Accelerated Nation

Will the Stimulus Work?

Posted in Data, economy by Ashley on 2009/05/12

The below graph, from TIPStrategies is aggregated from Bureau of Labor Statistics data and tracks job gains/losses from January 2004 through the first half of 2009. 

A few (unsurprising) things leap out at you:

  • The pace of job creation is much slower than the swinging reductions we’ve seen during the past six months;
  • Locales that grew the fastest are experiencing the deepest contractions (with the exception of the Detroit area); and
  • Job losses are very uneven, with the deepest cuts concentrated in California and Arizona, the Northeast, the Southeast, and the post-industrial Midwest.

Job Losses

(source and map: TIPStrategies)

If the goal of the stimulus bill and the government’s recovery plan is job creation, this map—in all of its red misery—previews that it might not work very well. 

Stimulus money is spread over all 50 states and the District of Columbia, despite the fact that a whole swathe of states (e.g., North Dakota, Utah, Kansas, Oklahoma) still boast robust employment figures.  And with stimulus cash tilted heavily towards infrastructure, and allocated through a complex formula of mileage + per head basis (with no state receiving less than 1/2 of 1%), hard-hit states with high unemployment like North Carolina (10.8%), California (11.2%), Oregon (12.1%), and Michigan (12.6%) will proportionally lose out (i.e., the minimum % + mileage allocation favors small population states with high mileage road networks, like Kansas or the Dakotas).

As it stands, the stimulus in its current form risks creating large numbers of new jobs and showering with cash states with little need (lots of lightly used roads), relatively low unemployment, and a tiny fraction of the national population.

Full state-by-state March 2009 unemployment rates can be found here.