$90K to $160K per Job

BigG · 10-31-2009, 09:21 AM

Interesting Link;

$160,000 Per Stimulus Job? White House Calls That 'Calculator Abuse' - Political Punch

Couldn't the government just hand out cash to greater effect?

As to "moral hazard", the Wall Street crowd has pretty much destroyed that argument.
Firms that made no money without the government's bailout are now declaring huge profits and awarding obscene bonuses. They were the recipients of public charity. Other than the fact that the top colleges are heavily exposed to their stock and "deals", why should they get preferred treatment?

Meanwhile foreclosures continue and we are experiencing another "jobless" recovery.

coureur · 10-31-2009, 09:42 AM

>>Couldn't the government just hand out cash to greater effect?<<

No, because then you just support the individuals for a while. When the money is spent it's gone. By putting people to work on projects you not only provide the job but you also get what the worker produces - the improved roads, bridges and other infrastructure, the kids who were educated by the teacher that was hired, etc.

That's what is wrong with simply dividing the stimulus money spent by the number of jobs created or saved. It fails to take into account the value of the goods and services produced by the people working in those saved and created jobs. Simple cash handouts would not have nearly so much benefit.

BCEagle91 · 10-31-2009, 10:09 AM

The government is handing out cash - it's called unemployment benefits.

Mr Payne · 11-01-2009, 06:15 AM

coureur, you just brilliantly illustrated why unemployment benefits are idiotic.

littlegreenmom · 11-01-2009, 11:14 AM

My cousin, who is an electrician, has been unemployed since January. Can't find a job, or at least that is what I thought.

I saw his mom the other night at a family shindig, and asked what was happening with his job hunt. He said that he has had some offers of employment at less money, and some different types of work, too, but doesn't want to take them because he is on unemployment and will lose his benefits. She is beside herself.

I asked the question "What happens when the unemployment benefits run out?" He still doesn't have a job, the family is facing bankruptcy and he doesn't want to take the leap of taking a job because it isn't what he wants. He is completely now "dependent" on the system.

But he could get health benefits, pay down some bills and would make MORE than he is on unemployment. It doesn't make sense.

My H got laid off in summer. His severance package ran out. Taking unemployment benefits for him makes him sick and angry, but it is a short term solution. Once you get reliant on those benefits, it is hard to take a risk and get a job, I think. My cousin is going to be completely financially devastated because his mindset is now about not wanting to take a job because he might lose those benefits. Yet, he will, within a short amount of time, anyway. What makes him think it will be easier to find a job in a few more months? He will just be more desperate...

Unemployment benefits were never meant to be a long term solution. It is terrible out there finding a job. In CA, our rate of unemployment is around 12+%. Jobs aren't coming back in some of those industries. For many newly unemployed, either time to transfer skills to another type of work, or take something that pays less, or find a new type of opportunity.

Lergnom · 11-01-2009, 11:16 AM

I assume you're all parents of college bound / college kids and I hope they can think critically better than this.

1. Remember when $300 hammers were a problem in defense contracting? That was because the big number in the contract was divided out among all the parts. It wasn't that hammers actually cost that much; it was a blunt accounting allocation. Same with stimulus and I'd hope you could actually think that through.

2. If you actually look at what jobs cost, apply some basic reasoning. Here's a start: a job pays taxes, which means government gets back about 1/3 of the money, and a job actually produces something, which generates GDP, which generates taxes. Stuff that's built enables growth, allows money to be spent on other productive activities, etc. A job also produces a multiplier, meaning other people have jobs and pay taxes. The multiplier for deficit spending is always and issue but a major factor is the cost of financing the money spent. As of now that cost is almost zero, which means the multiplier effect of stimulus now, in this weird US Treasury environment, is higher than it would be normally. The cost of financing is a major reason why governments can't normally just deficit spend to stimulate effectively.

3. As for unemployment insurance, man it's hard to even know where to begin. Take the basic economic function: it's to lubricate the job market, thus enabling employers to cut workers in the knowledge that this lubricant is out there to ease the friction in the job market. The basic economic function is not to provide a "safety net" but to enable the job market and thus our economy to function more smoothly. In times of emergency, such as now, unemployment insurance is a way of propping up consumption, thus keeping unemployment from rising higher, thus allowing more goods to be produced and thus keeping the economy going, albeit at a reduced level. If you can't understand the concept of putting out money to save money, then how do you make it through life?

razorsharp · 11-01-2009, 01:51 PM

The Obama administration has expended billions of dollars to increase the size of government when it should have been focused on stimulating the economy. Obama brags about saving jobs of police officers, but the fact it that saving their jobs does not stimulate the economy. It does not create new jobs in industries in recession. Stimulating the economy means creating private sector jobs that create other private sector jobs. On this mark, the Obama Administration is largely a failure.

