Right-wing media have seized on a recent Los Angeles audit of some stimulus funds the city has received to falsely claim that each stimulus-funded job in LA cost the taxpayer an average of $2 million per job. In fact, the controller's office noted that not all of the funds have been spent yet, additional jobs are expected, and moreover, such cost-per-job estimates are "highly misleading," as they do not capture the full impact of the stimulus.
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Right-wing media claim Los Angeles spent "$2 million per job," cry waste
Ace of Spades suggests L.A. is creating jobs at a rate of $2.02 million per job. In a September 16 post, Ace of Spades blogger Gabriel Malor quoted from the audit and stated that Los Angeles created "54 and a half jobs. That's it. Out of $111 million." He then added that "for damn sure they were misspent" and suggested that each job cost roughly $2.02 million, stating "great news, sportsfans. Los Angeles has another $483 million in spendulus funds coming its way. At the present rate that's a whole 239.3 jobs!"
Hoft: "Los Angeles has used $111 million in stimulus cash to create a whopping 55 jobs." In a September 17 post, Jim Hoft suggested Los Angeles has used the entire $111 million, writing: "Another Democratic Success Story...Los Angeles has used $111 million in stimulus cash to create a whopping 55 jobs."
Fox & Friends: LA gets "a failing grade" for spending "$2 million per" job. On the September 17 edition of Fox News' Fox & Friends, co-host Steve Doocy announced that the city of Los Angeles has "created 54.46 jobs for $111 million. That is $2 million apiece," which co-host Brian Kilmeade said "really defines government waste." Co-host Gretchen Carlson added that L.A. should get "a failing grade" for that job creation record. Doocy then echoed the Ace of Spades post, stating: "The good news is, according to the calculations, Los Angeles is going to get 483 million more dollars, which means, at this rate, they could create another 239 jobs. Not 239,000 jobs, 239."
MacCallum: "I'd rather take the $2 million, probably, than the salary for the job." On the September 17 edition of Fox News' America's Newsroom, co-host Bill Hemmer noted that the Los Angeles controller stated that 55 jobs have been created with the $111 million in stimulus it has received so far and claimed, "That's 2 million per job." Co-host Martha MacCallum described the report as "shocking" and added: "I'd rather take the $2 million, probably, than the salary for the job." During the subsequent segment with Fox Business host Stuart Varney, Hemmer claimed that the L.A. Department of "Public Works spent $70 million in stimulus funds; they created seven private sector jobs. Taxpayer cost per job: $1.5 million. Also in L.A., the Department of Transportation spent $40 million for nine other jobs. ... Taxpayer cost per job: $4.4 million." Varney responded: "Yes." Fox aired the following onscreen graphic during the segment:
In fact, Los Angeles did not "spend" $2 million per job
L.A. controller: Two L.A. departments have thus far "created or retained 54.46 jobs" from "$111 million in federal stimulus funds" but expects to create 264.14 jobs total. According to the L.A. controller's press release, both the Department of Public Works (DPW) and the L.A. Department of Transportation (LADOT) expect to create 264.14 jobs from the $111 million they have received once all the money has been spent:
DPW has received $70.65 million and created or retained 45.46 jobs, though they are expected to create 238 jobs overall (the fraction of a job created or retained correlates to the number of actual hours works). LADOT has been awarded $40.8 million and created or retained 9 jobs, though they are expected to create 26 jobs overall. Overall, the Departments have received $111 million in federal stimulus funds out of the $594 million the City has been awarded so far and created or retained 54.46 jobs.
LADOT spent has only spent $1.8 million of its $40.8 million; expects to create 26 jobs total. According to the auditor's report on the Department of Transportation, the department has spent $1.8 million thus far and expects to create 26 jobs with the $40.8 million awarded:
L.A.'s DPW has only spent $5.24 million of its $70.65 million; expects to create 238.14 jobs total. According to the auditor's report on the Department of Public Works, the department has spent $5.24 million thus far and expects to create 238.14 jobs with the $70.65 million reported.
LA comptroller: Stimulus funds were not "misspent," but "the City needs to do a better job expediting the process and creating jobs." From the L.A. comptroller's press release:
"I'm disappointed that we've only created or retained 55 jobs after receiving $111 million in ARRA funds. With our local unemployment rate over 12% we need to do a better job cutting the red tape and putting Angelenos back to work," said City Controller [Wendy] Greuel. "While it doesn't appear that any of the ARRA funds were misspent, the City needs to do a better job expediting the process and creating jobs. We're going to continue to audit how these funds are spent, to ensure that they are expended quickly and correctly. I'm pleased that since our auditors completed their field work, the Departments have begun to implement the changes we identified to help get this money out the door faster."
Such "highly misleading" calculations fail to capture full impact of stimulus funds
LADOT did not include jobs that were created on "contracted out" projects. In the audit report of the LADOT, the auditors noted: "The estimated number of jobs to be created/retained represents the estimated jobs that will be created/retained throughout the grant period. These estimates do not include job estimates for contracted-out projects."
Cost-per-job calculations of stimulus effects are "highly misleading,"' ignore "indirect employment." In a November 2, 2009, "fact check" article, The Associated Press reported a similar cost-per-job estimate of stimulus effectiveness: "Divid[ing] the stimulus money spent so far by the estimated number of jobs saved or created" is "highly misleading" because that calculation "ignores the value of the work produced," only includes jobs produced "to date" from funds "that will fuel work for months or years," and excludes "indirect employment" resulting from the stimulus. Similarly, PolitiFact wrote that a similar cost-per-job estimate "likely left out some important details" because of the "indirect effects on the economy."