Private sector recovering at expense of public sector

State and local governments are struggling with huge deficits. Many have even been forced to lay off employees, but critics say cutting government jobs is making a bad situation worse.

More than 470,000 state and local government jobs have been cut in the two years since the recession ended. And more will go as budgets get approved this month.

“We've lost almost 90,000 jobs in the local economy since the downturn began,” said Professor Alan Gin of University of San Diego. “We've picked up some of those jobs in the last year or so, but the unemployment rate is still pretty high.”

Gin expects the local unemployment rate to remain below 10 percent when the numbers come out in a few weeks. But the job growth we've seen in the private sector is being offset in the public sector.

Normally government jobs increase during a recession, but that is not happening this time around.

“Usually when you have a downturn, things like infrastructure type projects would put people immediately back to work,” said Gin. “We don't have a lot of that this time around.”

And what's going on in Washington is not helping. In fact, it's hurting.

To UCSD economics professor James Hamilton, Congress should be focusing on job creation rather than the debt ceiling.

“It's a challenge coming up, it's not the current year's spending that's the crisis in my opinion,” said Hamilton.

To Hamilton, the crisis is the inability of Congress to figure out how to come to terms on jobs versus the debt ceiling.

“For the coming year we want to get people back to work. For the coming decade we want to be on a path, fiscally, that's responsible and sustainable. And those work in opposite directions.”

We are about to enter an election year, and Hamilton believes politics is getting in the way of solutions.

“I don't think we're successfully addressing either one of them,” said Hamilton. “We're seeing posturing, we're seeing politics and symbolic moves in terms of the debt ceiling, and very little responsible cooperation in terms of really identifying what we need to do, both short term and long term.”

The problem is without jobs consumers have no money to spend, and consumer spending is 70 percent of the total economy.

Categories: KUSI