Lergnom · 11-01-2009, 07:22 PM

Wow, and your handle is razorsharp. Nice choice.

catahoula · 11-01-2009, 09:31 PM

I have to confess, lergnom - you make unemployment benefits and make-work programs sound so darn productive, what with the 1/3rd returned as taxes to the financiers, be they the taxpayers, government, or the Chinese. (Besides, who really cares?... it's almost free money, according to your reasoning.)

What, exactly is the productive labor generated by continually extended unemployment benefits? Other than that 'lubrication' thing and continued consumption, that is?

BigG · 11-02-2009, 09:27 AM

Anyone remember the ancient "negative income tax" proposals?

Society just accepts that in a technological culture, not everyone "needs" to work to supply all the goods and services necessary. The government provides subsistence allowances to everyone.

I prefer the European limited work week better. Require companies to hire more people by limiting the work week to 35 hours.

By some estimates this would increase the number of available jobs by 40%. End of unemployment problem.

Of course there is the problem of high benefit costs, particularly healthcare, making any increase in "base load" fringes unattractive.

BCEagle91 · 11-02-2009, 09:44 AM

> By some estimates this would increase the number of available jobs by 40%.
> End of unemployment problem.

Cool. What's the unemployment rate in Germany? It is nice that BMW and Mercedes have shipped some of their jobs over the the United States.

BigG · 11-02-2009, 01:53 PM

Mercedes and BMW have shipped no jobs to the US. They have created new jobs and kept all their old ones. The US jobs represent expansion of world employment, a concept "foreign" to US executives.

BCEagle91 · 11-02-2009, 02:12 PM

> Mercedes and BMW have shipped no jobs to the US. They have created
> new jobs and kept all their old ones.

Semantics. If it worked so well, they would have kept the jobs in Germany.

> The US jobs represent expansion of world employment, a concept "foreign" to
> US executives.

Rubbish. Ever hear of outsourcing?

coureur · 11-02-2009, 03:01 PM

>>I prefer the European limited work week better. Require companies to hire more people by limiting the work week to 35 hours<<

Bad idea. Hasn't worked out the way it was intended and France is seeking to repeal it. My company's Marseille facility didn't hire anyone to fill the gap. NO jobs were created. The salaried managers have filled in where they could, and the rest of the missed work simply went undone until the next day - simply making the plant less productive.

Conservatives in France just hate the 35-hour week:

France Debates 35-hour Work Week - TIME

Excerpt:

Despite that assurance, the 35-hour week is viewed as so damaging to businesses — and so offensive to conservative attitudes to work — that the right remains bent on finding ways of gutting the entitlement even as they promise to preserve it. A prime example came Thursday, as Betrand sought to explain why his draft legislation would not mean the end of the 35-hour week as a legal reference. "Our logic is to say 'Does the 35 hours week work for certain companies? Then you can keep it'," Betrand said. "Does the 35-hour week block others? Then you can do more by negotiating new rules."

Lergnom · 11-02-2009, 03:37 PM

I don't completely get all the discussions here. If you're a company of size, you locate facilities in your markets because that's a cheaper way of doing business. Some of that is additional job growth and some can certainly displace jobs in your home area. We have more of that than Europe because:

a) we have Mexico next door and NAFTA enhanced incentives to move production for the home markets right next to the home market. While there has been some of that in Europe - moving east - it's not the same scale.
b) we have a weird relationship with Canada in which they use our home market creatively by providing subsidies - notably health insurance - which makes paying wages higher than Mexico's attractive. We subsidize the subsidies which draw jobs north of the border (or South if you live above parts of Ontario.)

As for work weeks, I think it's necessary to also include the concept of vacation time. I say "concept" because in the US vacations are an after thought while in Europe they are substantial. We average a few weeks a year and they average more like 6 weeks a year. In light of this, the productivity of the major European economies is quite striking. Germany, for example, has brought in the very unproductive East while becoming the world's largest exporter - with a much smaller economy than ours. Part of the work week argument and tradeoff is quality of life. We may focus here on healthcare - provided there but not here - but they also get 3 times more vacation and work fewer hours.

Europe has its problems, but so does the US and it's not easy to make simple comparisons to prove one is better.