Stimulus Jobs
It looks like unemployment is turning a corner:
July's unemployment report showed a loss of 247,000 jobs, a significant improvement over the 741,000 jobs lost in January and better than the 443,000 non-farm jobs lost in June. While we are still loosing jobs, the pace is clearly slowing, and we may see the light at the end of the tunnel in the not too distant future. So far this recession has seen close to 6.7 million loose their jobs. The unemployment rate now sits at 9.4%; while it went down slightly in July, as more people abandoned the labor force than entered, it is expected to go higher in the months to come as the economy continues shedding jobs (even if fewer than before).
To gain a clearer picture of the job situation in the country, one needs to take a look at the under-employed, and the chronically unemployed. These include those working part-time because they can not find full-time work, or those who have given up looking for work because they are unable to find it, the total unemployed plus underemployed jumps to 16.3%. This recession has seen the highest levels of labor under-utilization on record.
Most states in the Union continue seeing the unemployment rate spiking;
labor department figures at the state level for June show that 17 states have unemployment rates of 10% or more. Only 5 states showed (minor) reductions in the unemployment rate, and 4 saw their rates more than double from last year's levels. The good news is that at least for some states, the situation is improving, and the pace of deterioration has slowed significantly. Furthermore, as the funds from the stimulus package continue being get disbursed, local governments will diminish the number of layoffs, and local industries that benefit should see a positive impact. For more on the unemployment picture see our "
How is the Consumer Doing" page.
The stimulus plan is intended to provide a jolt to the economy that the private sector is unable to do at the present time. Tax cuts and tax credits are designed to spur spending by letting people keep more of their money. Investments in infrastructure, education, agriculture and others whether directly coming from the federal government or through the states will result in jobs being created in those areas, and in turn generate secondary demand for jobs to service the recently employed. Furthermore, by providing funding for unemployment benefits, and delivering assistance to the most needy through food stamps and other social programs the stimulus package aims to put money in the hands of those that will spend it immediately and provide demand in the economy (of course, in addition to helping maintain the fabric of society in areas where unemployment has become pervasive).
This increased demand, or the stabilization of spending/consumption, plus the new funded programs will generate new jobs and stop people from being laid off in other areas of the economy. While nobody expects the stimulus to turn the economy overnight, the hope from its proponents is that it will provide a catalyst for an eventual recovery to come later in the year or next year. As important as the actual number of jobs created directly by the program is to change the psychology of people that has turned considerably pessimistic and generating a negative rather vicious cycle.
As the program is implemented and jobs are created, this page will track: who is hiring, where, what type of jobs. It will also track actual job creation versus expectation.
The initial hope as outlined by the President was to create, or avoid loosing, 3 to 4 million jobs over the next two years. These goals are based on the assumptions put forward by economist in the Obama team.
The Job Impact of the America Recovery and Reinvestment Plan lays out the assumptions made by the team. The changes on the stimulus resulted in some changes to the estimates; using the same methodology the White House published an analysis on the impact of the stimulus plan by congressional district;
this table provides a summary by state, while the original document is found
here. Nevertheless, it is worth pointing out that the margin of error for the estimate is very large, so there is no way to determine precisely how many jobs will be saved or created by the stimulus plan.
Perhaps more important than estimating correctly the number of jobs, is making sure that the funds disbursed find their way into the economy rapidly. While the timelines for appropriation of funds are very aggressive, the ability of federal, state and local governments to spend the funds rapidly is very much suspect. The Congressional Budget Office (CBO) put forward an analysis of the original version of the House bill (
click here for the CBO analysis document). One can debate each one of the assumptions made, the main argument made by the analysts that historical spending in the programs funded has taken a much longer time than the two years anticipated by the government is one worth taking notice.
One of the biggest recipients of ARRA funds, the Department of Energy has announced a restructuring in the way it disburses loans and loan guarantees and chooses where to invest. These changes are meant to expedite how the department moves the funds coming from the ARRA. The plan calls for the first loan guarantees to be approved by early summer, and for 70% of the ARRA funding to be disbursed by the end of 2010. The DoE put out a
press release detailing the changes. This is evidently good news; the DoE's previous experience disbursing loan guarantees, or rather not disbursing the loan guarantees that had been appropiated by Congress in 2005 had concerned many observers on the ability of the DoE to make use of the large amounts of funding made available by the ARRA. If the DoE is in fact able to keep its goals to rapidly spend the funds provided, there should be jobs for the taking in the areas of renewable energy, energy efficiency and the modernization of the grid.
JobsintheMoney, a job search site for accounting and finance professionals, published
an interesting article on the potential jobs created by the implementation of the
Financial Stabilization Plan. Given the significant changes in regulatory requirements, and risk compliance measures, accountants, financial and credit analysts, portfolio managers, quantitative analysts, and others bank operations finance professionals are expected to be in demand.
Construction Jobs
The government has released the $27 billion destined to highway infrastructure projects. States have 120 days to contract out these projects. Therefore over the next few months there should be an increase in the demand for construction jobs around the country. Take a look at the "
Highway Infrastructure Funds by State" page, to find out what each state will get, and the link to the state budgets (for those states that have them ready), to find out what projects are expected to be funded.