Your job: Washington's solution
The government's $787 billion stimulus plan includes funds that are designed to directly and indirectly create 3.5 million jobs by the end of 2010.
NEW YORK (CNNMoney.com) -- The economy continues to hemorrhage jobs at an alarming rate.
Job losses have reached a whopping 4.4 million over the past 14 months and the unemployment rate has zoomed to a 25-year high of 8.1%.
The bloodletting is hitting all industries, with manufacturing, construction and finance being hit the hardest. Even those workers who are holding onto their jobs are facing pay cuts, furloughs, forced vacations and fewer hours as companies struggle to stay afloat.
Lawmakers and President Obama have scrambled to work out a solution to the escalating labor problem but experts say long-term job growth hinges on a broad economic rebound.
Here's a look at what the government is doing and who is being helped.
The $787 billion stimulus plan, signed into law in February, has billions allocated for direct and indirect job creation.
Under direct injections, $111 billion is set aside for infrastructure projects (roads, bridges, public housing and broadband to name a few) and $43 billion for energy projects, such as solar panels and wind power technology. Economists expect the energy sector will see some 400,000 new or saved jobs by the end of 2010.
One of the biggest programs is building or fixing roads and bridges nationwide. The $27.5 billion set aside for that plan is expected to create nearly 300,000 jobs by the end of 2010. Roughly 28,000 jobs are created across the economy for every $1 billion spent on federal highway construction programs, says Ken Simonson, chief economist at the Associated General Contractors of America.
About a third of that total results in direct construction jobs, which would work out to 256,000 jobs, roughly in line with preliminary government estimates, according to Simonson.
Obama administration economists estimate that the stimulus package will help create or save 3.5 million jobs by the end of 2010.
At this juncture it's difficult to pinpoint the exact number of jobs that will be created or saved, though a big chunk will be manufacturing- and construction-related positions.
Here's roughly how the money will flow. The government will send funds to every state. In turn, the states will dole out the money to various agencies, which will use the funds to hire private firms.
For example, construction companies will bid on new projects. Whichever firm wins will presumably hire more workers for the new jobs.
When the project is finished, the hope is that the economy will have started to rebound and the workers will remain with those companies or that they will have little trouble finding new jobs.
Experts say the government's job-creation plan hinges on an economic recovery by the time the funds dry up at the end of next year. If the economy is not in decent shape by 2011, the country could be faced with another round of massive layoffs. Companies will likely be forced to pare down labor costs to meet demand.
"If the economy hasn't recovered, with everything else being equal, they'd have to lay those people off again," said Jay Bryson, economist with Wachovia. "But if that's the case, the government will likely launch another stimulus package in the end of 2010."