What had passed for a recovery of the American recovery took a substantial hit on Friday, as the eagerly anticipated jobs data for June was released with the shocking revelation that only 18,000 new jobs were created last month, far fewer than experts predicted and not enough to keep the unemployment rate from ticking up again.
The news was grim, and many wondered what could be happening to stall the economy in such a breathtaking fashion. Austerity is the most significant culprit.
In the June jobs report, private sector industries were found to be hiring at a reasonable, though hardly blistering, pace. 60,000 new private jobs were gained last moth. But government jobs, state, local, and federal, took their biggest hit yet, plummeting by nearly 40,000 and single-handedly rocking the June report and nearly wiping out the new private jobs. Economists say these “awful” threaten the overall economic recovery, even in private sector employment.
The broader statistics on government jobs since the recession of 2008 is stunning and discouraging. As the New York Times reports, layoffs in state and local governments has reached a grand total of just under 600,000 since August of 2008, the peak in public sector employment.
That drop is almost a record. And with more cuts on the way, especially among teachers as the new school year begins across America, the pain is not expected to go away anytime soon.
The number of state and local government employees fell by 25,000 workers, and is now down 577,000, or 2.9 percent, from the peak reached in August 2008 — the month before Lehman Brothers collapsed.
Only once before — or at least since they started collecting the numbers in the 1950s — did state and local jobs fall that far. In July 1982 the number was down 3.1 percent.
These figures are seasonally adjusted, and you have to suspect that the numbers will get even worse this fall, when a lot of teachers don’t go back to work.
The low point in state and local government jobs in 1982 came four months before the recession officially ended. This recession ended two years ago, but the relentless declines continue.
This time is different in large part because state and local governments are squeezed as never before. Property tax collections have been devastated by collapsing property prices. Washington delayed the worst of the pain with the stimulus plan, but now seems completely unwilling to help. Instead, a lot of politicians seem to think that cutting employment is a positive good.
Also reported in the New York Times is the raw data on the impacts of austerity among state and local governments in America.
David Leonhardt notes that the sudden embrace of spending cuts is an “unforced economic error” that has led to massive job losses among public workers that has devastated the overall economy and made what could be a strong recovery into something much, much less.
In all kinds of ways — consumer demand, the federal deficit, even the weather — the medium-term future is highly uncertain. But this uncertainty, while the main problem, is not the only problem. We are also committing an unforced economic error. We’re cutting government at the same time that the private sector is cutting.
It is the classic mistake to make after a financial crisis. Hoover and even Roosevelt made a version of it in the 1930s. The Japanese made a version of it in the 1990s. Now we are making it.
Federal payrolls have been roughly flat for years (even as the population has been growing). But state and local payrolls grew over the last decade, by almost 20,000 jobs a month on average.
Since the crisis began and state and local taxes began plummeting, though, governments began to cut back. At first, the federal government stepped in, with the 2009 stimulus bill, and sent fiscal aid to states. Then the aid stopped.
In round numbers, state and local governments have cut about a half million jobs over the last two years. If they had continued to hire at their previous pace — expanding as the population expanded — they would have added about a half million jobs.
In a graphic paired with Leonhardt’s piece, it is shown how the economy would have created nearly 1.6 million new jobs since June of 2009 if a nationwide austerity agenda had not led to such radical government cuts.
(The New York Times)
Maybe this will be the kick in the ass Obama needs to realize that cutting Medicare and Social Security on top of this is a bad idea on the merits, and for his electoral prospects in 2012.
But I wouldn’t bet on it.
Not surprising too many bad compromises. Obama’s concessions to the Republicans are tanking the economy just like the Republicans wanted. He is reaping what he has sowed unfortunately the ones feeling the pain are average Americans
Where are the jobs, GOP?
The Republicans promised jobs in 2010:
- instead they insisted on tax cuts to the wealthy and corporations
- instead they attacked collective bargaining
- instead they attacked education
- instead they attacked unemployment insurance
- instead they attacked women and girls
- instead they brought the Nation to the brink of default on its debt
- instead they tried to KILL DADT
- instead they voted for GLOBAL WAR
“Private employers added 57,000 jobs to their payrolls. A decline of 39,000 at government agencies pulled the overall figure down to +18,000.”
Boehner and the Repubs got rid of 39,000 gov’ jobs and they’re asking where the jobs are? Spending cuts=less jobs. When the private sector is not hiring the government needs to hire to compensate until the private sector is ready to pick back up.
Using number of jobs “created or saved” as a measure of the state of an “economy” is a useful but incomplete mode for measuring economic strength. Even when some bit of job “recovery” was underway, in the automaking industry for example, the jobs for which people were being hired were sometimes only half the pay of the jobs before “austerity” took a toll on wages which, in “real” terms (in relation to cost of living) never moved an inch toward recovery. Automakers are now paying $14 an hour for jobs for which they used to pay $28. The whole economic “recovery,” whatever the unemployment rates, has only been a recovery of spectacular profits for business operators and stockholders, a one-sided recovery that is creating an inevitable “bubble” in which these profits will come down as well as there are fewer and fewer people able to buy the products generated by a bargain basement work force. Henry Ford understood the relation between profits and wages, the bubble-heads of industry today don’t understand it.
Most of the people fired or laid off from these government jobs may well find work again. But i’s likely to be behind the counter at Mcdonalds or making fancy coffees, not worthwhile employment that pays a decent wage. Have to disagree with the last commenter. I say the loss of government and public jobs is the biggest crisis facing this american economy. Thats how the GOP is going to destroy us. By forcing every American to work for peanuts.