New research from economists Garett Jones and Daniel M. Rothschild show that fewer than half of all employees hired with funds from the $787 billion funding for the American Recovery and Reinvestment Act (ARRA) funds actually came from the ranks of the unemployed.
"In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations … were unemployed at the time they were hired," Jones and Rothschild write.
"More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5 percent) or from outside the labor force (4.1 percent),” making an almost even split between “job creating” and “job switching.”
“This suggests just how hard it is for Keynesian job creation to work in a modern, expertise-based economy: even in a weak economy, organizations hired the employed about as often as the unemployed.”
Jones and Rothschild surveyed hundreds of firms, non-profits, and local governments that received ARRA funding, collecting more than 1,300 anonymous, voluntary responses from managers and employees that allow us to better understand what happened at the organizations that received contracts funded by ARRA spending.
Among organizations required to pay prevailing wages, 38.2 percent thought that they could have hired workers at wages below the Davis-Bacon prevailing wage while another 17 percent were unsure.
“This meant higher costs for the federal government and fewer jobs created,” the authors say.
The Bureau of Labor Statistics reports that the unemployment rate held at 9.1 percent in August, with employment in most major industries changing little.
Health care continued to add jobs; a decline in information employment reflected a strike, and government employment continued to trend down.
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