Minnesota says stimulus supported 11,800 jobs

Minnesota officials released preliminary numbers on state government stimulus spending on Monday that said through September state agencies spent more than $1.5 billion, saving and creating thousands of jobs.

Minnesota officials have determined that state agencies spent $1.6 billion in stimulus money. They said that spending has either saved or created the equivalent of 11,800 full-time jobs in Minnesota.

Management and Budget Commissioner Tom Hanson said the biggest impact from the stimulus so far in Minnesota has come from money that offset state budget cuts. Most of the stimulus money has gone to filling holes in the state budget.

According to the new report, stimulus money preserved 5,900 education jobs and 1,200 public safety jobs in Minnesota. Those positions in those two government sectors alone, account for more than half the total.

Create a More Connected Minnesota

MPR News is your trusted resource for the news you need. With your support, MPR News brings accessible, courageous journalism and authentic conversation to everyone - free of paywalls and barriers. Your gift makes a difference.

Do the math and you'll find out that it cost, on average, almost $136,000 for each job saved or created.

But Hanson said that is not the right calculation. He said most of the money went to programs from which state officials do not attempt to make job estimates.

"Of the $1.6 billion, $1.3 billion and change was unemployment and federal medical assistance -- money we didn't have to report jobs on," Hanson said. "So then about $231 million is the money in which we reported the 11,800 jobs."

So, Hanson maintains the preliminary cost-per-job is closer to $20,000.

Hanson said stimulus spending has essentially followed the state's population, meaning that sparsely-populated areas are ending up with much less money than are urban centers.

In releasing the stimulus data, state officials underscored the information is preliminary and will likely change as details are finalized. In addition, their figures account only for stimulus money spent by state agencies. Their numbers do not include federal stimulus spending that went directly to local governments or other organizations.

The Senior Vice President for Public Affairs and Economic Development at the Minnesota Chamber of Commerce, Bill Blazar welcomes news of the nearly 12,000 saved or created jobs. Blazar said most of the business people he represents believe that state's economy would be in worse shape had there been no stimulus bill.

Still, Blazar is concerned so many of the positions saved or created are government not private sector jobs.

The Minnesota Chamber did not take a position on the controversial stimulus bill, but Blazar said if the goal of the bill was to spark economic recovery, it should be of concern that more than $3 billion the state's getting has yet to be spent.

"We needed something quick, we needed something decisive," he said. "Minnesota is closer to $2 billion or $2.5 billion as opposed to $4.7 billion, which is now going to kind of trickle out into the economy over the next couple of years, that's really not a stimulus package. That's, I think in the eyes of many business people, an expansion of the federal government."

Whether the number of jobs saved or created sounds high or low, considering all of the money that was spent, University of Minnesota Carlson School of Management Professor Alfred Marcus said consider the goal of the stimulus.

"There's supposed to be a multiplier effect," Marcus said. "What one would mean by that is for each job that's created, that person has money in his or her pocket which he or she then spends and the next person has money in his or her pocket; they go to the grocery store, they go to the gas station, they decide to fix up their house."

So, in other words, government spending to create jobs begets growth.

Not everyone agrees.

"Let me take it from a 10,000 feet level," said Art Rolnick, director of research at the Federal Reserve Bank of Minneapolis. Rolnick said most evidence shows governments can't spend their way out of economic downturns.

"Generally speaking, historically when governments have tried to do this, to spend their way out of recession through borrowing the money, or raising taxes and spending it that way, there's little evidence that a net is creates much in the way of new jobs," Rolnick said.

Later this week, the federal government plans to release preliminary stimulus job numbers. That count is sure to be higher than the state tally released today. It will count jobs saved or created from all stimulus spending in Minnesota, not just funds that went to the state government.