Newspaper’s analysis finds federal stimulus has brought Michigan few private-sector jobs

Newspaper: Stimulus brings few private-sector jobs

DETROIT — The federal stimulus funding that has reached Michigan so far has created few private-sector jobs and some recipients of the cash have overstated the number of jobs created or protected, an analysis by the Detroit Free Press shows.

The newspaper’s examination of the more than 1,800 awards to agencies, departments, municipalities and firms in Michigan under the stimulus act found the biggest impact was spurring or protecting public-sector or summer jobs — not private-sector jobs.

At first glance, the impact of the federal stimulus act thus far looks like good news for Michigan, which in September had the nation’s highest unemployment rate at 15.3 percent.

Officials said that by Sept. 30, some 22,500 jobs had been created or saved in roughly the seven months since Congress passed the stimulus plan.

Michigan was promised $5.2 billion in stimulus money, $1.2 billion of which had arrived.

Close inspection reveals flaws in the claims and raises doubts about the mammoth spending bill’s impact to date. The Free Press’ analysis revealed that some stimulus money recipients have greatly overstated the number of jobs created or protected.

General Motors Co., for instance, reported 105 jobs saved or created for a government purchase of 5,000 vehicles but later said no jobs were retained or added. The City of Detroit reported an impact of 342 jobs it now says was a projection — not jobs already created or retained.

The Free Press found that three of every four stimulus grants, contracts and loans approved in Michigan created or retained one job or less. Its analysis also showed that fewer than 700 awards had received some money, and nearly half of those — 327 — had created one job or less, at a cost per job of $2.7 million.

Obama administration and state officials have said it’s too early to draw conclusions about the overall impact of the $787-billion nationwide program to stimulate the economy and generate jobs. They promise that job growth will follow as more funding arrives.

“It looks to us like the program is unfolding much as we hoped in Michigan,” said White House economic adviser Jared Bernstein.

Stimulus bill critic Peter Morici, an economist and business professor at the University of Maryland, said his biggest complaint is that it is set up to produce mostly public-sector jobs, despite Obama’s claim last January that 90 percent of the jobs the stimulus created or retained would be in the private sector.

So far in Michigan, the numbers support Morici’s claim. Of 22,513 jobs reported, 13,555 were tied to state money for education, doled out to local school districts. Without a huge economic turnaround or more federal money after the 2-year stimulus ends, many of those jobs could be threatened.

More than 3,000 of the jobs were summer-only jobs for youths.

Leslee Fritz, director of Michigan’s Recovery office, spent two days in Washington, D.C., last week talking to stimulus officials from other states about how to improve reporting.

She said she was pleased with the federal investments.

“In a state like Michigan, there’s never going to be a situation where we feel they’ve moved fast enough” to get money flowing and jobs created, she said. But, she added, “I think we’re off to a good start.”

Both Bernstein and Fritz said what is missing from any snapshot analysis of the recipient reports to date is that the stimulus spending is still in its infancy.

Investments in so-called shovel-ready projects, such as road and bridge building, are just now getting under way.

Job creation tied to high-speed rail improvements have yet to be felt, and $1.35 billion in grants for advanced battery and electric vehicle manufacturing and development are estimated to create 6,800 jobs in Michigan by the end of 2010.

Information from: Detroit Free Press, www.freep.com