The Washington Post has a story this morning about how states and local governments are caught in a "fiscal vise" due to weak revenues and increasing costs. It is exactly the story one would expect from the WaPo: the poor states are being squeezed now that the stimulus funds have dried up. There is one canard that the Post repeats, however, which I believe needs to be discussed. According to the WaPo, "The fiscal pressure on states has become a drag on the job market; local and state governments are shedding jobs, even though the private-sector job market has shown signs of improvement. State and local governments have cut 455,000 jobs since the beginning of 2010."
Let's take a look at the employment levels at state and local governments in a bit more depth. First of all, according to the Census Bureau, at the beginning of 2010, states and localities employed 19,809,000 people. In other words, the 455,000 jobs whose loss the Post laments were just 2.3% of the total employed by the states and localities. Second, between 2000 and 2010, the total number of folks employed by state and local government increased by just under 2 million. That was an increase of more than 10% during that ten years. Think about that for a moment; what major event or trend required state and local government to increase employment by two million people? It was not population growth; during the decade, population growth was only a fraction of the growth in state and local government employment. The truth is that the growth in government employment was a triumph of inefficiency and waste. States that could easily have achieved their goals with one level of employment went to higher levels instead. Taxpayer money was wasted and political friends were rewarded. All that is happening now is that some semblance of reality is being brought back into the state and local governments.
The truth is that contrary to the story that the WaPo puts out there, not every reduction in employment by state and local government is a tragedy. Often, bringing employment to proper levels and avoiding the waste of the taxpayers money is a very, very good thing. I lived in New York City through the financial crisis of the 1970's. City payrolls were cut by over 40%, not just 2.3%. Nevertheless, New York City managed to function and to provide nearly the same services as prior to the layoffs. Keep this in mind the next time someone tells you that layoffs are decimating state and local government. Just ask what service is no longer being provided, then watch the head scratching and stammering.
2 comments:
Your example of New York failed to tell part of the story. The US Goverment bailed out New York and within 2 years New York paid them back.
Butch:
What actually happened is that after some initial federal help, New York City was cut off by the feds. It led to that famous headline in the NY Daily News :"Ford to NY -- Drop Dead!" It was the state of New York that set up the Municipal Assistance Corporation which helped the city get funds during its restructuring. In any event, however, the point is that employment got cut by 40% without much of a decline in the level of service.
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