Tuesday, July 29, 2014
Inquirer Daily News

Stimulus money is slow to translate into jobs

Bill Donahue: Out of work,he sought answers.
Bill Donahue: Out of work,he sought answers.

All that Bill Donahue wanted to know was: "Where do I get one of those stimulus jobs?"

Out of work for 15 months, the laid-off charter-boat crewman living in South Jersey figured that, somewhere, there must be lists of openings made available by the $787 billion stimulus program.

He started calling around. He called his assemblyman. He called his congressman. He called a U.S. senator.

He kept calling.

He called the governor's office, which referred him to the state Labor Department, which referred him to the state Transportation Department. A likable, chatty guy, Donahue even got an assistant U.S. secretary of labor in Washington to talk with him for 20 minutes on the phone.

What he learned was what many jobless people are starting to grasp: However much success the stimulus has had in slowing the decline of the U.S. economy, it has not yet created all that many jobs.

While the White House says the program is right on track, its most recent calculation was that 150,000 of a promised 3.5 million jobs had been saved or created.

It says the pace will accelerate. But the relatively slow effect on jobs appears to have opened an expectations gap.

Many Americans expected more, sooner.

 

Frustration

Christina Romer said she understood frustration like Donahue's.

She said she could well imagine many people saying, "OK, we passed the stimulus act [four] months ago; the economy should be better."

Romer is chair of the president's Council of Economic Advisers and coauthor of the stimulus package, the American Recovery and Reinvestment Act. In an interview from the White House, she said the stimulus had had major impact.

"We were an economy in free fall, and that's no longer the case," she said. "If you think where we were in January, that was really frightening."

She cited "glimmers of hope." Housing starts are up. Layoffs have slowed. Retail sales are up a bit.

But unemployment is at 9.4 percent and may climb to 10, by White House estimate.

"Nobody's satisfied with the fact that the unemployment rate is very high," Romer said. "We know we are still losing jobs. . . . I do know that people are absolutely hurting. I think the term expectations gap is a good one."

So far, White House says, $45 billion of $499 billion in program funds - less than one-tenth - has been released. An additional $100 billion in specific spending has been OKd. Total spending will spread over two years.

The bulk of the money has gone to help state governments avoid layoffs, aid schools, and meet health costs such as Medicaid. More jobs-heavy projects, such as highway and bridge work, will increase in weeks ahead.

Romer predicted that economic decline would bottom out by September and that growth would begin in the final quarter of the year.

She said it would take an annualized growth rate of 2 to 2.5 percent before the jobless rate went down.

"Even though people are chomping at the bit and wanting to see evidence [of job growth], we are still very much early in the process," Romer said.

 

Hurt early

Economists now say the recession began in December 2007. That puts Donahue in the first wave of people who got hurt.

Since high school he had been around boats. He made boats. He sold boats. He was a captain on the Chesapeake Bay and in Florida.

He was earning $10 an hour, plus tips, as a mate in Fort Lauderdale when he got laid off in March of last year.

Unable to meet his $800 monthly rent, he returned home to Jersey. He now lives with his mother, doing chores and looking for work while collecting jobless benefits.

"The yard has been cut more times than I've ever cut a yard in my life," he said.

He has sought work in boating, but that industry has collapsed. He has looked for a job as a prep cook and as a landscaper.

Shaved bald, he said: "I'm at the age where I have enough experience, but I'm too old to get hired anymore."

He has spent a lot of time on his mother's deck, reading the papers, with his dog, Bo.

He followed the news Feb. 17 as President Obama signed the stimulus into law and said of the economic crisis: "Today does mark the beginning of the end: the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs."

He read that New Jersey would get $17.5 billion in tax relief and spending. Based on a formula, the White House said the stimulus would foster 100,000 jobs in the state.

He kept up with the news last month as ground was broken on the first part of $652 million in road work that New Jersey will get. That's what got him calling government offices.

He was led to the state's stimulus Web site, nj.gov/recovery. He saw no jobs there. But on a Transportation Department site he found names of firms that had won highway contracts.

When he got the owner of one company on the phone, the owner asked him, "Are you in the union?"

"No," he said.

Donahue figured he couldn't catch a break.

"They said they were only hiring union workers."

 

"Too early to tell"

Herb Taylor says it's "too early to tell" what effect the stimulus is having.

A top official and economist at the Federal Reserve Bank of Philadelphia, Taylor said growth could begin by the end of September. That makes him a bit more optimistic than Romer, who predicts it will happen by year's end.

Job growth typically lags the end of a recession.

"That's going to happen later," Taylor said.

Obama has said the stimulus will generate an additional 600,000 jobs over the next three months. Part of that will come from summer jobs for 125,000 youths.

Still, layoffs will likely outpace hires for some time.

Many conservatives, including Republicans in Congress, doubt that the stimulus is having much impact.

"We've already lost more jobs than the White House predicted would have occurred even if the stimulus had not passed," said Brian Riehl, a senior budget analyst at the Heritage Foundation in Washington. "So it's failing to provide jobs by the White House's own criteria."

Tax cuts comprise $288 billion of the $787 billion in the program.

A tax credit of up to $1,500 for energy-saving home improvements is having an impact, said Michael McGee, of the Home Builders Association of Chester and Delaware Counties.

He said the credit might be spurring homeowners who were thinking of putting in solar panels or insulation to do so now, rather than put it off. He himself installed a new door, and his brother replaced most of his windows.

"But it's not a stampede," he said.

On the spending side, some agencies that do work for low-income people, such as home weatherization, expected funding sooner.

Pennsylvania will get $253 million and New Jersey $119 million in an expansion of the weatherization program. But it looks as if work funds won't be available until fall, as the heating season starts.

Liz Robinson, executive director of the Energy Coordinating Agency of Philadelphia, said of the funding: "I expected it to be out by now. It is slow. Part of it has been that the feds have not been as clear in their guidelines to the states as they might have been. . . . The time frame was probably not realistic."

But G. Edward DeSeve, deputy director of the White House Office of Management and Budget, said stimulus programs could go no faster and still be carefully managed.

"It's like a runner in a long-distance race," he said. "The worst thing you can do is run the first part of the race too fast. . . . You have to be sure you have a pace you're comfortable with."

 

Unemployment drops

On Wednesday, the government reported that, for the first time since January, the number of people on unemployment rolls had fallen. Stocks rallied on the news.

But the report counted only people who have been collecting benefits for six months. It did not count those such as Donahue who long ago passed that threshold and are on extended benefits under a federal emergency program.

He expects his government checks to last until August, "if I don't find something first."

 


Contact staff writer Tom Infield at 610-313-8205 or tinfield@phillynews.com.

 

Tom Infield Inquirer Staff Writer