This is yet another example of why it’s tough to calculate the actual job-stimulating benefits of the stimulus plan. The Recovery Act’s success is typically measured by looking at how many jobs have been created. But there’s also job “shifting,” which happens when a business uses stimulus funds to hire someone who was already employed at another company. And according to a new study from George Mason University’s Mercatus Center, that’s been the case with nearly half of the workers hired under the Recovery Act:
Hiring isn’t the same as net job creation. In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations after January 31, 2009, were unemployed at the time they were hired (Appendix C). More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5 percent) or from outside the labor force (4.1 percent)(Figure 2). Thus, there was an almost even split between “job creating” and “job switching.” This suggests just how hard it is for Keynesian job creation to work in a modern, expertise-based economy: even in a weak economy, organizations hired the employed about as often as the unemployed.
A substantial portion of the jobless population has been out of work for longer than six months, but this group is also the hardest to help. The problem isn’t necessarily a lack of jobs, but a lack of suitable education or skills. The Obama administration has proposed federally-funded job training programs, but these courses tend to be inadequate. In the eyes of many employers, training isn’t a substitute for a college degree or experience.
The latest proposal – which will likely be included in Obama’s upcoming jobs plan – is to create a program similar to the one in Georgia, which gives people eight weeks of paid, on-the-job training at an actual company:
Obama wants to help those who have been out of work for six months or more, which adds up to about 6 million Americans. Specifically the president is looking at a program such as Georgia Works – which gives unemployed Americans eight weeks of training at a local company while allowing them to still collect their unemployment benefits. And it’s no cost to the participating company.
There have been questions about the effectiveness of Georgia Works that Politico tackled recently. The program has also drawn opposition from unions, which are worried about it being exploited by companies looking for free labor – and they do have a point. When businesses are provided with an endless supply of temporary workers, wouldn’t that actually make them less likely to hire full-time employees? Beyond that, it does sound like a creative way to address the problem, and would least give on-the-job experience to the unemployed, which couldn’t hurt.