Calculating jobs

The federal government issued new guidance on how states calculate Recovery Act jobs. The changes are in response to recommendations made by the Government Accountability Office (GAO) and from lessons learned and feedback from recipients after the first reporting period. These changes are designed to make definitions clear, simplify the process, and increase accuracy so citizens have the transparency and accountability the process was designed to promote.

The federal Office of Management and Budget (OMB) anticipates the clarifying guidance will result in simplified methodology and improved data quality. For example, the original guidance was not well suited for reporting over multiple quarters or for dealing with unique circumstances for specific programs.

Please use the ‘frequently asked questions’ below to answer any questions you may have about how we calculate jobs in future reporting periods.

How are the job counts different now from the first reporting period in October?

The new guidance has two changes regarding calculating the number of jobs created or retained:

  1. Jobs will be reported quarterly as opposed to cumulatively. To calculate jobs, recipients will divide the hours worked in the reporting quarter by the hours in a full-time schedule. Thus, a full-time job will count as one job, while a half-time job will account for one half of a job. This change will simplify how to determine the correct denominator and help explain the number of jobs created or retained. Recipients will no longer have to determine when the project started or when the program received funding.

    Example: For the January reporting period, recipients will only submit calculations for those jobs funded by Recovery Act dollars between October 1 and December 31, 2009. If the standard workweek for a job is 40 hours/week, use 520 hours in the denominator (40 x 13 = 520).

    Important Note: Expenditures and other qualitative data will still be reported on a cumulative basis.

  2. Only jobs that were funded with Recovery Act dollars will be included in the reporting. This change is a shift away from the “but for” methodology that was used during the previous reporting period. (The previous guidance was to include jobs that would not have created or retained “but for” Recovery Act funding. This methodology was subjective and difficult to verify and audit.) This change aligns with the recommendation made by the GAO that OMB make “more explicit that ‘jobs created or retained’ are to be reported as hours worked and paid for with Recovery Act funds.

    OMB clearly defines the terms for a “job created or retained” as those funded in the quarter by the Recovery Act. Jobs funded partially with Recovery Act funds will only be counted based on the proportion funded by the Recovery Act. Jobs funded with non-Recovery Act funds will not be counted.

Do the changes mean that the federal government is starting over with the job counts?

No. This is an effort to make the reporting process as easy and as streamlined as possible, not start the job count over. The changes are based on recommendations by auditors and outside experts on how to improve the data collection and accuracy.

What do the job estimates with the new methodology represent?

The data collected from the January recipient reports represent the total jobs directly funded with Recovery Act dollars (these data do not count indirect jobs, such as when Unemployment Insurance recipients spend their benefits and create more economic activity). It allows citizens to see job activity being specifically paid for using Recovery Act funds. In some cases, these funds are creating new jobs or sustaining jobs that would have been lost. In other cases, these funds are being used to pay for ongoing employment, thereby freeing up funds for other important activities and expenditures.

How does this differ from the job estimate from the first report in October 2009?

In the October 2009 reporting period – the first reporting effort – job estimates captured a different but related measure: employment activity that would not have occurred without the enactment of the Recovery Act.

This estimate was useful for isolating the specific impact the Recovery Act was having on job creation and avoiding layoffs. However, generating this type of estimate proved burdensome for recipients to report and challenging for auditors and others to validate.

Are the October job data inaccurate?

No. The October data provided reliable information directly from recipients about the use of their funding at the state and local level. That data provided an unparalleled look at the positive difference that the Recovery Act is having on the economy across the country.

Will the new methodology drive the jobs numbers up? Down? Keep them the same?

The update for how jobs are counted is intended to make the reporting process less bureaucratic. We do not yet know exactly what impact on the job numbers will be. Most important to the OMB is that the updates reflect the right public policy and are consistent with what they believe to be sound recommendations from GAO and input from bipartisan members of Congress who are tracking this issue closely.

How should the October reports be compared with the January reports under this updated formula?

Both measures provide useful data on the job impact of Recovery Act dollars. However, they are not measuring the same type of impacts. Thus, comparing one number to the other would not be meaningful.

The two measures should be seen as complementing one another in providing an assessment of the overall job impact of Recovery Act dollars.

Will you be able to compare the October data with what you learn in January and in subsequent reporting periods?

The changes that we’re making will mean that the October and January data won’t be comparable to each other. However, the data will continue to provide an unprecedented look at an important part of the Recovery Act’s benefits at the state and local level: the job impact of direct spending on Recovery Act projects. The complete job impact of the Act – including both direct and indirect jobs – will continue to be published quarterly by the national Council of Economic Advisors.

Will job estimates reported in future quarters be comparable to the data provided under the new methodology?

Yes. The new data that comes out at the end of January will serve as a baseline view of jobs being funded by Recovery Act dollars. While each quarter’s report will stand on its own, future quarters will allow us to assess, as money is spent, how the overall impact on job activity changes.

How will citizens know that recipients are spending Recovery Act funds for jobs?

Recipients should be prepared to justify their job reporting estimates. Under the guidance, recipients must use reasonable judgment in determining the appropriate sources of information. The changes outlined in the new guidance – linking job creation and retention directly to Recovery Act funding and removing subjective assessments – will make it easier for recipients and auditors to identify supporting documentation.