Wednesday, August 31, 2011

Echoes of my fiscal stimulus thoughts

Echoing my previous thoughts on fiscal stimulus, carpenters and construction workers is the following:
Tom Allen, an unemployed construction worker in Searchlight, conceded that building solar panels may create a few construction jobs, but said: “It’s a temporary solution; it’s a couple of hundred jobs for however long it takes to complete the job, and then they may hire a 10 or 15 people for the permanent jobs.”

Or, from the same article:
Kirstin Peart, a tileworker who lost her job in Las Vegas about 18 months ago and came out to Searchlight to find work in the mines, said she doesn’t know anybody who has found employment in the renewable energy industry. “The solar places don’t hire anybody from Nevada,” she said. “It’s all people from California, Arizona--there’s very few from Nevada. But there’s so many people in Nevada [who] need the jobs. The unemployment rate is horrible right now. People are hurting bad.”

Thus, targeting industries (e.g. infrastructure construction or green industries) to take on workers affected by the recession (i.e. construction workers) is not a permanent solution and can never be one.

Thus, it should not be a surprise that the stimulus did not create jobs (or sustain job creation):

There are many studies of the stimulus, but finally there is one which goes behind the numbers to see what really happened. And it’s not an entirely pretty story. My colleagues Garett Jones and Daniel Rothschild conducted extensive field research (interviewing 85 organizations receiving stimulus funds, in five regions), asking simple questions such as whether the hired project workers already had had jobs. There are lots of relevant details in the paper but here is one punchline


…hiring people from unemployment was more the exception than the rule in our interviews.

In a related paper by the same authors (read them both), here is more:

Hiring isn’t the same as net job creation. In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations after January 31, 2009, were unemployed at the time they were hired (Appendix C). More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5%) or from outside the labor force (4.1%)(Figure 2).

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