5 Things to Know About the Stimulus-Era Job Market . . . The stimulus has Americans mostly confused. Here’s what you need to know
Near the start of the nearly 1,100-page stimulus bill is its statement of purpose, and its first purpose is jobs, as in «to preserve and create jobs and promote economic recovery.» With a price tag of nearly $800 billion, the ambitions for job creation and recovery over the next two years are huge. The president has signed it into law, but we still haven’t heard a giant swoosh of relieved exhales from the 11.6 million Americans who are out of work and looking for jobs. Instead, when it comes to the stimulus package, confusion reigns.
On Yahoo Answers, a free public forum for posting questions and answers, hundreds of questions relate to the stimulus and its effect on the job market. One contributor asks: «Is there anything in the stimulus package that is not wasteful spending and will create jobs?» Now that the stimulus is beginning to be implemented, it’s worth understanding just what this package is intended to do for employment. Here are five things to know about its intended effects on the job market over the next two years:
Every sector should grow: When economists Jared Bernstein and Christina Romer came up with the widely-used estimate of 3 to 4 million jobs that would be created or maintained by the stimulus, they used the rule of thumb that a 1 percent jump in GDP would correspond to a 1 million jobs jump in employment. Of the 3.7 million jobs estimated to be created or retained, you’ve probably heard the most about construction and healthcare jobs. But when jobs are created in those sectors, jobs are also created indirectly in other sectors. Businesses can spend, and workers can pay for things like hotel rooms, clothing and furniture. So, even the infrastructure portion of the bill should indirectly benefit the other sectors, like hospitality and retail.
Union workers will benefit: This bill provides money to repave highways and reinforce bridges, as well as money that could be used to build wind turbines and renovate schools. Even the Environmental Protection Agency gets money to build green visitor centers at national parks and refuges. Those projects all mean work for occupations that have an above-average rate of unionization.
There will be white-collar work, too: Laurence Shatkin, a career expert who’s authored multiple occupational guides, notes that one of the principles of the stimulus is that it’s intended to create 90 percent of jobs in the private sector, as well as create jobs at all levels of the occupational strata. Even portions of the bill that would seem blue-collar heavy will offer variety, Shatkin says. For example, infrastructure spending will mean work for civil engineers and urban planners, as well as construction workers.
The unemployed will get help: While bent on job creation, the bill also provides relief for the unemployed. The stimulus pushes the unemployment benefits extension through the end of year, as well as boosts benefit payments by $25 a week. It also offers a tax deduction—taxpayers won’t have to pay federal income tax on the first $2,400 they earn in unemployment benefits in 2009. About $25 billion is allocated to subsidizing 65 percent of COBRA insurance for unemployed workers as long as nine months. COBRA is a program that allows workers who have lost their jobs to maintain their health insurance by paying a hefty 102 percent of their premium.
This sort of relief is also stimulative, as the money spent on unemployment benefits has a high multiplier effect, Shatkin points out. Unemployment checks tend to be spent immediately, rather than saved, and many economists view that relief as an especially efficient economic stimulus.
It aims to get consumers spending again: Joanie Ruge, a senior vice president at Adecco, says the company is optimistic about the stimulus plan’s effects on the job market, and is projecting that the job losses will slow mid-year. «We do think the economy right now really needs a jolt,» Ruge says. «We need something to get consumer confidence back up.» The U.S. economy is locked in an ugly cycle of weak consumer spending, which slashes revenue for companies, forcing them to layoff workers, who then stop spending, and on it goes. Luring consumers back with tax credits is part of the formula for recovery and job creation.