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The Stimulus and Presidential Credibility, Part II

Mixed signals.

3:40 PM, Jan 13, 2010 • By MARY KATHARINE HAM
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ABC News, 1/11/10:

The Obama administration has taken some heat and mockery for using the nebulous and non-economic term of jobs being “saved or created” by the $787 billion stimulus program.

So it’s gotten rid of it.

In a little-noticed December 18, 2009 memo from Office of Management and Budget director Peter Orszag the Obama administration is changing the way stimulus jobs are counted.

The memo, first noted by ProPublica, says that those receiving stimulus funds no longer have to say whether a job has been saved or created.

“Instead, recipients will more easily and objectively report on jobs funded with Recovery Act dollars,” Orszag wrote.

Christina Romer, 1/13/10:

"The most important bottom line is to say that close to 2 million jobs have been created or saved by the close of 2009, a truly stunning . . . effect of the act," she said. Still, she added, there is a need for additional spending to spur job creation, as President Obama has called for.

The Orszag memo (PDF) is essentially an admission that the original "created or saved" model and memo were nonsense, and in the future, jobs numbers cannot be based on nonsense. It lays out very basic ground rules for what can count as a job "created or," ahem, "retained:"

Definitions of jobs considered to be created or retained:
a. A job created is a new position created and filled, or an existing unfilled position that
is filled, that is funded by the Recovery Act; 
b. A job retained is an existing position that is now funded by the Recovery Act.  

Using the definitions above, recipients must estimate the total number of jobs that were
funded in the quarter by the Recovery Act.  A funded job is defined as one in which the
wages or salaries are either paid for or will be reimbursed with Recovery Act funding. 
3. A job must be counted as either a job created or a job retained; it cannot be counted as both. 

One would think think such rules would have been part of the inital calculations, but one would be wrong. Turns out, fantasy is not easily quantifiable:

...trying to count the number of jobs created or saved may have been a fool's errand that needlessly undermined the credibility of the overall reporting effort.

This has proven especially true when it comes to "saved" jobs, which the administration says count as much as new jobs, since both keep people off the unemployment rolls. Recipients of stimulus money have used wildly different standards to estimate how many employees would have been laid off if not for the funding -- some have reported every job in their business or agency as "saved," while others have reported zero jobs "saved," even after receiving very large contracts.

The Orszag memo also puts limits on reporting jobs as "saved or retained," "employment impact upon materials suppliers and central service providers (so-called 'indirect' jobs) or on the local community ('induced' jobs)."  
But last week, Labor Secretary Hilda Solis was touting just such jobs to spin away from the news of December's job numbers, which showed the economy lost 85,000 jobs.

"We also see where people want to have a career ladder in perhaps the energy efficiency arena. So they may start out as someone who's an electrician and end up later on being the owner of a small business that actually helps to install solar panels. So we're trying to provide those incentives working with community colleges, local government, private partnerships with businesses, and really getting a handle at the local level so it comes from the bottom up."

I appreciate Orszag's attempt to eliminate some of the nonsense from stimulus jobs numbers, but if the rhetoric used to describe the new numbers doesn't change, the administration's message becomes even more misleading.

Rep. Darrell Issa pointed out problems with the new rules for counting jobs in a letter to Chairman Earl Devaney, in charge of stimulus accountability and transparency:

"...the new guidance counts every job that is funded using stimulus mone even if it existed before the Recovery Act and was not in any danger of being eliminate— as "created or saved." This definition ignores the plain meanings o th ewords "created" and "saved," and makes's "JOBS CREATED/SAVED" label a falsehood, further eroding the confidence of the American people in their gvernment."

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