$23 Billion Equals How Many Jobs?

By 05/28/2010

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(This post also appears on Rick Hess Straight Up.)

Regular readers know that I’m highly skeptical of the proposed $23 billion bailout championed by Senator Harkin and Secretary Duncan and now being carried forward in the House by Representative David Obey. Happily, the prospects for this ill-conceived proposal seem to be sinking. The legislation ignores the fact that many states flew through two years of stimulus money in the first year, rewards states and districts for the hiring binge they’ve been on, reduces the impetus for districts to make serious management decisions, violates the President’s pledge to embark on a discretionary spending freeze, and merely kicks the can down the road on crucial challenges. The Washington Post’s opinion pages are also all over the story today, running a fatuous op-ed in which Christina Romer, chair of the White House Council of Economic Advisers, tries her hand at political hackery, as well as a no-holds-barred editorial that slams the proposal.

But let’s set all that aside for the moment and consider that the $23 billion is being touted for its ability to save as many as 300,000 education jobs and then do the math. That works out to $76,700 per job preserved. Now that’s peculiar, because the Bureau of Labor Statistics tells us that K-12 teachers only earn about $50,000 a year. Even including the extravagant benefits that teachers enjoy, the figure works out to something less than $65,000 a head (and, it’s worth asking, even if we’re eager to subsidize these jobs, do we really want to borrow dollars so as to preserve unaffordable, generous benefits?). Meanwhile, most of the other jobs being preserved appear to be for individuals who earn less than teachers do. So I’m just curious as to how on earth it should cost that much to keep each employee in place–especially when prevailing “last hired, first fired” policies mean that most teachers being protected would be newer, and therefore cheaper, hires.

And all of this presumes you take the numbers proffered by the White House Council of Economic Advisers at face value. I’m pretty sure skepticism is warranted on that count. In fact, Nick Anderson’s WaPo story yesterday pointed out that estimates of jobs saved vary from 100,000 to 300,000, with the unions themselves reporting that about 160,000 teacher jobs may be on the line. If one uses the 100,000 figure, for instance, the cost-per-job-saved is about $230,000. I would think that figure ludicrous, except this is Washington we’re talking about–and that number is actually pretty consistent with some of the mainstream calculations from ARRA.

After carefully trying to keep its fingerprints off requests for extra unfunded spending (recall that “domestic spending freeze” and the promise to stop “kicking the can down the road” on tough choices), the White House yesterday blasted out a full-throated endorsement of the Harkin-Obey bailout. I’m curious as to whether the administration thinks the NEA, school boards, or school administrators have been more willing to accept tough measures in gratitude for the $100 billion bailout they received last year. As best I can tell, the “give now, get gratitude later” strategy hasn’t done much to ease the path of reform. So, while I get that Senator Harkin just wants to placate the NEA, I wonder what our reform-minded Secretary thinks he’s getting in return for his frenzied efforts to borrow and spend another no-strings-attached $23 billion? I’ll tell you, for an administration with a lot of smart folks and more than its share of lawyers, these guys haven’t impressed at the negotiating table.

All of this adds another depressing dimension to the administration’s promise that last year’s stimulus bill would be about both reform and recovery. Duncan certainly deserves plaudits for serving as a visible and outspoken advocate for reform. And the President has spoken out admirably on merit pay and charter schooling. But when it comes to the “money where your mouth is” test, we saw ARRA include about $100 billion in free edu-cash and perhaps $5 billion for reform, and now we’re watching the administration push hard to borrow another $23 billion in jobs money–with no strings attached. I don’t know about you, but a mix that’s 4% reform and 96% status quo isn’t real high octane in my book.

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