Simple analysis of cost per job saved from stimulus
About this video
Sal checks the claim that the stimulus plan created 650,000 jobs from $150 billion of spending and 350,000 jobs from $189 billion of tax relief. Dividing cost by jobs gives about $230,000 and $540,000 per job, which he points out, with some irony, would have to be very well-paid jobs.
You'll be able to
- calculate cost per job by dividing total spending by jobs created.
- use a per-unit calculation to judge whether a claim sounds reasonable.
Key words
- Stimulus
- Government spending or tax cuts meant to boost the economy and jobs.
- Tax relief
- Reducing taxes so people and businesses keep more money.
- Cost per job
- Total money spent divided by the number of jobs created or saved.
Transcript
There's some news out today about how many jobs, or at least a claim of how many jobs, have been created so far from the stimulus plan. And at first, the numbers look impressive. The administration said that 650,000 jobs were created from $150 billion of stimulus spending so far.
So let me write that down. So what does that turn out to on a per-job basis? Let's see, let's get a calculator out here. If I spent $150 billion to get 650,000 jobs-- let me just divide by 650,000-- I get to $230,000 per job. So that is equal to $230,000 per job, which is claimed to be saved.
So obviously, they're not just outright paying the salary, these people were adding some value to begin with. So these were clearly very good jobs. So $230,000, I think it's fair to say, is more than the majority of us make. So these are very good jobs. Now, there's a further claim that at least another 350,000 jobs were created from $189 billion of tax relief.
We got $189 billion less to the government and that created 350,000 jobs. So let's see what that turns out to be. That's $189 billion in tax relief. Let's see what that is on a per job basis. Get the calculator out. And so, if we have $189 billion, so you divide that by 350,000 jobs.
And you get $540,000 per job. So this is equal to $540,000 per job, which are even better than the $230,000 jobs that we were able to save with $150 billion. So clearly some very highly paid people are being able to keep their jobs by virtue of the stimulus package.
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