Stimulus and jobs: What the fight's all about

By Tami Luhby, senior writer


NEW YORK (CNNMoney.com) -- One of the most important questions surrounding the stimulus program is also one of the most controversial: How many jobs has it created?

The Obama administration credits the American Recovery and Reinvestment Act with turning around the economy and bringing America out of the worst downturn since the Great Depression. Without it, things would have been a lot worse.

Critics, particularly congressional Republicans, say that stimulus has done little to help the economy. They point to the high unemployment rate and to pork-barrel projects they say have done little good.

CNNMoney takes a closer look at the jobs debate.

How many jobs has stimulus funded?

There are two numbers floating out there, depending on how you count the jobs.

The White House says 640,000 jobs were created or saved through Sept. 30. This counts only jobs funded directly with stimulus money -- such as the teacher who kept her job because of federal aid to the states or the teen who got a summer job through a stimulus-funded program.

The administration is reporting this figure every three months. The next update is due at the end of January.

But the White House recently changed the criteria for counting jobs. The administration initially asked funding recipients to tally jobs that were created or "saved," meaning positions that were at risk of disappearing without stimulus. Going forward, officials just want recipients to add up the total number of jobs funded with stimulus money.

The White House also says the Recovery Act has created 2 million jobs. This figure covers all positions that were touched by stimulus money, not only the 640,000 directly funded by it.

How do they know how many jobs were funded?

Included in the jobs count is the worker in the asphalt plant who is on the job because his employer got orders stemming from stimulus-funded road improvements. Also counted are the retail workers still getting paychecks because the unemployed have more money to spend after getting a $25 boost in weekly jobless benefits.

The recipients required to file reports will receive about 35% of the $787 billion stimulus package. The other 65% is going toward increased Medicaid payments to states, tax cuts and the like.

As for the 2 million jobs figure, that's calculated by the president's Council of Economic Advisers. It's based on mathematical formulas and economic models that estimate how many jobs were created based on how much stimulus money has been spent.

Why is unemployment still rising?

Unemployment remained at a stubbornly high 10% in December 2009, up from 7.4% a year earlier. While this is a smidge lower than the 10.1% recorded in October, it's still the highest unemployment level since the early 1980s recession.

Businesses are still not hiring, despite the billions of stimulus dollars being pumped into the country.

And with 15.3 million people out of work, job seekers still outnumber openings by more than six to one, the greatest differential since the Labor Department began tracking job openings in December 2000.

What do Obama and his critics say?

The administration says the unemployment would be much worse if the stimulus program didn't exist. A year ago, the economy was losing 691,000 per month, on average, in the first quarter. In December, the number was down to 85,000 jobs lost.

"It's because the downward trend was so severe that you can say you are two million jobs higher than you otherwise would have been, but you still have a very high unemployment rate, said Christina Romer, chairwoman of the president's Council of Economic Advisers.

Romer predicts the economy will stop losing jobs in the spring. But the employment situation won't really improve until the private sector starts adding to payrolls again, she said.

Republicans, however, argue that the stimulus has largely been a waste of money.

"The administration has no idea how many jobs have been 'saved or created,' but we do know that roughly three million Americans have lost their jobs since the 'stimulus' was enacted," said Ohio Rep. John Boehner, the House Republican Leader.  To top of page

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