$200,000 Per Job?

Discussion in 'Politics, Religion, Social Issues' started by fivepoint, Feb 9, 2009.

  1. fivepoint macrumors 65816

    fivepoint

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    #1
    Random thought, real quick: I've been trying to wrap my head around some of these huge numbers we've all been throwing around lately. I decided to try and determine just how efficient some of this spending is by comparing the promises of the bill to the actual cost as proposed (roughly). I came up with some surprising and conversation-worthy results:


    $800,000,000,000 (800 Billion) Stimulus Bill

    Divided By:

    4,000,000 (4 Million) Jobs created as estimated by Barack Obama
    (could actually be far less according to several studies, perhaps closer to 1.5 million)

    Equals:

    $200,000 Per Job



    Wow, does that seem efficient to you? I know that the bill is supposed to do more than just create jobs... but that is a core function, and I'm not impressed with the cost associated with creating those jobs. Anyway... just so everyone knows, you shouldn't believe the hype that all economists agree... many, many, economists think that doing nothing would be better thank this huge spendulous bill that is being passed through congress.

    What do you think? We may spend over 2 Trillion dollars this year on stimuluses and bailouts... Do you think adding more deficit spending is the way out of this crisis? Do you think that we're just biding our time and limiting short-term pain which will lead to far larger and longer-lasting pain in the future? It's something to consider.

    Good Ron Paul video on this topic:
    http://www.youtube.com/watch?v=0k92fTDReHg
     
  2. NT1440 macrumors G4

    NT1440

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  3. iJohnHenry macrumors P6

    iJohnHenry

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    #3
    You're forgetting the over-head/bureaucracy.

    The before tax value for the actual job will be ~$25,000 per year.

    :eek:
     
  4. fivepoint thread starter macrumors 65816

    fivepoint

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    #4
    Thanks, I appreciate that. The calculator on my Win PC started smoking when I was trying to figure this calculation out earlier, so I had to wait until I got home and could do it from my Mac. I wonder if my TI-83 could graph this?
     
  5. iJohnHenry macrumors P6

    iJohnHenry

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  6. NT1440 macrumors G4

    NT1440

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    #6
    Its just that you even admitted you are twisting this to get your point.
     
  7. Aea macrumors 6502a

    Aea

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    #7
    You do realize the entire stimulus bill isn't just for job creation? A lot of it is to spur consumer spending, help companies survive and prevent job loss, etc.

    That's equivalent to saying that porsche charges you $25,000 per wheel.
     
  8. NT1440 macrumors G4

    NT1440

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    #8
    Of course he realizes that, he stated it in his first post, then went on to create this ridiculous thread on the very premise he already dismissed.

    Wonder why....
     
  9. pdham macrumors member

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    #9
    Ok lets do some more fancy math:

    Lets say 4 million jobs at an average of $30,000 per year: That is equivilant to before tax income of $120 billion. That $120 billion is the direct effect of the government spending Now, that spending will have a multiplier effect in local economies which will in turn create more income. Let say the average multiplier is 1.5 (lower end of average) that is an additional $60 billion in income. If you add those up that is $180 billion in income produced, or $4.44 of stimulus money for every dollar of new income produced. If the new jobs last for a little over 4 years the $800 billion starts creating entirely new income.

    Now in reality not the whole $800 billion is intended for job creation so the pay-back period is much shorter, and, the indirect effects will create additional jobs which will have the same type of multiplier effect. So, in the end not as inefficient as $200,000 per job makes it sound.
     
  10. mactastic macrumors 68040

    mactastic

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    #10
    Thoroughly debunked right-wing talking point.
    Personally, I think you need to deduct the tax cuts the Republicans are stuffing the stimulus bill with, since tax cuts are far less effective at creating jobs than government spending is. That lowers the cost even further. Plus, if you expense the entire stimulus package into a cost-per-job, then you're getting all your infrastructure improvements for free.
     
  11. Tomorrow macrumors 604

    Tomorrow

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    #11
    Actually, if you can create a job for only $200,000 you've accomplished something. Think about it - suppose a salary for such a job might be $50,000 - the job you create has to sustain enough value to support that salary for who knows how many years, not to mention that the whole of the $200k investment goes to a salary.
     
  12. Aea macrumors 6502a

    Aea

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    #12
    As for the government getting that money back, if we assume that person pays ~$10,000 in taxes per year, then that's roughly twenty years to repay or a 5% return on investment, which isn't shabby either.
     
  13. iAthena macrumors regular

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    #13
    Seriously? You don't believe that tax cuts directly influence businesses on whether or not they are going to increase or decrease their workforce? The price I have to charge for my products with the burden of taxes is key to my staffing calculations. I have to pass the cost of my taxes to my customer and if my taxes go down, I can sell my products cheaper and sell more of them. To sell more I have to make more and to do that I need more employees.

    Perhaps you run your business differently.
     
