Madness In December Employment Numbers

The new job numbers are out and, at first glance, there is nothing surprising here. Job growth continued to inch upward in December, with 155,000 new jobs added. Of course, with several million young people joining the labor force every year, numbers like these don't actually amount to growth. We are just running in place. 

But here's a statistic that jumped out at me: 89,000 public sector workers lost their jobs in October, November, and December—with most of those losses, 66,000, occurring in October. 

These numbers are revised figures that are much higher than what appeared in the past BLS employment releases, so for some reason the BLS tends to lag behind in capturing the full scope of government layoffs in a timely fashion.

Anyway, back to the main point: Large-scale layoffs of government workers continue across the United States. Such layoffs undermine local economies and stymie the recovery. For every five workers who were hired in the past three months, one was laid off by government. 

This doesn't make sense. Government may not always do such a great job of stimulating employment growth through fiscal and monetary policy, but it sure as heck can bolster the job market by continuing to employ those people who do have jobs. Instead, thanks to austerity policies, government has been doing the exact opposite. 

Many of these laid off workers will get on unemployment and perhaps collect other government benefits such as food stamps, the EITC, or SCHIP. They also, obviously, will no longer be paying taxes. So quite apart from the human costs and economic costs, in terms of depressed consumer spending, layoffs of public workers don't deliver all of the fiscal gains imagined because the unemployed cost government money while no longer contributing to the tax base.

And there are other costs, too. As we have noted here often, a great many of the public sectors workers being laid off by state and local governments work in education. As a White House report noted in August:

More than 300,000 education jobs have been lost since the end of the recession. Since the end of the recession in June 2009, the economy lost over 300,000 local education jobs. The loss of education jobs stands in stark contrast to every other recovery in recent years, under Republican and Democratic Administrations.
The loss of teacher jobs can mean larger class sizes and difficult choices for schools. The national student-teacher ratio increased by 4.6 percent from 2008 to 2010, rolling back all the gains made since 2000. Further layoffs in 2011 and 2012 mean that the student-teacher ratio will continue to increase as we enter the 2012-13 school year. From Florida to Ohio to California, districts have faced teacher shortages, have cut preschool and kindergarten programs, and have shortened the school week and school year.

This is wrongheaded in so many ways. 

Even the most cursory student of economics understands that investing in human capital is one the best ways to bolster long-term prosperity. And anyone who has followed the rise of China, India, and other competitors knows that these nations are pouring big resources into education.

Yet over here, even as signs abound of America's eroding competitive edge, we are firing school teachers and shoving kids into bigger and bigger classes. That's got to stop. Not just to get out of the current slump, but to prosper in a global economy. 

The fiscal cliff deal should have included new aid to the states to prevent these layoffs. It didn't and America— along with its children—will be paying the price this year. And for years to come. 

Comments

It's obvious David you don’t understand how an economy works, or why this President has been such a failure!!! Who funds the payment of government workers, teachers, and state aid? The tax payers!!!! More government jobs extracts money from the economy. Private sector jobs add new monies or revenue to the economy; another words growth. That’s why the stimulus package was a complete failure (in reality it was a pay back to the Obama supporters). If we shrink government, spend less, and let American businesses grow our country can overcome the Obama debt crisis!!!

I live in FL. A small community north of where I live Homosassa Springs, Pop 12,000 was so awash in tax revenues in the in the middle of the last decade that they went on a spending binge that included the construction of a state of the art public library costing several million dollars. Problem is according to the head librarian of the existing library, we only have 15 book withdrawls per month. This insanity was repeated hundreds of thousands of times across the land as tax revenue fueled by the housing bubble poured into local communities. The spending spree and the hundreds of thousands of new hires brought on board during this boom time now push municipalites towards the brink of insolvency. Like all institutions that must live within their means whether they be families, corporations or state and local governments expenses must be cut. Too bad that the Federal government the source and wellspring of so many laws, regulations and unfunded mandates that burden the land is not held to the same standard.

"Even the most cursory student of economics.......investing in human capitalist.....ways to bolster.....prosperity."

The assumption in your argument is that we have an educational institution that is not wasting a significant portion of the resources. The current scheme is about the institution NOT educating kids...that is a secondary concern. I suspect it is your too.

The author is obviously never a student of economics. Increasing expenses that don't produce a return on investment (ie gov't payroll) will never help an economy.

Quick economics lesson for the author. Your town's school has 1 teacher for every 30 students. They decide to double the teachers, to 1 teacher to every 15 students. Will the kids be twice as smart? ie eg 100-200 IQ? uh no. Will the kids be twice as productive over their lives? ie eg average pay from $65,000 to $130,000? uh no. Will some do somewhat better in school, and some be somewhat more productive? Maybe. But more likely it won't change any of their lives significantly. Will that possible minimal productivity increase exceed the cost of doubling the teachers pay? uh no.

Will the author ever get that there's a difference between what we want, ie more teachers, police & fireman, and what pays for itself to help an economy? Obviously not.

this man is one of an endless number of journalists who speak on economics without any evidence of economic study. the suggestion that more government hiring provides economic growth is simply inane. government workers are funded by taxpayers. more workers require more taxation, more burden on the productive, less money to spend on goods and services offered by private enterprise. government is necessary, but it is a productivity drain on a capitalists economy, and should be no bigger than minimally necessary to provide reasonable goods and services. but in the mind of this man, and in the mind of our president (both naive on economics), government is the driver of the economy, the creator of jobs, the proper entity to proscribe and initiate business activity. ludicrous.

And if we borrow money we don't have just to keep government workers employed, our children will be paying the price - with interest - for generations to come.

The ONLY thing that grows an economy is profit and government reduces profit.

Wow.

I say put the entire economy under government control. That should ease unemployment and make Paul Krugman fvery happy.

Or something.

A story Milton Friedman used to tell. He went to Asia in the 1960s and was proudly taken by the government to see a public works project. They were building a canal. He was struck everyone was digging the canal with shovels. Friedman says, why no heavy earth-moving equipment?

They said, oh, this is a jobs program. So Friedman says, why don’t you give them spoons instead of shovels?

What planet does Mr Callahan live on? And in what country? What is difficult to understand about Government's not having any money, and being at the point where they can't borrow any more? Government workers Mr Callahan are a weight on the private economy. A private economy that is already being crushed by Obama's reguations, socialist policies, massive Government, massive DEBT, and truly massive new taxes. Anyone that can't undertand that either isn't smart enough to add 2 + 2 and get 4, or they just live in an alternate reality.

Replacing government workers with private sector workers is the best tonic for the economy.

Now all we need to do is quit paying people not to work for 99 weeks and we can think about economic recovery.

Only 89,000? I'd be a lot happier if that number was 890,000. Government must be shrunk to about 10% of its current size in order for freedom to be restored. The sooner we get the nanny staters off our backs, the better. It's obvious that Barack Obama is a totalitarian socialist. He must be stopped. Cut off the money supply to Washington DC. Split the country an allow the socialists their urban coastal enclaves.

I think there is a strong case that there have been no layoffs. Rather government employment was overstated by the Administration in the couple months preceding the national elections, and is now being corrected. Notice that no article references any particular state or locality undergoing layoffs. I have heard of not one article about government layoffs, and 89,000 would be a big, big number of layoffs.

new jobs are waiting for us. this is the great that the people moves government jobs to private jobs.

I have been teaching a class and we are looking at this subject in the next week. I will be directing my student to look at your post for good information.
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it will be cutt of in january.
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If ya’ll can’t lie no better that, ya’ll might as well tell the truth……

We can handle the truth……
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