The White House has circulated materials asserting that the President’s proposed American Jobs Act (AJA) would “support” nearly 400,000 education jobs. A former colleague of mine has noted that the validity of this claim rests on the definition of the word “support,” prompting a dissection of what exactly the Administration means by this terminology.
Similar claims were made earlier in the Administration with respect to jobs “created or saved” by the 2009 stimulus package. The many problems with those claims have been amply discussed elsewhere and will not be reviewed here in detail. Suffice it to say that one big problem was that the claims were based primarily on modeling assumptions and could neither be verified nor refuted after the fact, thereby leaving little to no informational value. (Moreover, to the extent that rigorous empirical assessments were subsequently conducted, they have undercut the claims). Of perhaps even greater concern, however, is that the concept of “jobs created or saved” appeared deliberately designed to produce more favorable numbers than the neutral standard of “job creation” commonly applied throughout previous presidencies.
If numerical claims do not reliably measure the effects of government policies, that alone is a reason not to make them. But inappropriate use can also boomerang on the authors of the policies if they create a tangible disconnect between advocacy rhetoric and economic reality. To be claiming a powerful positive effect on millions of jobs at a time when so many Americans were losing theirs inevitably introduces skeptical questions, especially in an environment where many Americans are already inclined to be skeptical. Far better to make more prudent, verifiable claims that resonate with Americans’ actual economic experience.
The terminology of “supporting” nearly 400,000 jobs, as it turns out, is even more problematic. It, too, reflects an assumption rather than a metric that can be objectively tested and verified. And it similarly has the problem of being seemingly designed to allow the citation of significant positive numbers. But the “support” metric (also used by DoE to praise similar education funding in last year’s Medicaid law) contains a more glaring problem: it has nearly nothing to do with the policy that it advertises. It does not illuminate the policy’s efficacy, barely reflecting even on its content.
Let’s review in detail how the concept of “supporting nearly 400,000 jobs” is derived.
To start the process of estimating educator jobs at risk, the Administration refers to a June, 2011 paper by the Center on Budget and Policy Priorities (a left-of-center think tank). This paper quantifies recent and projected shortfalls in state budgets.
The Administration then makes various assumptions about how the projected shortfalls would be filled. In effect, they assume first that shortfalls would be filled by a combination of tax increases and spending reductions, and then that spending cuts would be applied proportionally across all categories including education. As the Administration materials state, “These spending reduction numbers were then converted into estimates of educator jobs at risk based on estimates of average teacher compensation by state. These calculations implied that, if spending reductions had their full negative impact on education staffing, up to 280,000 educator jobs across the country would be at risk in the 2011-2012 school year.”
The Administration then points to $30 billion in spending contained in the proposed American Jobs Act. The purpose of this spending, as specified in the bill text, is to “prevent teacher layoffs and support the creation of additional jobs in public early childhood, elementary, and secondary education in the 2011-12 and 2012-13 school years.” These appropriations would be distributed among states by a formula based in part on the state’s total population, and in part based on its school-age population. Various provisions in the bill text specify that the funds must be used to retain, recall, rehire or hire educators, and that they must be used by September 30, 2013.
The Administration asserts that this $30 billion is “enough for states to avoid harmful layoffs” (i.e., saving the 280,000 educator jobs referenced above) and also to “rehire tens of thousands of teachers who lost their jobs over the past three years” – together resulting in the figure of “nearly 400,000” jobs. (The earlier teacher job losses are detailed in the joint NEC/CEA/DoE document.)
The Administration also points to a recent Government Accountability Office (GAO) report finding that similar funding enacted with the 2009 stimulus bill was indeed used by states and localities to keep teachers in jobs. Putting all these informational items together, therefore, the Administration concludes that the $30 billion in the AJA would “support” nearly 400,000 jobs.
What is the problem with this chain of reasoning?
There are several. First, the initial assumption made is that in the absence of these federal appropriations, states would make no effort to prioritize education spending relative to across-the-board budget cuts. Federal funding is to be credited with “supporting” any “job at risk” that is not lost, without accounting for displacement effects. In the real world, however, the presence or absence of external funding for a particular spending priority will have enormous spillover effects upon the tough decisions states and localities must otherwise make to operate within existing budget constraints.
Second, this foundational assumption clashes with empirical results like those shown in Figure 4 of the Administration paper – in which local education employment is seen to plummet virtually at the precise moment that the 2009 Recovery Act’s funds are reportedly supporting education job retention. Advocates will naturally say that “without the funds, the employment decline would have been much worse.” This could well be true to a significant extent, but just as with the “jobs created or saved” claims this is essentially being assumed rather than demonstrated.
Third, there are some conspicuous gaps in the chain of reasoning. The basic logic is that teacher layoffs are driven by state budget shortfalls; funding provided to states/localities under the jobs bill would therefore prevent future layoffs and allow rehires of those previously let go. But the Administration’s state-by-state projections of education jobs “supported” doesn’t fully comport with this representation. For example, the original CBPP paper shows no shortfalls for either Montana or North Dakota in any of fiscal years 2009-13. Yet the Administration document shows a (small) number of jobs “supported” in each of those states under their proposals. This makes little sense if state budgeting shortfalls are indeed the source of all of the education “jobs at risk.”
The biggest problem is that even if numbers of “jobs at risk” were correct, this would tell us nothing about the desirability of the Administration’s proposed policy response. The figures presented effectively describe a set of assumptions about state budgets; they carry no hard information about the efficacy of the AJA.
And so we are left with a number that draws no clear connection between the policy advocated and the results claimed. By this same standard, virtually any advocate could reasonably claim that an opposing approach to funding education at the state level would “support nearly 400,000 jobs” – almost irrespective of the specific policy. For evaluating the relative merit of policy alternatives, this is not illuminating.
The previous effort to rationalize and quantify “jobs created or saved” caused enormous public confusion and created unnecessary controversy for the Obama White House. Let’s hope that the even more nebulous concept of “supporting” jobs doesn’t create still more confusion.
Charles Blahous is a research fellow with the Hoover Institution, a senior research fellow with the Mercatus Center, and the author of Social Security: The Unfinished Work.