The US and Canada's Stimulus Compared

I was going through the budget and came across the estimates of the Economic Action Plan. According to the budget, through the EAP "$60 billion in extraordinary stimulus is being delivered to the economy" and that there has been the "creation of more than 480,000 jobs since July 2009."

Now I've heard that the cost per job created by the US stimulus was rather high, and decided a comparison might be interesting.

The number above is not the number of jobs created by the EAP, but rather the number of jobs created by the economy as a whole. The Seventh Report to Canadians stated that the EAP created or maintained over 220,000 jobs.

So, $60 billion/220,000 comes to a cost of $272,727 per a job created.

The CBO report on the American Recovery and Reinvestment Act puts the cost of the ARRA at $787 billion and estimates it increased the number of full-time equivalent jobs by somewhere between 1.4 million and 3.3 million jobs. This results in a cost per job created costing somewhere between $238,484 to $562,142.*

It seems that Canada's stimulus was fairly efficient compared to the US stimulus, coming in at the lower end of US costs and being almost half of the high end of US costs. Although, one wonders why ours was accurate, while the US' was less so.

But, even so, it seems that stimulus was a rather inefficient method of job creation in both countries.

Not to mention, that in the US' case, there is some indication that most of the jobs created evaporated once the stimulus was spent. I would expect the same happened in Canada, but do not know for sure.

In comparison, according to Mintz' recently released paper, which has gotten some media attention lately, the current corporate tax cuts would create about 100,000 jobs. The lost revenue of these cuts will be a total of $10 billion over the next three years. So, using this we come to a cost of $100,000 per a job created. But as Mintz says in his paper, most of the lost revenue of these cuts will be made up for by increased corporate activity in Canada leading to increased tax revenue.

It seems that corporate tax cuts are a much more efficient method of job creation than stimulus.

* The CBO report also had between 2.0 million and 4.8 million full-time equivalent jobs, which is higher because it includes as transitions from part-time to full-time and increases in overtime as created jobs. The cost per a job would have been somewhere from $163,958 to $393,500.