What is the cost per stimulus job?

February 03, 2010

By Lee McPheters
Economy@W. P. Carey

As the nation continues to endure troubled labor markets and high unemployment, critics of the American Recovery and Reinvestment Act (ARRA) have become more vociferous. Some have suggested the Recovery Act funding may have been too small to have much impact on jobs, since it was formulated when unemployment was projected to be much lower than it is now. Meanwhile, a significant proportion of the population (29% according to a Rasmussen Poll) doubts the program has had any effect at all on employment and labor markets.

Yet another issue is the cost of jobs related to the Recovery Act. Economists and the administration have estimated that perhaps 1.5 million jobs have been created or saved by the stimulus program so far. Critics have divided $787 billion by 1.5 million jobs to derive a disturbingly high estimate of about $525,000 per job.

But this approach fails to recognize that so far, only about one-third of the stimulus funds have been expended. According to the Recovery.Gov website, $269 billion in funds had been paid as of January 22, 2010. Dividing $269 billion by 1.5 million gives a very rough estimate of the cost per job of $179,000.

American Recovery and Reinvestment Act Funding
Tax Benefits $288 billion
Contracts, Grants, Loans 275 billion
Entitlements such as Unemployment Benefits 224 billion
Total Program   $787 billion
Paid Through Jan. 22, 2010    $269 billion

It is difficult to determine the number of jobs created from ARRA tax credits or higher levels of consumer spending from extended unemployment benefits. Jobs created or saved by direct contracts, grants and loans have been recorded each quarter, but the process has required a high level of judgment by those reporting on "jobs created or saved." In the fourth quarter of 2009, the reporting guidelines were changed to emphasize jobs directly funded by the Recovery Act. Employment figures are now linked to hours worked in positions funded by the Act.

According to figures released at the end of January at the Recovery.Gov website, there were 583,820 jobs supported in fourth quarter 2009 by Recovery Act outlays to the states. It should be emphasized that this includes only the jobs associated with contracts, grants and loan spending, about one-third of the total stimulus program. Jobs created by tax credits or consumer spending due to COBRA or extended unemployment benefits are not included in this tally.

Between February and December of 2009, a total of $57.3 billion of the planned $275 billion in contracts, grants, and loans was paid out to the states (this does not include awards to other entities such as Puerto Rice or American Samoa). An evaluation of jobs supported should be based on this amount, with the expectation that additional spending in 2010 will have a further impact.

Average job cost: $117,933

Although jobs were reported only for the fourth quarter, the analysis is based on the cumulative effect of spending during the year, with results measured at year end. In brief, the $57.3 billion dollars is associated with 583,820 jobs, for a cost per job of $117,933.

California received the largest dollar funding of contracts, grants and loans in 2009 (some $7.8 billion) and Recovery Act funds supported the most jobs of any state (71,015 as of the fourth quarter). The cost per job was $109,949, compared to the average for all states of $117,933 per job (see table).

There is wide variation in the number and costs of jobs created or saved from state to state. Two smaller states, Alaska and New Hampshire, created or saved fewer than 2,000 jobs, at a cost of more than $200,000 per job. The highest cost per job was in Illinois. The state used $3.1 billion received in 2009 to create or save 11,375 jobs at a cost of $275,038 per job.

The lowest reported cost was in New York, at $47,757 of Recovery Act funding per job. New York had the second greatest number of jobs funded by the Recovery Act.


Cost of Jobs Funded by ARRA Averaged $117,933

State  Dollars
 Per Job
Funds Received
Feb.-Dec. 2009
Jobs Funded
by ARRA
New York $47,757 $2,056,433,926 43,061
Missouri 58,636 942,526,367 16,074
Alabama 60,471 838,786,638 13,871
North Carolina 67,520 1,763,547,003 26,119
Ohio 69,612 1,719,808,723 24,705
Florida 70,769 2,474,484,426 34,966
Louisiana 74,086 838,778,709 11,322
Connecticut 74,643 526,064,262 7,048
Kentucky 74,675 797,289,164 10,677
New Jersey 77,778 1,673,117,431 21,512
Oregon 78,406 757,128,580 9,657
Pennsylvania 81,205 993,807,860 12,238
Hawaii 82,959 250,042,340 3,014
Nebraska 83,785 322,482,258 3,849
Georgia 86,151 2,076,484,222 24,103
Minnesota 89,083 1,094,941,574 12,291
Kansas 89,865 589,633,058 6,561
Iowa 92,395 840,424,892 9,096
Delaware 94,219 143,517,935 1,523
Idaho 94,816 584,028,403 6,160
Montana 97,056 399,970,402 4,121
Texas 97,579 2,777,138,660 28,460
Colorado 101,325 953,121,162 9,407
Indiana 104,166 1,591,469,749 15,278
Massachusetts 106,879 989,787,016 9,261
Virginia 108,913 1,075,784,984 9,877
Michigan 109,484 2,205,030,881 20,140
California 109,949 7,808,033,492 71,015
Oklahoma 115,791 926,239,003 7,999
New Mexico 116,577 534,133,096 4,582
South Dakota 117,148 380,037,611 3,244
Tennessee 120,018 1,231,240,850 10,259
South Carolina 122,443 1,349,824,810 11,024
Wisconsin 123,747 1,276,554,810 10,316
Vermont 123,873 201,196,325 1,624
Washington 131,825 1,899,922,190 14,413
Nevada 131,878 415,241,521 3,149
D.C. 135,595 504,289,514 3,719
West Virginia 141,612 310,812,373 2,195
Maine 141,708 309,153,518 2,182
Wyoming 148,409 126,300,350 851
North Dakota 151,782 409,561,156 2,698
Arizona 159,786 1,088,248,339 6,811
Utah 173,149 820,650,787 4,740
Maryland 174,711 1,180,888,050 6,759
Rhode Island 182,522 245,467,200 1,345
Mississippi 197,982 675,560,793 3,412
Arkansas 199,163 563,385,375 2,829
Alaska 218,263 348,425,730 1,596
New Hampshire 227,372 294,516,909 1,295
Illinois 275,038 3,128,414,212 11,375
Totals   $57,303,728,639 583,821
Averages $117,933   11,447
Source: Derived from data at Recovery.Gov website

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