Hiring Is Up, Yet Americans Remain Skeptical About Jobs
May 6th 2010 12:10PM
Updated May 6th 2010 12:14PM
With about one in 10 people out of work, few Americans don't know someone who hasn't lost a job. So, it should come as no surprise that only 33% of Americans believe that the economic stimulus package Congress passed last year has helped create jobs, according to a recent Pew Research Center poll.
And yet, the White House in its latest quarterly report, released April 14, said the package, called the American Recovery and Reinvestment Act, has created or saved between 1.1 million and 1.4 million jobs.
President Obama said earlier this year that "the Recovery Act is on track to save or create another 1.5 million jobs in 2010." That would be in addition to the 1.1 million to 1.4 million already created or saved.
However, as the Pew poll shows, House Republican leader John Boehner of Ohio echoes most Americans' sentiments in a report his office prepared recently: "When Democrats rushed their massive 1,100-page, 'stimulus' through Congress in 2009, they promised that unemployment would not exceed 8% and that job creation would begin 'almost immediately.' But nearly one year later, more than three million more Americans have lost their jobs, unemployment is near 10 percent, and the deficit is set to hit a record $1.6 trillion."
Big Changes From a Year Ago
In this case, both sides are right. No doubt, millions of Americans lost jobs last year, but analysis done by several independent economists show that the recession would have been much deeper and a jobs recovery would have taken even longer without the government's involvement. The job market is now stirring to life, adding 162,000 positions in March, the largest increase in three years. And economists polled by Thomson Reuters expect an additional 175,000 jobs to be added in April, when the government's widely watched monthly jobs report is released on May 7.
Around this time last year, hardly any economist would have dared predict that new jobs would be added to the payrolls so soon. "A year ago, it looked like we were in free-fall with no idea how far we would drop," says Nigel Gault, chief U.S. economist at IHS Global Insight, a financial analysis firm. "The fact that we're seeing jobs being created is clearly good news."
According to IHS, 2.07 million jobs were saved by the government's stimulus program since it was passed last year.
"Most of the impact was really jobs saved, rather jobs created," says Gault. "When spending died and output died last year, the government essentially stepped in as a spender of last resort and propped up economic activity. That prevented the hole from becoming deeper, essentially cushioning the depth of the recession."
A Million Fewer Jobs Without the Stimulus?
However, businesses on Main Street find it hard to believe that hiring has come back. "To truly start the engine of job creation, the government has to ensure that small and middle-size businesses have access to capital," says Lynn Tilton, CEO of private equity firm Patriarch Partners, which is a buyer of small businesses.
Still, other independent groups have found numbers that echo IHS's. In its research, Macroeconomic Advisers found that since the stimulus bill was passed last year, about 1.4 million jobs were saved or created, and Moody's Economy.com estimates that 1.9 million jobs would have been created or saved by the first quarter of 2010.
Economy.com Chief Economist Mark Zandi, who was an economic adviser to Republican presidential candidate John McCain, said in testimony six months ago before the Joint Economic Committee: "Although the exact number of additional jobs that would have been lost without the fiscal stimulus will never be known, it is clear that the number is significant. The research of Moody's Economy.com suggests that a million fewer jobs would exist today, while the unemployment rate would already have risen well into double digits."
Despite all the independent analysis, the public distrust continues, seemingly fueled by errors in how the government has counted jobs it has saved or created. Several media reports found employment numbers in different states faulty, which led to questions over the reliability of stimulus data.
At the same time, finger-pointing has continued, leading to a toxic political climate that doesn't help create a positive sentiment toward anything that's done in Washington. Democrats were quick to point out that several Republicans who voted against the stimulus bill were later found posing for photographs and taking credit for it by handing over large checks of stimulus money to local communities. And at least 100 Congress members who voted against the bill also applied for stimulus funds for their constituencies.
Still, throughout the recession, President Obama has continued to grease the gears in hopes of generating more jobs. In March, he signed the Hiring Incentives to Restore Employment Act -- the "jobs bill," which provides incentives to employers for hiring new workers. Among other things, it gives employers a tax credit for their 6.2% Social Security payroll contribution and another credit for hiring new employees and then retaining them for at least 52 weeks. As recent surveys and data show, these actions seem to have jump-started the creation of some jobs, at least for now.
Despite the negative sentiment, doing nothing isn't an option. The U.S. needs policies that help nurture these early signs of job creation. Washington's job isn't done until far more Americans get back to work.
Editor's Note: This is the last installment of our six-part special report: Restarting America's Job Machine.