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We Need the Public Sector!
The other night Rachel Maddow (on her MSNCB show) was talking about how it’s taking longer to recover from this economic downturn than most others.
There are many reasons, including globalization and increased worker efficiency requiring fewer workers. But I'd say it’s gone long enough, wouldn’t you?
Maddow explained during the past four recessions, under four different presidents, economies that had more public sector jobs recovered faster. Her guest, Nobel Prize winning economist Mr. Paul Krugman, wrote a book on the topic and echoed the need for more public sector hiring.
Star Tribune business columnist Lee Schafer acknowledges that the recession has hit Minnesota's public sector hard, saying “There is no question that the recession that began in December 2007 has been unusual in its deep impact on local government jobs.”
This is what he found:
• Minnesota local government jobs peaked at 289,400 jobs in September 2008.
• Employment for local government has declined by 14,500 jobs in April 2012.
However, he had a different take on public sector employment's role in economic stimulus and recovery. Instead, he says to wait for local government revenue growth to bring the jobs back or to retrain workers for private sector opportunities.
Unfortunately, in a time when the state has frozen or cut revenue sharing with local governments, many have few ways to fund even basic services without raising regressive property taxes. For many Minnesota communities, keeping people hired isn’t just a matter of economic stimulus, it’s a matter of ensuring the city runs at basic efficacy.
Also, cutting jobs is not a dollar-for-dollar exchange. Fewer people employed in a community has an impact on a town’s multiplier effect. The money trail from one public worker doesn’t end when he cashes a paycheck. That money circulates back into the community
With no way to counter this reduced economic activity, it’s much more difficult for communities to ever recover. As we’ve seen with recent unemployment figures, a lot of the private sector employment gains are undermine with massive public employment layoffs, stalling the recovery.
While austerity measures may be what Europe is using, they aren’t necessarily going to work here at the local government level (it’s debatable whether or not they are working in Europe). Instead, Mr. Krugman says that if we had a federal revenue sharing program, which we had at the beginning of the recovery act and which Obama proposed last fall, we would be able to make sure the local governments had the money they need to keep jobs and hire back workers.
Since the recession, and even before, Minnesota has been trying the conservative cuts approach. Guess what? While jobs have come back, they’re lower paying, and Minnesota is falling further into poverty. Communities are still struggling to fund schools, public safety, and public services. Conservative policy is not working.
Posted in Economic Development | Related Topics: Economic Growth Job Growth Economic Recovery
1 Comment
Ginny says:
June 26, 2012 at 11:34 am
That’s not the only consequence. Many of these cuts are going to cost much more in the longterm—cuts to health care, education, and so on. Be assured, we will pay.