Fuzzy Math with Alabama Jobs and the Stimulus (ARRA)

I became concerned when I heard that the American Recovery and Reinvestment Act wasn’t doing what it was intended to do, that it was creating few jobs at a very high cost.  So, of course, I did what I do, I went to look at the information out of Alabama (big thanks to those at  both the federal and state level who are making it so easily accessible) and SURPRISE, I found that there is much more to the story:

Executive Summary

1.  I hope we can all agree that money that hasn’t been spent yet can’t have done much.  The stimulus was designed to have some immediate impact in targeted areas, but also have that impact extend over a two year period.  So, though Alabama was awarded $2.6 billion under ARRA, only a little over $1 billion has been made available, and only $530 million has been expended.  That’s 20% of the overall amount that will be made available to Alabama over the entire period designated in the act.

2.  And now for the kicker ARRA was not ALL about job creation, a significant amount of the money Alabama has received was intended to keep important government programs afloat during the recession, you know all the wailing and gnashing of teeth over the state budget for FY2011?  That all would have come to a head one year earlier without ARRA…of the $530 million we have spent:

• $354 million (of what will eventually be at least $850 million) was spent on an adjustment to the rate that is paid by the federal government for Medicaid services, with the federal government picking up more of the tab than it normally would, which helped Alabama close a significant budget gap in that area. 
• $68 million was spent to help with the additional need for food stamps because of the recession
• $26 million for interest free loans out of the department of industrial relations
• $16 million for childcare out of DHR

Doing the math…that’s $464 million that nobody is trying to claim saved jobs (thus the zeroes in the executive summary linked above), because that wasn’t the purpose of those dollars.  But do you honestly believe there aren’t medical workers, childcare workers and folks in the food supply chain who would be unemployed today without an extra $464 million in the economy?  Not to mention the state workers who would be unemployed if not for that injection of funds into the budget.  If  you do, I have several bridges to sell you…

3.  So let’s look at what is left of the money and the jobs that were created/saved.  Some quick math says we have spent about $74 million (530-464) that should have gone toward some sort of activity that created or saved jobs.  We are currently reporting 3,140.45 jobs created or saved.  That amounts to $23,563 per job, which sounds absolutely reasonable to me and completely different from the inflated figures you’re seeing thrown around by people who didn’t invest the time to really look at the numbers.

Please offer your thoughts in the comments, but I believe the American Recovery and Reinvestment Act is doing, with the help of the Governor’s Office and many others, exactly what it was designed to do in Alabama (help the state weather the FY2010 budget year and begin to grow the economy again) and that the results we are reporting bear that out.

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