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.
