Eugene Loan Guy

I subscribe to Barry Habib’s Mortgage Market Guide and he has often given me some insight into what is happening in the mortgage market that I was unable to find elsewhere. Today’s installment had some very interesting numbers having to do with the Stimulus Plan and the creation of jobs (and/or the saving of jobs.) It interests me that what Barry has done is break down the amount spent on job creation and saving and put a cost per job number together. Barry has often been a guest on Fox Business News

And today we are getting reports on how the $787B government stimulus package has either saved or created around 650,000 jobs.  Rather than watch the television and get the spun version of the data – you may wish to check out the website www.recovery.gov, which shows how much has been spent, where it has been spent and how many jobs it has either saved or created.  The US map on site lets you see how your state is doing.

Many have pointed to the fact that there is a difference between a job that has been saved and a job that has actually been created.  However even if combining both, the cost per job appears quite high.  So far the government has distributed about half of the $787B to the states.  The government is saying that the total of both saved and created jobs is 650,000 as a result of the stimulus plan.  This comes as a result of spending about half the $787B or a total of $393B spent so far – this means that it cost an average of $604,615 per job saved or created.  In some States, we spent well in excess of $600,000 to either save or create jobs – for instance, in South Carolina, we have spent $220 Million to save or create 146 jobs – that equals $1.5M dollars per saved or created job.

To further put this into perspective, the Weekly Initial Claims report shows that each week close to 600,000 people are filing for new unemployment benefits – so all this money, reporting, time and work has only saved or created enough jobs to replace one week of newly unemployed people.  With numbers like these it is understandable to see the point of view of the small business community, which create many jobs, that feel a fraction of the money could have been spent in tax credits given for new hires. 

And this story is not over -  the Associated Press is now reporting that that 650,000 jobs saved or created is very likely overstated because of faulty reporting.

So, with that note, I would like to send the above card to our elected representatives and government bureaucrats that have been doing such an excellent job in spending our money. Also, just to be fair, this is not aimed at the Democrats, but all of our politicians, they are all equally responsible for the amount of money spent and the way it was spent. Earmarks and pork barrel spending continues to be a problem while extending the First Time Home Buyer Tax Credit takes a back burner. If you agree or even if you disagree, it is time to let your representatives know what you think. I want to thank Barry Habib for this excellent information and suggest that if you are interested in his insightful commentaries to subscribe at www.mortgagemarketguide.com.

One Response to “What is the cost of creating or saving a job?”