The federal government can’t force private employers to hire people; businesses will invest when they see fit.
But the feds have considerable influence over the public-sector job market, and as David Leonhardt explained today, officials in Washington are deliberately making “an unforced economic error.”
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 other words, the state and local austerity of the last two years has cost the economy about one million jobs.
Those one million employees could still be on the job, if Congress simply chose to rescue the state and local governments. But there’s no political will to do so. The stimulus prevented a lot of these losses, but that was before, and those funds are now gone.
Indeed, it’s important to remember that these job losses are, in the eyes of Republicans, a positive development. Under the GOP economic model, the public sector is supposed to lose jobs, and as part of the party’s austerity agenda, this is a problem that must get worse on purpose.
State and local governments can’t run large deficits*, so they’re forced to balance their budgets by laying off teachers, police officers, firefighters, etc. Those laid off workers, in turn, rely on unemployment benefits — which Republicans also want to cut — to try to get by, and have no choice but to spend less, thereby hurting the local economies, too.
The job losses, in other words, have a ripple effect. All of this is easily preventable, but our jobs crisis is partly the result of our political crisis.
Congress can choose to spend the money to keep these workers on the job, but it runs counter to Republican philosophy, and therefore doesn’t happen.
These identical Republicans then complain bitterly when unemployment gets worse, and blames Democrats for the job losses the GOP chose not to prevent. Worse, Republicans then try to persuade the public that “out-of-control spending” is to blame for the weak economy.
It’s quite a feedback loop.