  14. mactastic macrumors 68040

    mactastic

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    #14
    I'm not saying that tax cuts don't "directly influence businesses on whether or not they are going to increase or decrease their workforce". I'm saying that it is more effective to spend stimulus money on direct spending than on corporate tax cuts if the goal is job creation.
     
  15. iAthena macrumors regular

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    #15
    What proof is there that giving money on direct spending creates jobs better than tax cuts for the people that create the jobs? Tax cuts have the added advantage of making goods less expensive to export thereby further increasing business and therefore jobs. Modifying tax policy has the immediate psychological effect on the business owner about the short term viability of hiring and increasing production. Spending results in after the fact measurements which a business looks at maybe a quarter or two later.
     
  16. Macaddicttt macrumors 6502a

    Macaddicttt

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    #16
    Because if I am building a road, I have to hire someone to do it. If I give a tax cut to a business, the business could say, "With this money I'm going to hire some more help," or they could say, "Awesome, I'm making more money now."
     
  17. mactastic macrumors 68040

    mactastic

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    #17
    Modifying tax policy has it's place in a stimulus package, due to the immediacy with which it can be implemented. But it should only be the very first phase of a stimulus package because, for several reasons, it is less effective at job creation than direct government spending.

    For one, across the board corporate tax reductions are taking a hatchet where you need a scalpel. It doesn't target struggling businesses, it simply spreads the aid around to those struggling and those not struggling. Do you really think Exxon needs a tax break to stay profitable right now?

    Second, because businesses only pay tax on profits (unlike the rest of us who pay tax on revenue), cutting taxes on businesses that aren't making a profit makes zero practical difference. The businesses that need the most help are the ones who aren't making a profit and are forced to lay off workers to stay solvent.

    Third, there is no guarantee that a business will pass that tax cut savings on to their customers, nor any guarantee that they will hire additional workers. A business would be perfectly within it's rights to decide that they would rather keep the additional profits and save them for a rainy day. They might also use the money to expand, but by outsourcing to non-American workers. By contrast, direct government spending is all spent on goods and services. It also specifically targets those out of work who need it most.

    The "trickle down" theory of providing assistance to the top of the pyramid and hoping it eventually makes it's way to the bottom has been tried for 30 years, and has failed miserably.
     
  18. iAthena macrumors regular

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    #18
    And the spending policies of the thirties worked?

    Maybe we can have ten years of CCC and WPA programs until a world war sized production need finally gets us on our feet again.
     
  19. Macaddicttt macrumors 6502a

    Macaddicttt

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    #19
    Yes, they did. They only stopped working when FDR tried to balance the budget. All that revisionist stuff that says that FDR prolonged the Great Depression is ridiculous.
     
  20. shu82 macrumors 6502a

    shu82

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    #20
    FYI,

    The rule of thumb in gov't contracting is 5 heads per million. You have to pay for their facilities/security/HR/materials/equipment/pension/healthcare. @ 5 heads per million the average employee grosses 70K or so. These are average middle class office jobs and skilled factory jobs.
     
  21. mactastic macrumors 68040

    mactastic

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    #21
    Yes, they did. See graph below.


    Let me ask you this... if war stimulates the economy, what's going on? We're in two wars, and yet the economy sucks. Is it because these wars just aren't big enough? Like maybe if we attacked Russia, or even China, would things improve? Would Iran suffice?

    And if we just haven't made enough war yet, wouldn't you expect there to be some kind of incremental (at least!) benefit to the economy? It shouldn't be getting worse faster if wars truly do help the economy, right?

    And I suppose by pining for the days of the economy of WWII, you're advocating that government take control of businesses, and strictly control prices nationwide? Yes?

    And as an aside, would you consider the money spent getting us onto our wartime footing in WWII to be considered direct government spending, or tax cuts?
     

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  22. itcheroni macrumors 6502a

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    #22
    What does that chart measure? It's heading towards a 100% of something. Must be something good. :rolleyes:
     
  23. Raid macrumors 68020

    Raid

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    #23
    It's a chart of GDP over time expressed as a percentage of the lowest GDP reported which is 1933 on this graph (as that's where the value hits 0%). I had thought it was indexed against inflation (i.e. 'real' dollars), but there is no indication of that.
     
  24. itcheroni macrumors 6502a

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    #24
    What does 0 to 80% mean?
     
  25. iAthena macrumors regular

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    #25
    And you're saying these numbers are better than the tax cuts implemented by Reagan after the economy that Carter created? Sorry, I'd rather have the tax cuts. Maybe those WPA and CCC jobs were what Obama was thinking about when he used the term "shovel ready." I saw a lot of photos from the thirties with guys holding shovels.


    I don't remember Bush converting all automobile and other durable goods manufacturers over to support the war. Or sending every able bodied male overseas to free up jobs here either. Maybe that's the difference.
     

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