Government Layoffs Holding Economy Back

It's The Economy Stupid

by Alan Pyke

 

While the public sector added 1,000 net jobs in July’s jobs report, shrinking government payrolls have been a consistent drag on the economy throughout President Obama’s term. By contrast, at the same point in the shrub's junta the government had contributed over a million jobs to the economy:

Of course, the recession early in the Bush years looks like a blip next to the economic collapse that was underway when he handed the Oval Office over to Obama. But the ongoing weakness in government employment isn’t an automatic consequence of the Great Recession — it’s the result of policy choices Congress has made. Economists say that the shift to austerity since 2011 has pushed the unemployment rate a full percentage point higher than it would otherwise have been. Those spending cuts harm growth across the entire economy, not just the public sector. But of the last four American recessions, the current is the only one where government payrolls shrank in the years of recovery that followed.
The temporary spike in public employees due to the 2010 Census gave way to massive layoffs as states dumped workers in pursuit of balanced budgets that are often required by state law. The result was the worst three-year stretch for state and local government employment in the history of the Bureau of Labor Statistics’s data. If public sector employment had instead followed the trajectory of  Ronald Reagan’s junta, the unemployment rate would have been a full percentage point lower in mid-2012.