The federal jobs report released Friday arrived three years after the recession ended, according to the Federal Reserve. Yet the national unemployment rate is still at 8.2 percent, or 12.7 million Americans – an alarming figure that does not even include part-time workers or those who stopped looking for a job.
According to the liberal, Washington, D.C.-based Economic Policy Institute, the reason for this is pretty clear (though not mentioned by either presidential campaign): What distinguishes the Great Recession recovery from the economic recoveries of the early 1990s and early 2000s is the loss of public sector jobs.
A report by EPI economists Josh Bivens and Heidi Shierholz discovered that just since June 2009 – again, when America technically climbed out of the Great Recession – there was a loss of 627,000 public sector jobs. Bivens and Shierholz find that these reductions occurred even as private sector job growth is as strong as in the early 1990s and better now than during the early 2000s recovery.
Taking into account population growth and public sector investment in past recessions, Bivens and Shierholz project there should be 1.1 million more public sector jobs. These positions would in turn produce collateral economic activity that means 275,000 more private sector jobs, i.e. companies that make education supplies for teachers or public safety equipment for police officers.
Illinois is part of the public sector job loss trend. Lucy Dadayan, a senior policy analyst at the Albany, New York-based Rockefeller Institute of Government, says that since July 2009, Illinois state government has lost 2,300 jobs. According to Dadayan, there were 19,500 laid off local government employees in the last three years, from traffic aides in Chicago to teachers in Peoria.
“The decline in Illinois government jobs is not surprising and such a pattern is true in most other states,” Dadayan explained via e-mail.
The reason why is that states and cities have faced budget shortfalls for the last five years, thanks to declining revenues and unpaid for obligations, like public employee pensions, catching up with them. Unlike the federal government, states must balance their budget, and one result is employee layoffs.
In past economic recoveries, most notably the Great Depression, the federal government stepped in with emergency aid to states and localities and public works jobs. But any such federal aid more or less ran out in 2010 when remaining stimulus bill provisions expired.
It bears watching if EPI’s findings enter the national discussion this election year. Presumed Republican presidential nominee Mitt Romney will not castigate the loss of public employee jobs: more public employees mean more government. But, so far, Obama and the national Democratic Party are also silent on the issue.