How Do I Estimate Job Creation?

Funding from a state or federal level can create new jobs, but it is important to measure how effective this job creation is.

Job creation is a difficult part of the economy to estimate because the economy is so large, and it's difficult to tell the difference between new jobs and jobs that have simply been moved around. What's more, it's difficult to tell whether jobs are being created or whether individuals are just working harder.



However, it is possible to use the White House's methodology to measure job creation and arrive at a rough figure of how well the economy is progressing.

Instructions

1. Specify the timeframe and method of funding. Job creation is generally linked to spending from above: A good example is the 2009 economic stimulus package.

2. Specify that a created job has to be directly related to the funding. While jobs may be created further down the economic system, the effects are so diluted that it is impossible to tell if they were created by the funding or by outside factors.

3. Specify what entails a job. For example, the Office of Management and Budget defined a job as 520 hours of work in a year. This could be one full time employee, two part time employees, or any combination. It could be 520 people working 1 hour each per day. The reason you need to do this is to weight jobs in relation to how much they actually contribute.

4. Survey all recipients of the funding to see how many people they employed under the criteria above.

5. Compare your results to previous years to roughly show how well the job creation is going.

Tips & Warnings

• Remember that this is a rough guide to estimating--the rules are not set in stone, and job creation is a subjective measure of economic performance.

References

• Washington Post: Economic Stimulus Has Created or Saved Nearly 2 Million Jobs, White House Says
• UC Berkley: American Recovery And Reinvestment Act: Number of Jobs Created or Retained