Saturday, September 10, 2011

Some jobs bill arithmetic

Economist Mark Zandi is quoted in yesterday's N&O:
"The president's plan would provide a meaningful boost to the economy and job market in 2012," Zandi concluded. "I expect the plan to add 2 percentage points to real GDP growth and 1.9 million payroll jobs, and reduce unemployment by a percentage point."

The biggest contributor to job growth next year under the Obama plan would be extending the payroll tax holiday for workers, which Zandi estimates would add 750,000 jobs. The portion that is waved for employers would add another 300,000 jobs, he said. Infrastructure spending could add 400,000 jobs.
I entered these numbers into a spreadsheet along with the cost of each program (based on WSJ) of $175b, $70b, and $140b respectively.  You can then calculate how much it costs (in lost revenue or greater expenditures) to create a job.  The numbers are sobering: $233k per job for the payroll tax cuts and $350k per job for the infrastructure spending.  And these jobs would only be around for the duration of the new stimulus package!

My plan for zero unemployment: There were 14m unemployed workers in August.  The $447b stimulus package could be used to generate a check of almost $32,000 to each and every one of them.  As a condition of receiving that check, they would be asked to work at some organization, for profit or nonprofit, for one year.  These jobs would last just as long as the stimulus package and some of them would no doubt turn into real jobs.  Isn't this a plan everyone could support?

20 comments:

  1. Funny. ~40% of the working age population (242,000,000) have no jobs. some of them would also join such a plan. Approximately 120,000,000 from 215,000,00 with income have incomes below $32,000. SHould they also be included?

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  2. um.. job rationing?

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  3. Interesting idea. Although it sounds ripe for a moral-hazard type of problem. Would people quit their present jobs for the $32K? Would people enter the workforce for 32K?

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  4. Hi Steve,
    Thats exactly what unemployment insurance is supposed to do. Also why its the most stimulative of all the stimuluses. Of course, since it works so well, you'll never get the GOP to support it.

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  5. The Baggers would scream "SOCIALISM" until they coughed blood.

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  6. So both comments from the left are simply attacking the right and other opinion. Anyone surprised really? Guess you need an 'open mind' and to be 'more intelligent' to understand how such a double standard is acceptable. Or you could use those heads and add something constructive. I personally see the biggest problem to such a plan to be the same that others mentioned, ie. people working but under $32k salaries. Benefits etc also would need to be addressed, and long term stability is problematic. Obama's plan MAY lead to more permanent jobs for some at least.

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  7. The Tea Party WILL support it as long as:

    1. Recipients get paid less.
    2. Their labor is auctioned by the government to private parties starting at $40 per week.

    http://biggovernment.com/mwarstler/2011/01/04/guaranteed-income-the-christian-solution-to-our-economy/

    Slowly but slowly the future policy unfolds.

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  8. Well , your plan seems to be logical but in present situation of turmoil , the assumptions made by you may fail and may lead to totally different results which you are expecting
    To avoid the risks, I follow http://www.forecastfortomorrow.com/ they give an accurate predictions about the market and other happenings

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  9. Yes! But why not make it more than a year for anyone who is unemployed but willing and able to work?

    Read here and here if you are interested.

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  10. from TIME (http://ti.me/qjs1JV): According to Obama’s plan, all 50 states would be able to establish Self-Employment Assistance (SEA) programs, enabling aspiring entrepreneurs to utilize unemployment insurance money to fund their businesses for up to 26 weeks —providing roughly $10,000 to $13,000 in assistance, or what I would refer to as “seed funding.” Not a bad deal when you consider that the cost of most startups, especially most service-based businesses and tech ventures, have relatively low startup and operating costs. In essence, the president’s plan will create a guaranteed source of startup capital for businesses without any of the traditional credit and collateral requirements as barriers — or the need to give away equity to investors. Someone pinch me.

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  11. Well, if I'm a business and I have say 20 employees and suddenly I can get 5 for "free" guess what i'm going to do with 5 of my paid employees? You would have to make a rule or law that no one can get fired for a year, otherwise you'll just be trading currently unemployed workers for currently employed workers . . . but such a rule or law wouldn't allow businesses that genuinely need to shed workers to do so . . . so you'll have to have a commission to approve any firings . . . and once getting fired from any job is a federal process guess where the productivity of your workforce is going to go . . . Law of Unintended Consequences, anyone?

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  12. Interesting idea but seems to me you would have to set up a pretty large bureaucracy to make this work. Which would come first: will give you a check for $32,000 and then follow-up to make sure you went to work or, you go to work and then we'll send you the check for $32,000? Who would be responsible for locating the employers (for-profit or public/non-profit)wanting to participate in this?

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  13. Another marxist scam with no link between productivity and income

    10K to start a business? Just more one time redistribution. Takes more than that to arrange accounting, legal, govt approvals, IT, and space.

    Where did the 10 Billion weatherization go?

    Where did the 40 Billion go for Green jobs through Van Jones, Shabazz and the Soros Center for American Progress?

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  14. If your plan can help unemployed workers, i support you :)
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