The latest jobs numbers for January of this year show a mixed bag of data. The unemployment rate dropped significantly, down to an even 9 percent. But that’s despite only 36,000 new jobs added last month, fewer than expected or that is necessary to sustain growth going forward.
Another bright spot is that revised numbers show well over a million new jobs were created in 2010 by private businesses. It’s a healthy figure that shows an expansing economy, and should have been enough to bring the national jobless rate to a point lower than it is now. The question is, what’s holding it back?
While private businesses are adding payroll, state and local governments are slashing jobs and eliminating positions at a frenetic pace as the economic crisis continues to batter individual states. With politicians taking shots at public employees and promising to slash public sector jobs even further, the crisis will likely grow and become a serious burden on the overall economy.
The data on public sector jobs is the opposite of the somewhat rosy private outlook.
- 12,000 public jobs were lost last month, compared to 36,000 in gains overall.
- 260,000 public jobs were lost last year, compared to over one million new jobs created overall in 2010
- Nearly half a million public jobs have disappeared since mid-2008, the peak of government employment
And public jobs cuts are only going to get worse as state and local governments deal with huge budget deficits and an end to federal stimulus spending. The November election that swept anti-stimulus Republicans into control of the House also brought a wave of “tea party” and conservative lawmakers into power in localities and statehouses across the country.
Faced with a plethora of red ink and budget despair, Republicans governors and legislatures are preparing to gut payrolls in order to protect their plans for massive tax cuts and government subsides for special interests.
The austerity measures and government job cuts popular at the state level will undoubtedly make the national economy shudder and hamper economic recovery. Even private sector companies will suffer as they lose contracts and potential consumers as governments hand out pink slips and slash spending.
“There’s no more serious drag on economic growth than the severe budget cutbacks at the state and local level,” said Mark Zandi of Moody’s.
President Barack Obama’s goal of driving the unemployment rate below 9 percent this year is threatened by state and local budget cuts that are likely to intensify as Federal stimulus money runs out.
Austerity measures may add as much as 0.25 percentage point to the unemployment rate this year, according to Mark Zandi, chief economist of Moody’s Analytics Inc.
“This could make the difference between ending 2011 with unemployment above or below 9 percent,” he said. “There’s no more serious drag on economic growth than the severe budget cutbacks at the state and local level.”
Reductions in public payrolls will ripple through the economy, slicing revenue at companies that rely on government contracts and depressing spending among those who are thrown out of work, Zandi said. The result could be the loss of 600,000 jobs in the fiscal year that starts July 1, he said.
State and local governments cut 12,000 workers from payrolls last month, a Labor Department report showed today. Total payrolls rose by 36,000, depressed by poor weather, and the unemployment rate dropped to 9 percent from 9.4 percent.
The 18-month recession that began in December 2007 — the longest since the 43-month Great Depression — shrank state and local tax revenue while inflating demand for services such as Medicaid and unemployment insurance. After three years of struggling to bridge budget gaps, many governors and mayors have exhausted one-time maneuvers and rainy day funds.
State and local governments fired 260,000 people last year — more than General Motors Co.’s entire workforce — even as companies expanded payrolls by 1.37 million. Since state and local government employment peaked in 2008, the 435,000 public- sector pink slips have exceeded General Electric Co.’s payroll.
The skinny on the Republican economic model:
Privatize everything, and have 98% employment at sub-living wage, with 60% of those below current minimum wage!
Cause such a wrinkle in the public sector, the ensuing mega layoffs along with the need to provide for one’s family, and middle class teachers, police officers, fire fighters, city, county and state dept wage-earners will submit themselves to the private landscape where they are prey to the whims of the boss instead of serving as employees of a public entity, under a public contract!
The Republican party and the U.S. Chamber of Commerce want to be our economic overlords.
The skinny on the Democrat Party economic model:
Triple corporate tax on corporations and any private enterprise. Raise mimimum wage to 60% of average income level. Mandate SEIU membership for all employees to facilitate funneling of adequate membership dues to Democrat Party.
Grant waivers of ObamaCare, EPA rulings, and any other idiotic legislation, to enterprises that demonstrate proper obedience to Democratic Party Principles (to be determined by Economic Czar Kwame Kilpatrick.)
Impose crushing carbon tax on traditional energy companies to bring about elimination of carbon emissions. Provide bicycles free of charge to every citizen. (Certain indespensable government officials, such as Green Jobs Czar Van Jones, will be provided with great big tricked out Pink Cadillacs.)
We become Detroit!!
I hope the whole things falls apart, then the arrogant ones will be down here with the rest of us, until then nothing will happen to correct it, doesn’t matter who is in charge.