Fallout: The Financial Crisis

Why hasn’t the stimulus created jobs?

John Dimsdale Jul 2, 2009
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Fallout: The Financial Crisis

Why hasn’t the stimulus created jobs?

John Dimsdale Jul 2, 2009
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TEXT OF STORY

STEVE CHIOTAKIS: We get June unemployment numbers from the Labor Department today. It looks like the economy probably lost several hundred thousand more jobs. And of course, the lack of job creation defies the goals of last winter’s $700 billion stimulus package. From Washington, here’s Marketplace’s John Dimsdale.


JOHN DIMSDALE: When President-elect Obama unveiled his stimulus package for the struggling economy back in January, he predicted…

PRESIDENT BARACK OBAMA: Our plan will likely save or create three to four million jobs.

But critics, like Michael Boskin, who was chief economic adviser to the first George Bush, says spending for construction, health and education projects has been too slow to generate many jobs.

MICHAEL BOSKIN: If they were really interested in stimulus they would have had the vast bulk of the funds get to people and create incentives for business to reduce layoffs immediately, not delayed over several years.

Instead of boosting spending, Boskin says cutting taxes would have gotten money into the economy more quickly. And Arizona State University economist Lee McPheters raises another problem: The stimulus has been spread equally around the country — even though some states have far worse jobless rates than others.

LEE McPHETERS: So the money is distributed by population rather than distributed by where the problems are.

While some argue it’s time to abandon what’s left of the stimulus package, defenders urge patience. It will take a while, they say, for businesses to start hiring new workers. First they have to reduce inventories and become more confident about consumer demand in the future.

In Washington I’m John Dimsdale for Marketplace.

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