When I was in business some years ago, it was estimated that creating each new job cost the average business about $25,000. Its not free or even cheep for a business to bring-on new employees.
But according to the Congressional Budget Office’s statistics, having the government throw money around to “stimulate” new job creation may make that cost look like pennies! Read this from James Pethokoukis, and discover why we want the government out of the business of job creation!
Obamanomics: The theory that if you throw enough money at a flat tire, it will eventually fix itself!
CBO: Obama stimulus may have cost as much as $4.1 million a job
May 30, 2012, 10:09 am
The Congressional Budget Office in a new report:
When [the American Recovery and Reinvestment Act] was being considered, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009–2019 period will amount to about $831 billion.
By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of March 2012. CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. …
On that basis CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise:
– They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent,
– They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points,
– They increased the number of people employed by between 0.2 million and 1.5 million,
– They increased the number of full-time-equivalent jobs by 0.3 million to 1.9 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
OK, so without the stimulus, there would be anywhere from 200,000 to 1.5 million fewer people employed right now?
That means the current cost-per-job created is somewhere between $4.1 million and $540,000.