Unemployment Rates and Stimulus Dollars

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Unemployment Rates and Stimulus Dollars

Thursday, August 19th, 2010 - 4:14
Monday, August 16, 2010 - 17:58
A couple of new pieces explore the fact that fewer stimulus dollars seem to have been directed at areas with relatively high unemployment.

Should the men and women who designed the stimulus have placed more attention on directing the money to high unemployment areas? That’s the burning question behind two recent pieces that analyze federal spending in light of state-by-state unemployment figures.

A recent item from PBS NewsHour’s Patchwork Nation, a project that divides counties into a dozen categories for better analysis, argues that stimulus dollars went to places that didn’t need it as much as others.  Some low employment rate county types, for example, received less than $1,000 per capita while high employment “Tractor Country” counties received $1,282 per capita. A similar item in USA Today backs up this conclusion noting that states with a high unemployment rate, like Florida and Nevada ,received far less than low unemployment states like Alaska and North Dakota.

We wonder if there there might be a very benign explanation for this skew. It seems to us like it's entirely possible that when you measure federal funding on a per capita basis, low population states often come out looking better. According to the USA Today piece, for example, the five highest per capita recipient states are Alaska, South Dakota, Montana, North Dakota, and Vermont. These are five of the seven least populous states in the country.

Is this justified? We don’t know. But it’s sure understandable. Spending in California would have to be about 40 times as great as spending in those plains states in order to create equality per capita.  Even a dribble of money to Alaska or Vermont would necessitate a gusher toward California or New York in order to equal out.

This all raises another question: Should the stimulus have been designed in order to better target high unemployment areas? Doing so might have slowed the process of getting the money out the door—and might also have added additional political hurdles to creating the stimulus in the first place. But, as these two pieces suggest, it might also have made the impact of the stimulus more dramatic in the areas of greatest need.

Thanks by the way to  ProPublica for pointing us to these two items.