Retention Deficit Disorder

October 19, 2009

The American Recovery and Reinvestment Act is designed, among other things, to use government spending to stimulate demand for goods and services from the private sector and thereby enable employers to hire more workers or retain ones who might otherwise be laid off. In fact, recipients of ARRA contracts and grants are required to report their job-creation and job-retention numbers.

The first recipient data (covering direct federal contracts) were released last week, and it is clear that many contractors have not completely grasped the concepts of job creation and retention.

The now cleaned-up national spreadsheet just


on summarizes a total of 9,102 reports from prime and sub-recipients of federal ARRA contracts. Of these, 919 describe the status of the work as “completed.”

One would expect that a completed project would have generated some job creation or job retention, yet 335 of these recipient reports list a zero in the column for “number of jobs.” These same recipients have received a total of $87 million in payments.

Some of these recipients have apparently slipped through a loophole in the job reporting system. In some cases, companies that received Recovery Act contracts to provide goods to federal government say they made use of their existing workforce to fill the order and thus created no new jobs. A major example is Chrysler, which reported getting $52.9 million to supply “Light Passenger Vehicles Orders Under Stimulus Plan” but added: “No jobs were created.  Existing employees were utilized to fulfill award orders.”

What is implied, but usually not stated, in such cases is that these workers would not have been laid off without the federal contract and thus their jobs were not, technically speaking, retained.

At the same time, there are some cases in which contractors explicitly state that the ARRA funds prevented layoffs, yet they still entered a zero in the jobs column. For example:

  • Tinsley Asphalt has completed five paving contracts in Tennessee. In each case it reports in the job narrative column that the work “KEPT COMPANY FROM LAYING OFF EMPLOYEES,” yet in each it lists the number of jobs as zero.
  • M W Clearing & Grading in South Carolina reports zero jobs on two demolition contracts while saying in the job narrative: “Although no new jobs were created, employees were kept from being placed on lay off.”

You couldn’t ask for a clearer statement of job retention.

While these companies displayed obvious inconsistencies in their reporting, it is likely that many other contractors reporting zero jobs also had actually engaged in job retention (and perhaps job creation) thanks to ARRA funds.

This is yet another reason not to put too much stock in the 30,000 job total that came out of last week’s reporting. It should also serve as an indication that the federal government needs to do a better job of educating ARRA employer-recipients about the full scope of their reporting obligations.

Reposted from the STAR Coalition blog: