It would not surprise most Americans to hear that unemployment rates are still lingering lower than pre-recession levels. As Dennis Cauchon wrote last week in USA Today:
The nation has 5% fewer jobs today — a loss of 7 million — than it did when the recession began in December 2007. That is by far the worst performance of job generation following any of the dozen recessions since the 1930s.
In the past, the economy recovered lost jobs 13 months on average after a recession. If this were a typical recovery, nearly 10 million more people would be working today than when the recession officially ended in June 2009.
What might be more surprising to some is that the federal government has been the reason why job growth has been stymied. A new study by economists Tim Conley and Bill Dupor shows that The American Recovery and Reinvestment Act of 2009 (ARRA) has destroyed over 550,000 jobs on net. The study notes:
Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.
The stimulus spending has not only saddled our nation with debt, but it also crowded out one million private sector jobs. Dan Mitchell explained back in 2009 how this stimulus spending would do more harm than good in several of our Economic Lesson Series videos (here, here, and here).
The important lesson from all of this is that government stimulus spending crowds out private investment, kills jobs, and increases inflation and debt. If Obama and Congress truly wish to help increase job growth they should cut government spending, remove burdensome regulations, and lower taxes.
