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Macro Impact of Census Hiring - Nada

Bruce Krasting's picture




 

A friend of mine is out of work, so I suggested that he apply to the
Census Department. The news you read is that Census will be hiring
1,200,000 workers. The head of the Census, Robert Groves has said these
will be temporary, but good paying jobs.

The creation of 1.2mm jobs at this point in the economy would be a very
good thing. It wouldn't solve all our problems by a long shot. But it
would be a big boost. Just looking at the headlines you might get the
sense that the Census employment wild card could be a factor in the
economy. After looking at it a little closer I have concluded that it
is no big deal.

The critical questions are, How long will these temporary workers be
employed? How many hours a week will they work? What hourly pay will
they receive?

At the end of this piece is a flow chart of the Census process. You
will see that the allocated time frame for hiring and employing the
temporary workers is May – July. A total of only three months. There is
a specific restriction on the hiring. There will be no overtime.
Therefore assume that each worker works the full forty-hour week. The
hourly wage offered by the Census Bureau will vary by region. They will
offer workers a “competitive wage”. The BLS puts the average hourly
wage for non -permanent workers in a range of $11-15 per hour on a
national basis. I use the highest average number for the following
calculation:

(number of hires) * (maximum number of weeks employed) * (maximum hours worked per week) * (Average Wage) = Total Compensation

(1,175,000) * (12) *(40) * ($15) = $8.64b.

The $8.64b number can’t be correct. It has to be lower than that. The
GAO recently estimated the cost of the census at $14.7B (up from $11.5b
estimate in July 09). There is no budget on this $15b that I have
found. But I did see a reference to the IT portion of the cost being
25% of the total. The direct costs to the Census Bureau are also
significant. Based on my review of the job that has to be done and the
role that the temporary workers will contribute the cost of the Temps
has to be no more than 1/3 of the budgeted total. My own guess on this
is that the number will prove to be no more than 25%. But lets use 33%
or $5,000,000,000 as the amount of Total Wages Paid by the Census
Bureau.

If you use the $5b number and put it into the formula I used it results in:

(1,175,000) * (12) * (Hours worked per week) * ($15) = $5b

Working this backward you get Hours Worked Per Week = 24. After tax
that comes to less than $300 per week per average worker. That is less
than what unemployment pays. On a five-day week equivalent it comes to
$60 a day. The impact of the Census hiring is not what it might first
appear to be. Some observations on the broader impact based on the
foregoing:

-Social Security will take 12.4% of these wages. That comes to $620mm.
This is a big number, but the Trust Fund deals in very big numbers. In
August of 2010 the Trust Fund will be paying our $60 billion in
benefits. They will receive an extra $200mm in August as a result of
the Census. That comes to about 8 hours of payments. In 2010 SS will
pay out approximately $700 billion. The Census income amounts to .09%
of the total.

-The IRS will take approximately 25% or $1.25B. That comes to .09% of
the anticipated $1.4 trillion deficit. While someone might look at this
as a positive we have to remember that it is costing us $15 billion. So
we are getting back less than ten cents on the dollar. Net of SS and
the IRS the Census will add $13 B to the Unified Budget Deficit.

-$3.15 b will be the net wages received by the temp workers. This comes
to .03% of GDP. Not all of the wages will actually go to consumption.
Therefore the impact to the broad economy is barely noticeable.

-The Census impact will only benefit the economy for three months of
the year. Any benefits that it does bring will be reversed by August
1st. This is not good timing in my opinion. I think a lot of the other
monetary and fiscal stimulus measures will be ending at about the same
time. This is just another reason to expect the economy to hit a wall
in the 3rd and 4th quarters of this year. By August 1st there will be
another 1.2mm workers looking for a job.

-To look at the impact of the Census on employment I annualized its affect as follows:

Total hours of employment = Hires * Weeks * Hrs/week

1,175,000 * 12 * 24 = 338,400,000 Hours.

Once again that appears to be a lot of hours. However, consider that if
you were a full time employee (40hrs/week) you put in 2080 hrs in a
year. It takes only 162,700 full time workers to accumulate 338.4m hrs.
The annualized contribution to employment is equivalent to only 150K –
200K jobs. We have lost 7mm jobs in the past two years. The census
impact is equal to full time hiring of just 2% of those who lost work.
There is no lasting benefit. Total employment in the US is 130mm
currently. The 2010 Census impact is equal to only 1/8th of a percent.

I looked at the Census employment issue because I have been hearing in
the MSM that the hiring of 1.2mm workers is imminent and it will impact
the employment picture in a measurable way. Don’t listen to the MSM on
this one. While I will be happy if my friend (and many others) get some
part time work, the Macro economic impact of the census is negligible.
Any positive benefits will have been reversed by the start of the third
quarter.

 

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Tue, 03/02/2010 - 05:14 | 250772 Anonymous
Anonymous's picture

What about the unemployment rate? Will they be able to count those 'temp' workers as full time employed for those 3 months? That could impact the headline rate for a while. The good financial accounting management may be a good solution.

