The New York Times has a good editorial this morning based on analysis by Josh Bivens and Heidi Shierholz at the Economic Policy Institute on just how much state and local budget cuts have hurt job growth. Bottom line, the editorial says, Congress could lower the unemployment rate substantially by providing more federal aid to states.
- Editorial, The New York Times — The Road to More Jobs:
How different would conditions be today economically and politically if unemployment were 7 percent instead of its current 8.2 percent? For one thing, some two million unemployed workers would have jobs, and the rate of economic growth would be comfortably above 2 percent, instead of below that pace. This scenario could have been possible if federal aid to states had been bolstered, saving hundreds of thousands of public-sector jobs...
A recent analysis by the Economic Policy Institute shows that the loss of public-sector jobs, largely because of state budget cuts, has been the biggest hit to job growth over the past three years.
The direct jobs lost — 627,000 since June 2009 — understates the drag because population growth alone suggests that the public sector should have added nearly 500,000 jobs over that time simply to restore government employment to its norm of the last 20 years. In all, the public sector is coming up short by 1.1 million jobs, including positions for teachers, social workers, public health officials and other professions that would have been filled by many of today’s unemployed college graduates.
Worse, the public-sector gap of 1.1 million jobs has translated into some 750,000 lost jobs in the private sector, the result of contractors losing government business and less spending by laid-off government workers. In addition, another 400,000 or so jobs have been lost because of cutbacks in state aid to the poor and unemployed, which reduce consumer spending.
The effects from an ailing public sector are profound because state and local spending on employees, contractors and beneficiaries reverberates swiftly through the economy. When that spending is depressed, the entire economy suffers.
The bottom line of the institute’s report is that if it weren’t for state and local budget austerity, the economy would have 2.3 million more jobs today, and the unemployment rate would be around 7 percent, not 8 percent. The lesson is that the best and easiest way to reverse job losses would be for Congress to provide fiscal aid to states.
Meanwhile, the Philadelphia Daily News details the human cost of state budget austerity.
- Phillip Lucas, The Philadelphia Daily News — Thousands of poor Philly residents learn they're losing state cash assistance:
After opening a letter from the state Department of Public Welfare on Wednesday afternoon, Alexander Fink was left wondering how he'd pay for even the simplest of necessities next month.
The Port Richmond man and more than 35,000 other Philadelphians are being cut off from the state-funded general-assistance public-welfare program, which is being terminated July 31 as part of Gov. Corbett's austere budget.
"With that cash, you pay for your basic needs, your toiletries, a bill — I'm on lifeline for my telephone company, and my co-pays for my prescriptions," said Fink, who is disabled. "I get my haircut, I have to pay the phone bill, I need soap, shampoo, toothpaste — stuff everybody needs."
Fink, 61, said he's received general assistance since doctors found cancerous tumors in his intestine about seven years ago. He also has glaucoma, had a gland in his neck removed and had surgery to remove part of his bowel. He takes several prescription medications and said that without the welfare, he's unsure how he'll cover his multiple co-pays.