If you’ve been following the news, there are lots of people screaming about how incredibly expensive the stimulus package was, and how it didn’t create enough jobs for the money spent.
I’m not a fan of stimulus, nor big government, but I do know how to do math like a capitalist. An employee costs a lot more than just salary, and I haven’t seen much reporting in this vein.
Let’s say you’ve been given stimulus money to hire somebody. GREAT! Do you start writing them paychecks immediately? No. You find work for them to do. Let’s go on to say that the employee is (as many of them are reported to have been) a construction worker. How much is it going to cost to put that person to work? Well… you have to have land on which they can put a building, materials to put up the building with, and tools for them to use. Some of this you might already have, but with stimulus money you’re going to go buy MORE of it so you can grow your business and (here’s another form of the word) STIMULATE the economy as a result.
Pulling numbers out of my butt: if twenty guys can build a subdivision of 40 homes in a year, and the homes cost $120,000 each to build, you’ve spent just short of five million dollars creating 20 jobs, at a cost of $240,000 per job.
You also created forty homes (in a depressed real-estate market that is saturated with defaults, foreclosures, and short sales, but I digress…)
Also, somebody out there sold you a whole mess of lumber, nails, concrete, PVC, etc.
Sure, if all we wanted to do was feed people tax money we could do it much more efficiently by just dumping the entire stimulus package into the existing welfare system. But that doesn’t stimulate the economy, and it provides incentives for the wrong sort of behavior.
Again, let me say that I’m not a fan of the stimulus package, not as implemented, and not in principle. But the math I use as a good capitalist who wants to be able to create jobs tells me that the critics of the stimulus package are being very loudly dishonest in their criticism.
(Note: If you gave me $240,000 and told me to create as many jobs as I could, I would hire a writer, two line-artists, and a colorist and create graphic novels out the wazoo. If the books sold well, I’d be able to keep my employees. If not, well… they worked for a year, and we all had a good time with taxpayer money. DO NOT SEND ME TAX DOLLARS IT WILL ONLY END IN TEARS.)