Just a paranoid thought...

Mon, 01/18/2010 - 20:16 | 197846 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Any number pales in the face of $1.5 QUAD.  

What we need is a miracle.

Buy Silver.

Mon, 01/18/2010 - 13:24 | 197304 lawton
lawton's picture

I see a double dip in place by the 3rd or 4th quarter of 2010. The Dems will do everything they can to make sure its the 4th quarter officially however.

Mon, 01/18/2010 - 13:14 | 197287 deadhead
deadhead's picture

Great article Bruce, nice analysis and very timely.

Frankly, I hope you keep updating this piece as new info comes available and re-post with updates  in March, April, etc.

 

Thank you for your efforts.

Mon, 01/18/2010 - 10:28 | 197098 Anonymous
Anonymous's picture

Any commercial value gleaned from the census could be done for a fraction of the cost using statistics (excluding black swans).

The census needs to be done precisely because the Constitution requires it for deciding representation.

However, I don't believe I will be eating, drinking, driving, etc. census data.

Mon, 01/18/2010 - 13:03 | 197269 Rainman
Rainman's picture

Yes. The Census is the incubator that validates a need for more politicians. The rest of it is cover for that primary purpose. 

Mon, 01/18/2010 - 00:50 | 196992 Winisk
Winisk's picture

When the MSM start to talk about the hiring of a million people to go door to door asking questions as a productive exercise that benefits the economy, we have stepped into the twilight zone.  This is absurd.  If it's so important to goose the GDP, how about hiring people to do something useful like caring for elderly folks at home, or nurturing neglected children, or plant trees, or build something!  There's no shortage of useful projects that can be done.  No, in our perverse economy it's better to dump gobs of money into the black hole of financial institutions, fight losing battles on the other side of the world, pay folks to sit at home doing nothing, or pay a few of them to chit chat with their neighbours.  Heck, if there is enough resources to feed and keep everyone housed, why not spread the workload around a bit, kick back, relax and enjoy the fruits of our labour.  Screw growing the economy.  Let's give conservation a try.  See if that works out better for us all.

Mon, 01/18/2010 - 17:45 | 197682 Anonymous
Anonymous's picture

Grow or die.

There is no other choice. Unless you plan on no births, no immigrants legal or not, we need to either resign ourselves to a new Constitution that guarantees everyone a certain basic living WITHOUT working for it, or we need to find millions of jobs per year, barring a cataclysm or Apocalypse.

Your idea of apportioning the available work among the productive, has some merit but it wouldn't provide near enough jobs or activity for the 600,000,000 people this country will grow to year by year for the next 50 years.

Mon, 01/18/2010 - 14:04 | 197352 Obnoxio
Obnoxio's picture

I think requiring people who are on the dole for more than 6 months to do 10 to 20 hours a week of public service type work would be good for the country.

Mon, 01/18/2010 - 15:47 | 197521 Lonewar
Lonewar's picture

Obnoxio,

Actually, out side of California and New York people on Transitional Assistance for Needy Families (Welfare or TANF), must participate 24 hours per week for a single adult household or 32 per week for a two parent household or be kicked off aid for the entire family.

Participation is defined as working, looking for work, preparation for looking for work, volunteering, or in some cases education directly leading to employment.

In California and New York if the parents dont participate the grant amount is just reduced to not include the parents in the calculation.

However, if you are an illegal alien, because we are not aiding you anyways (The grant includes nothing for your needs), you dont have to participate at all and we just keep giving you money until your last child turns 18...

Now some parts of my numbers may be a little off as the Welfare to Work (WtW) program is separate in California from the CalWORKs side of the house (WtW = What you must do to not have your grant reduced vs. CalWORKs = How much money you will get based on family size, income, etc), and I work on the CalWORKs side of the house.

And truthfully, it would save taxpayers a LOT of money to just let the families sit at home and suck on the Middle Class tit for 5 years versus making them go out to work or look for work and track all the results, etc. Considering that the WtW side of the house actually has a higher budget than the cash aid side of the house in my county we could eliminate over 50% of the Welfare Costs by getting rid of WtW.

But of course, that would be bad, as we would not be trying to prepare these leeches (Most, but not all participants, especially these days) for actually having to look for work after their 5 years of partying... (/dripping sarcasm off)

(Sorry for the double post, forgot to log in)

Mon, 01/18/2010 - 15:46 | 197518 Anonymous
Anonymous's picture

Obnoxio,

Actually, out side of California and New York people on Transitional Assistance for Needy Families (Welfare or TANF), must participate 24 hours per week for a single adult household or 32 per week for a two parent household or be kicked off aid for the entire family.

Participation is defined as working, looking for work, preparation for looking for work, volunteering, or in some cases education directly leading to employment.

In California and New York if the parents dont participate the grant amount is just reduced to not include the parents in the calculation.

However, if you are an illegal alien, because we are not aiding you anyways (The grant includes nothing for your needs), you dont have to participate at all and we just keep giving you money until your last child turns 18...

