Bang for the Buck in the American Jobs Act

Recently, a somewhat deceptive estimate of the cost of the nearly 2 million jobs that independent economists estimate will be shaped by American Jobs Act has been making headlines, so we’d like to set the record straight.
These calculations claim to show the “cost per job” created by the bill, by simply dividing the cost of the bill by the estimated jobs created next year. While this calculation might seem intuitive, it provides a misleading picture of the American Jobs Act and its financial impact.
First, as Secretary Geithner highlighted in a visit to a UPS facility in Louisville, Kentucky on Monday, in addition to supporting good middle-class jobs, the investments in the American Jobs Act also create real economic value. It helps pay for the cost of materials for rebuilding roads and bridges or modernizing schools. It provides tax cuts that go towards new asset by small businesses or new purchases by families. We can all agree that improving the quality of our schools and our infrastructure or only if small businesses with the incentives and resources to expand strengthens our economy and its competitiveness. Simply dividing the cost of the bill by an approximation of the number of jobs created ignores these economic benefits. In addition, these calculations focus on the jobs collision in one year alone, and evaluate it against the cost of the entire bill. While the package is intended so that there is the strongest boost in 2012, there is a job creation bang beyond then, which these calculations don't take into account.

What’s more, these calculations fail to take into account the collision of getting people back to work now. Helping Americans get back to work not only reduces the costs of publicly funded programs like Medicaid and food stamps, it also reduces the potentially important long-term costs to the economy of having people out of work for comprehensive periods.