Where The Stimulus Is Working

The Obama administration has claimed that over 600,000 jobs have been created by the stimulus so far through direct grants, and many have argued this is a deceptive argument in light of the "disturbingly high unemployment rate," as Michael Boskin writes today.

The White House is at a bit of a disadvantage in this debate because the method of counting jobs through direct contracts misses out on perhaps the stimulus's greatest successes. The ripple effects created by stimulus spending have consequences that are hard to calculate in the short-term. Nevertheless, we can identify certain winners from these ripple effects.

Take the education industry, for example. Not the schools and the people they employ, but the range of businesses that provide services to educators. At a conference yesterday, I spoke to the CEO of one such business, Dennis Heneger of the Provenio Group based in Austin, Texas. His company sells a piece of software called LEAPS that helps teachers deal with behavioral problems in their classrooms. The software lets teachers evaluate their students' behavior, and then offers resources to fix the problems based on the evaluations. Heneger said he was growing his business throughout the decade, spreading the technology to more and more school districts, but that changed in 2008.

School districts had to freeze or cut their budgets as the fiscal situation worsened in the 50 states, and so many schools didn't have the money for LEAPS. But, Heneger told me, the company got back on track in 2009 thanks to the stimulus. Now many school districts are flooded with money that is specifically set aside for special education. Heneger's company is marketing LEAPS as an investment for which schools can use that money.

This is one anecdotal example of exactly what the White House would like to see with the stimulus: the money trickling down to other parts of the economy. Of course, for every success story, you can probably think of many businesses that are unaffected by the stimulus and haven't been able to survive.

Counting jobs created versus jobs destroyed is hard. While it's clear that for now, the economy is still bleeding jobs, we won't have a good idea for some time just how much the stimulus has done to stop that bleeding. But at least on the level of the individual firm, we can say it has done some good.