From the Federal Reserve Bank of San Francisco, the number appears to be approximately zero.
This paper estimates the “jobs multiplier” of fiscal spending using the state-level allocations of federal stimulus funds from the 2009 American Recovery and Reinvestment Act (ARRA). Specifically, I estimate the relationship between state-level federal ARRA spending and the change in states’ employment outcomes from the time the Act was passed (February 2009) to some later month (through August 2010). Because the allocation of stimulus spending across states may be endogenous with respect to state economic outcomes, I instrument for stimulus spending using exogenous formula-driven cost estimates made by the Wall Street Journal and the Center for American Progress around the time that the ARRA was passed. To control for the counterfactual – what would have happened without the stimulus – I include several variables likely to be strong predictors of state employment growth. The results point to substantial heterogeneity in the impact of ARRA spending over time, across sectors, and across types of spending. The estimated jobs multiplier for total nonfarm employment is large and statistically significant for ARRA spending (as measured by announced funds) through March 2010, but falls considerably and is statistically insignificant beyond March. The implied number of jobs created or saved by the spending is about 2.0 million as of March, but drops to near zero as of August. (March, when temporary census workers were hired; August, when they were laid off. — DRP) Across sectors, the estimated impact of ARRA spending on construction employment is especially large, implying a 23% increase in employment (as of August 2010) relative to what it would have been without the ARRA. Lastly, I find that spending on infrastructure and other general purposes had a large positive impact, while aid to state government to support Medicaid may have actually reduced state and local government employment.
The results suggest that though the program did result in 2 million jobs “created or saved” by March 2010, net job creation was statistically indistinguishable from zero by August of this year. Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker. Even if the stimulus had in fact generated this level of employment as a durable outcome, it would still have been an extremely expensive way to generate employment.
Of course, no one can actually know what would have happened; Mr Wilson’s paper is his best analysis. But I don’t know why we should trust it less than we’d trust the guys who told us that passing the stimulus plan would hold unemployment down to 8%. Mr Morrissey concludes with:
The real question at the end of the day is this: opportunity costs. Had the government acted to restrain regulatory growth and allow investors to keep an extra $800 billion in early 2009, would we have created more net jobs by August 2010 than zero?
Ahhh, well, it’s probably racist to ask such questions.