Obama's "Lost and Dislocated" Jobs

The White House announced last week that the $787 billion stimulus package has "saved or created" more than 1 million jobs.

Yet on Friday we learned that unemployment increased to 10.2%, and the number of unemployed Americans rose by 558,000 in October. If you factor in workers who gave up looking or settled for a part-time job, the real unemployment rate--what's known as U6--is an astounding 17.5%.

Look out now for even more claims about "saved or created" jobs from the Obama administration.

As numerous economists have explained, there is no academic or empirical basis for the category of "jobs saved."

Veronique de Rugy of the Mercatus Center at George Mason University says, "no agency--not the Labor Department, not the Treasury, not the Bureau of Labor Statistics--actually calculates 'jobs saved.'"

How can anyone know that his or her job has been saved?

Dr. Allan Meltzer of Carnegie Mellon University adds, "One can search economic textbooks forever without finding a concept called 'jobs saved.' It doesn't exist for good reason: How can anyone know that his or her job has been saved?"

The fact is, there is no guarantee that the government actually creates a job when it spends stimulus money. There is no way of knowing whether a worker or firm that is engaged in a stimulus-related activity would have been idle or engaged in some alternative activity. But we do know that as the recovery picks up, individuals engaged in government activity will be unavailable for more productive private activity.

That means that the recovery will have trouble truly lifting off if many of our workers have been committed to questionable make-work projects concocted by Speaker Pelosi and President Obama. A Keynesian might be happy to have government workers digging holes and filling them in, but workers occupied in that manner cannot, at the same time, return to the factory floor. The higher the number of such dislocated workers, the higher the policy challenge going forward.

So if the Obama administration is just going to make up formulations like "saved or created" that have no basis in economics, let us offer our own formulation that is a far more accurate characterization of our economic challenges since the enactment of President Obama's $787 billion stimulus package, even if economists currently don't use this measure.

And that is, we have seen more than 4 million jobs "lost and dislocated" since President Obama and the Democratic Congress enacted the stimulus package in February.

This is a much easier formulation to understand.

You begin with the increase in the number of unemployed Americans since the stimulus was passed in February as reported by the Bureau of Labor Statistics. That number is 3.2 million, which represents the jobs that have actually been lost since the stimulus package was enacted.

Then, to have a clear sense of the liabilities created by Obama's misguided policies, we should add to our "jobs lost" number an estimate of private workers who have been "dislocated" by the government. Since stimulus actions are meant to be temporary, knowing how many workers have been "dislocated" is essential to forming a realistic long-run economic outlook. The more dislocated workers that Obama creates today, the higher the number of workers that will have to eventually be reabsorbed by the private sector tomorrow when the stimulus winds down.

So what figure should we use for the number of "dislocated" jobs since the stimulus program was enacted? Thankfully, the White House has, perhaps inadvertently, provided us with an estimate. When the White House says that jobs have been "saved or created" by the stimulus program, then we should say that this is the number of jobs "dislocated" by the stimulus program.

So, using current figures, adding the number of actual jobs lost since February (3.2 million) to the number of jobs that the Obama administration says that they have "saved or created" since February (1 million) means that the economy has "lost and dislocated" more than 4 million jobs since President Obama signed his $787 billion stimulus package.

This "lost and dislocated" formulation is a much more honest assessment of where we are as a country when it comes to understanding job creation, unemployment and the economic challenges ahead under the so-called stimulus package.

If it's not, then the White House should at least explain how "saved or created" is more accurate.

Newt Gingrich is a senior fellow at AEI. Vince Haley is the vice president for policy at American Solutions.

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