January 11, 2009 6:03PM

Obama’s Jobs Plan Detailed: The Consumer Needs to Step Up

By Brian Sullivan

Here come the jobs.   And they rely on two big things: construction and a consumer turnaround.

This weekend President-elect Barack Obama unveiled more specifics about his proposed plan to create 3.5 million jobs over the next two years.  That is an ambitious goal and has understandably faced skepticism, especially without specifics on how this would happen.     We now have a more specific outline of the plan.  It was released this weekend.  (WSJ story has a link directly to the 14 page report in .PDF format or you can access it through Obama’s website).

The plan involves a government spending program “just over” $775 billion dollars, with the key components being outlined as:

• A package in the range that the President-Elect has discussed is expected to create
  between three and four million jobs by the end of 2010.
• Tax cuts, especially temporary ones, and fiscal relief to the states are likely to create
  fewer jobs than direct increases in government purchases. However, because there is a
  limit on how much government investment can be carried out efficiently in a short time
  frame, and because tax cuts and state relief can be implemented quickly, they are crucial
  elements of any package aimed at easing economic distress quickly.
  
• Certain industries, such as construction and manufacturing, are likely to experience
  particularly strong job growth under a recovery package that includes an emphasis on
  infrastructure, energy, and school repair. But, the more general stimulative measures,
  such as a middle class tax cut and fiscal relief to the states, as well as the feedback effects
  of greater employment in key industries, mean that jobs are likely to be created in all
  sectors of the economy.
  
• More than 90 percent of the jobs created are likely to be in the private sector. Many of
  the government jobs are likely to be professionals whose jobs are saved from state and
  local budget cuts by state fiscal relief.
  
• A package is likely to create jobs paying a range of wages. It is also likely to move many
  workers from part-time to full-time work.

The report details expected job growth by industry by the 4th quarter of 2010.   Here’s how the Obama camp breaks it down by expected job growth per sector by that time:

• Energy: 459,000
• Infrastructure: 377,000
• Health Care: 244,000
• Education: 250,000
• Protecting Vulnerable: 549,000
• State Relief: 821,000
• Making Work Pay Tax Cut: 505,000
• Business Tax Incentives: 470,0000

(Note to Obama camp: Your report has bad math.   In the report you have “direct effect” of jobs on energy at 305,000 and “indirect effect” at 153,000, totaling “459,000.”   305k + 153k = 458k.   The same is done with the ‘infrastructure’ breakdown.  Small detail, but you got to get this right).

There are a few interesting points to dig out:

1. The public outcry over fear of big(ger) government is resonating with the Obama administration.   The plan now says that “90% of the jobs are likely to be in the private sector.”   This is up from earlier estimates that only 80% would be in private sector.    Of course, the bad news is that this plan still presumes to add 244,000 government jobs (listed in the report).

2.  Consumer recovery is a major component of this plan.  The report outlines that more than 1.1 million of these jobs will come from “retail trade” and “leisure and hospitality” (604,000 & 499,000 respectively).   These are jobs that are nearly entirely reliant on the macro economy and consumer confidence.    They are less impacted by government plans than by a simple overall economic recovery.

3. The biggest jump in jobs is expected to be in construction (678,000 in the report).   Let’s hope that construction goes to projects that truly need it and will positively impact GDP and transportation instead of merely re-patching existing highways.  We have a real chance to invest in and build newer, smarter energy and transportation grids that can help define how we live in the next century.    We need it.   Not only to reduce dependency on foreign oil, but also to help shape city design and transportation.  Consider that the travel time by train from near my home in New Jersey to New York’s Penn Station hasn’t changed meaningfully in 30 years.   This while France’s national railway - SNCF - recently hit more than 350mph on a train trip from Marseille to Paris.   A(note to Obama camp: please save some money for New York City’s Penn Station, its a dump).   America is a leader in many areas but energy and transportation aren’t two of them.

So there you go.  “The plan” to create (or save) 3.5 million jobs.   Many Americans will be counting on this to work.   The Obama jobs plan is one that is sure to generate much debate.  It is greatly ambitious and depends on many things that are not in the control of the government, namely a macro economic rebound and consumer spending increase.    Still, confidence and psychology are mysterious things and perhaps a constant reminder that “things are going to be okay” will provide a lift to this sagging economy.

One positive though: I give the President-elect credit for laying out specifics in this manner.    Too few politicians these days actually give firm answers on anything, instead choosing to stammer and dance around any topic.    Now we have a guide.    And one that we can hold the soon-to-be President to.