 2x to 3x their base salary once you account for benefits and overhead.
If these were all 20k/yr jobs, I'd worry, but there's no evidence that they are.
Posted by: Tyro | May 12, 2009 4:08 PM
This is why there's such a difference between public works in the model of the Public Works Administration (PWA) and public employment in the model of the Works Progress Administration (WPA). And why I was pushing for more of the direct job creation and less of the "shovel-ready." It's all about how you do things - whether your marginal dollar goes into cement or wages, whether you decide to build something with steam shovels vs. 1000 people with hand shovels.
Needless to say, we could have created a lot of jobs faster if we'd gone the WPA route.
Posted by: StevenAttewell | May 12, 2009 4:16 PM
It is also unclear that the figure relates to job-years.
If a job is created for two years, then that figure appears twice as large as the actual number you are comparing it to. Thus, the job would pay $92,000 / 2 - overhead and expenses.
Be careful with overly simplistic work with numbers, it's always wrong and misleading.
Posted by: DCDan | May 12, 2009 4:17 PM
I'll note that, even after the stimulus, lots of teachers are losing their jobs in my daughter's school district here.
Posted by: Obama / Steelers / etc | May 12, 2009 4:30 PM
Also, not to get all fussy or, you know, business-management-y here but if you measure what the HR department of the Fortune 500 company I used to work for used to call the "average fully encumbered cost" of a new employee $92,000 isn't that expensive.
Point being that even if you're hiring a cubicle monkey you've still got their salary (maybe as low as $30,000/year for, say, a tech support operator) but you've also got to pay annual costs for the cubicle partitions, desk, phone, computer, plus the incremental cost of training, IT, management, facilities, real estate, healthcare, 401(k) administration, and, of course, HR. Heck, the per-unit cost for purchasing just for an additional cubicle module is between $1000 and $8000 *before* you had it installed and wired up.
And yeah, the stimulus plan isn't for cubicle monkeys, and you'd think the encumbered cost for construction labor would be lower but... a D8 Caterpillar bulldozer for one construction worker can run half a million dollars.
And yeah, everyone else has said this too. But that's a bug in the criticism, not a feature: anyone criticizing average per-employee costs below maybe $100,000/year probably doesn't know very much about business operating expenses...
...and therefore probably isn't competent to comment on whether $92k/year is too much.
figleaf
Posted by: figleaf | May 14, 2009 4:00 PM
If these were all 20k/yr jobs, I'd worry, but there's no evidence that they are
Posted by: sesli chat | June 7, 2009 3:31 AM
And yeah, the stimulus plan isn't for cubicle monkeys, and you'd think the encumbered cost for construction labor would be lower but... a D8 Caterpillar bulldozer for one construction worker can run half a million dollars.
Posted by: lingerie wholesale | June 24, 2009 6:23 AM
i need to say we could have created a lot of jobs faster if we'd gone the WPA route. thanks
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Basically, the way the stimulus plan works is that the federal government has a big pot of money, and they give it to the different federal agencies which then give it to the appropriate state agency, which is then responsible for spending it.
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