Cost per Job in Indiana

[daenku32]

There was complaining about how expensive was it for government to add a worker through the stimulus package. The number was high, like much more than the average wage of a worker.

So, I got a bit curious. How efficient is the current market in my State--Indiana.

In 2010, Indiana GDP was $267 billion. The per capita GDP for the state was $41,169 (in 2010, per Wikipedia).
While this first caused the reaction that "hey, it shouldn't cost most that $41k on average to hire a worker", that's not the correct formula.

Indiana's labor force is around 3 million (as opposed to total population of 6.5 million used in the per capita calculation). So when you divide the GDP by Indiana workforce, you get $89,000 per job. Since the average wage is around $34,000 per year (2007 data), it means over half is "wasted", when GDP is used as a reference point. What's worse is that 50% of all those laborers work for under $28,000 per year. So to hire an unemployed worker you shouldn't need more than $30,000, right? (Ref: Wage Pyramid)

The point here is that when calculating the 'extra' that a program paid to create a job, you need to be careful with the numbers. It also gives an indication of how some jobs are much more beneficial for workers all around even if they do not have a big impact on the GDP.

PS. On a national scale, it costs about $100,000 in economic activity to have a single paid job.

 

[Puppycow]

It's very difficult to prove how many jobs were created and/or saved by the stimulus.

It's more than just jobs directly created because the money that goes into the economy then gets used by the people who receive it to buy other things and that indirectly helps to create or maintain more jobs.

You basically have to rely on economic models to do this.

Here's the back-and-forth from last summer about how many jobs were created:

White House Disputes Study Saying Stimulus Cost Taxpayers $278,000 Per Job

Jared Bernstein, a senior fellow at the left-leaning Center on Budget and Policy Priorities who served as a member of the White House economic team until May, told FoxNews.com, that the actual cost per job is below $100,000 when all factors, including jobs that lasted only one year, are calculated.

Remember also that a large part of the stimulus was in the form of tax breaks, which can't be traced to specific jobs created, but nonetheless are thought to have created jobs according to economic models.