It's the most wonderful time of the year...
Well, not really. It is again that time when State governments will haggle over line items, spending cuts and appropriations. What does it all really mean in relation to job growth, unemployment and the economy? Throughout the month of July, Career Talk will examine this very issue. We begin with the blog, will coordinate related webinars (via www.thealbertinstitute.com) and ultimately interview special guest PA Representative Dan Deasy on the July airing of Career Talk on KQV Radio.
Let's start with an examination of recent job growth. According to ADP, the private sector added 133,000 new jobs in May of 2012...up from 119,000 in April of 2012. Job growth in the private sector has slowly but consistently grown since February of 2009 with small, community-based businesses leading the way. These are the backbone of American business and employ more than 50% of workers in the private sector. Companies of just 49 workers or less accounted for 67,000 of the 133,000 new jobs created in May.
As the private sector slowly grows, the public sector remains...without question...the drain on the nation's economy. Since February of 2009, the nation has lost more than 600,000 public sector jobs. The unemployment rate would be approximately 2.5% less if we still had those jobs. Philadelphia Mayor Michael Nutter recently appeared on Fox News and discussed recent layoffs 100's of Philadelphia police officers, teachers and fire fighters. As he spoke, Fox ran all of the positive private sector job stats along the ticker.
So, to get back to the original point, I have to ask: Do State budgets help the private sector and subsequently contribute to job growth? In PA, we have certainly seen how a mismanaged budget can contribute to job loss. Our State funded colleges, facing a potential 30% funding cut, may feel the sting this year. But, these losses have primarily been private sector losses. Perhaps this all lends itself to a much large question: Is America's economy struggling because we no longer 'make/produce' anything or is it struggling because modern-day politics has interfered with public sector growth?
Actually, the public sector is really not such a "drain" on the economy--a robust public sector features employees who purchase goods and services and in general stimulate the economy. What really is a drain on the economy is the nearly complete dismantling of the public sector by ideological zealots, with its concomitant lay-offs and subsequent drain on unemployment compensation and other social safety net monies.
ReplyDeleteAlso, re the last question you posed, "Is America's economy struggling because we no longer 'make/produce' anything or is it struggling because modern-day politics has interfered with public sector growth?"...
I don't think it's an either/or scenario for why America's economy is struggling--both production and policy have had a negative impact, to be sure, but I'd like to mention two trends which pretty much under-gird everything else: global competition and a highly unregulated--and unaccountable--financial infrastructure. These two trends have offered plenty of economic dysfunction over the years.
In fact, I would argue the following: 1) The lack of American productivity (we don't make anything here anymore) is partly a myth--more accurate is we don't make the same stuff we used to and it takes fewer of us to make what we do make. However, the stuff that we don't make here anymore is made somewhere else because of the first trend I mentioned, global competition.
2) The most recent financial crisis (from 2008) that still ripples through the economy had its roots in the latter of those two trends, the lack of proper oversight of the big casino known as Wall Street. These financial lords--unaccountable to anyone at their highest levels--were largely responsible for our most recent economic meltdown. They have emerged from the crisis bailed-out, unscathed, and mostly un-prosecuted, while millions of their fellow Americans have paid a serious economic price.
We should be regulating these guys a whole lot better--and prosecuting a bunch of them as well.