President Obama says that he plans to accelerate portions of the stimulus bill in an attempt to add jobs to the economy more quickly. The new goal is to create 600,000 positions over the next 100 days.
Most of the new employment will come in healthcare, construction, and education, but in many cases it is not clear that jobs will be created. Instead, existing jobs may be preserved. School districts may not be looking for new teachers; they may simply want to preserve the jobs of the teachers that they have now.
The issue with the Obama plan is that there is no objective way to measure whether a job is newly minted.
The May drop in employment was 345,000 jobs. Economists still expect the average monthly attrition of non-farm payrolls to be more than 400,000 people per month between now and the end of the summer. If the Obama plan works, the rolls of the unemployed should drop by much less than expectations, perhaps by only 200,000 in July, August, and September.
The Administration has a simple reason to be concerned about reaching its goal, even if the goal cannot be accurately measured. Pushing money through the bureaucratic pipeline and moving it along to states, municipalities, and the private sector almost always take months. Once the money reaches its final destination, the work of recruiting and hiring new workers has probably only begun.
Unemployment is likely to top 10% in the next 90 days. If the Administration’s plan works, the figure should stay shy of that. The balance of the stimulus package is still supposed to create or save another three million jobs, or just a bit less. The ten percent joblessness marker will tell more than how many people are out of work. The success of the stimulus package relies on which side of the number the economy comes down own.
Douglas A. McIntyre
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