Now some parts of my numbers may be a little off as the Welfare to Work (WtW) program is separate in California from the CalWORKs side of the house (WtW = What you must do to not have your grant reduced vs. CalWORKs = How much money you will get based on family size, income, etc), and I work on the CalWORKs side of the house.

And truthfully, it would save taxpayers a LOT of money to just let the families sit at home and suck on the Middle Class tit for 5 years versus making them go out to work or look for work and track all the results, etc. Considering that the WtW side of the house actually has a higher budget than the cash aid side of the house in my county we could eliminate over 50% of the Welfare Costs by getting rid of WtW.

But of course, that would be bad, as we would not be trying to prepare these leeches (Most, but not all participants, especially these days) for actually having to look for work after their 5 years of partying... (/dripping sarcasm off)

Mon, 01/18/2010 - 11:33 | 197139 Anonymous
Anonymous's picture

Thats a very very sensible post Win!! Why are we so obsessed with growing the economy ? For heaven's sake we have been trying to do that for the last 20+ years and look where we have landed.

Not that a Republican will solve any message but Elect Brown instead of Coakley and send the Democrats a message. Talk to the Mass constituents if you know any.

Mon, 01/18/2010 - 07:58 | 197070 Bruce Krasting
Bruce Krasting's picture

I agree with your thinking. But census should not be included in the definition of wasteful spending. It is a law that we do it every 10 years, and there are good reasons to do it.

I'm not apposed to the census. I just don't think it matters much in our big economy. Those that do, might be disapointed by the results.

Mon, 01/18/2010 - 14:21 | 197383 ghostfaceinvestah
ghostfaceinvestah's picture

I don't think the census is a waste, but over a million workers?  Didn't the last census use significantly less people?  I thought Mish had something on his blog about that - that Obummer added something like 70% of the jobs as a jobs-creation program.

Not sure of the actual numbers, but a follow up might be in order - compare the employment during the last census to this census.  It would be interesting to see how many people were needed last time, versus this time, adjusted for population.

Mon, 01/18/2010 - 14:23 | 197388 ghostfaceinvestah
ghostfaceinvestah's picture

Here it is.  this certainly seems wasteful:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEws7wrt8FY0&pos=6

"The stimulus bill President Barack Obama signed in February and additional funding by Congress provided enough money to hire 1.4 million Americans in total for the census, almost three times as many as in 2000."

Mon, 01/18/2010 - 10:33 | 197101 Anonymous
Anonymous's picture

If we are now subject to a dictatorship of the proletariet why in the hades do we need a census. We have politicians in Washington that refuse to listen to their constituents and only follow the dictates of their respective political parties. We're only consulted every two years and that's to vote for bums that have been selected for our purview by the dominant political parties.

And it seems rather odd that this is practically the only part of the constitution that these political hacks follow religiously without question. They have no problem trampling over all of the rest of our other constitutional rights.

What a bunch of shmucks. Or are we the shmucks for letting them walk all over us.

Mon, 01/18/2010 - 10:12 | 197093 bugs_
bugs_'s picture

If the data produced by the "census workers"

isn't corrrupted for a political purpose then

it will have value - but we already know the

data will be untrustworthy and the conclusions

driven by the data will justify bad policy.

 

Mon, 01/18/2010 - 15:44 | 197513 Anonymous
Anonymous's picture

Not if but when.

Precisely.

Mon, 01/18/2010 - 09:53 | 197085 Anonymous
Anonymous's picture

Bruce: In your neck of the civilized world the census may be relevant. In rural Texas, it is viewed as an unnecessary intrusion by an imperial government. My neighbors are all talking about it and they're talking about how they will tell the census collector how many people live in their home and absolutely nothing else. Like everything else the meddling federal government gets involved in, the census has expanded far beyond what it was intended to be. While we understand the need to count the people and are willing to comply in that respect, we have no intention of complying with the corporate data-gathering aspects of the census. The feds and pinheads from the coasts can go to hell. Got that?

Mon, 01/18/2010 - 14:37 | 197419 Hephasteus
Hephasteus's picture

But we have to ask you for the 100th time how much money your household makes. Then we cross check that with 200 databases and the IRS and blah blah blah.

Besides it's good for you got through the questioning process. It gets you used to the idea that some people are allowed to know what they want to know while the FED is telling everyone on the planet to fuck off I won't tell you.

Mon, 01/18/2010 - 09:09 | 197080 Winisk
Winisk's picture

The census is an inconsequential sideshow. The fact that it is even entertained as a beacon of hope for improving the economy, and more importantly the quality of our lives reveals how desperate conditions truly are.

Mon, 01/18/2010 - 00:21 | 196980 Anonymous
Anonymous's picture

With .8 to 1mm being added with the birth/death numbers. Looks like a wash to me too.

Sun, 01/17/2010 - 23:23 | 196960 Chopshop
Chopshop's picture

a great look, Bruce.

thanks much for your efforts.  really enjoy your quantification & analysis.

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