State and Local Government Payrolls are Shrinking

State and local governments could use more help:

State and Local Governments Continuing to Lose Jobs, Off the Charts: States and localities cut 22,000 jobs in the past month, wiping out half the month’s gain in private-sector jobs… In total, state and local governments have cut 231,000 jobs, including 100,000 local education jobs, since the summer of 2008.

This is a problem for the economy as a whole, because local businesses suffer when teachers and others don’t have paychecks to spend. These new figures are further evidence that Congress needs to include aid to states in its upcoming jobs bill…

This is a no brainer, but Congress hasn’t done anywhere near enough to help so far, and it is unlikely to do so now even for the “low hanging fruit“. I think one of the lessons of the crisis is that we need to develop better mechanisms to prevent state and local government from magnifying the effects of crises. The balanced budget requirements that that most state and local government operate under cause them to decrease demand at a time when they should be boosting it.

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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