How austerity cost the US 2.2 million jobs
A study points out that slashed government spurred on by flawed policy logic has the economy in far worse shape than it should be.
Only if your margin of error for "harm" is 2 million jobs or so.
A study from The Brookings Institution finds that the austerity measures touted by Harvard professors Carmen Reinhart and Kenneth Rogoff cost the U.S. economy 2.2 million jobs at a time when it could least afford to lose them. Unlike their austerity-minded counterparts, however, Michael Greenstone and Adam Looney at Brookings actually show their work.
In the 46 months since the recession ended, state, local and federal governments have cut about 500,000 jobs. In every other U.S. recession since 1970, however, the government hired approximately 1.7 million people, on average. Put those two bits of information together, and the U.S. is 2.2 million jobs shy of where it should be.
If that doesn't seem like a whole lot, consider the bigger picture. According to the Bureau of Labor Statistics, the entire American workforce adds up to little more than 155.2 million people. Add 2.2 million jobs to that pool and the unemployment rate slides from 7.5% to 6.1%. That's just below the 6.5% figure the Federal Reserve is trying to hit with its quantitative easing bond-buying programs in an attempt to jolt the economy. That's noteworthy only because, just last week, the Fed blamed austerity for keeping the economy in neutral.
Those 2.2 million jobs would also put the U.S. near the peak employment it hit in January 2008 just before the recession. We're roughly 2.6 million jobs shy of that now, but Calculated Risk notes that the job growth rate under austerity measures is the slowest since World War II and won't return to that peak employment figure until 2020 at the earliest.
But wait: Shouldn't the U.S. at least seek a private-sector solution before going on a Big Government hiring spree? Well, we're trying that right now, and, while businesses aren't wholesale firing people anymore, they're not hiring a whole lot of folks, either. That's creating a huge rift between jobless claims and actual unemployment numbers that The Huffington Post says is leaving the economy 4 million jobs short of being fully functional and sustaining a 5% unemployment rate.
The problem, again, is austerity. Nobody, from government to the average consumer, is spending with any regularity, which is forcing companies to shift their focus from generating U.S. production to prodding U.S. consumption. As a result, roughly 65% of the jobs regained since the recession have been of the low-wage variety, though nearly 60% of all jobs lost during the slump paid middle-income wages or better, according to the National Employment Law Project.
It's no surprise, then, that the most common job in America since the recession is in retail sales. Those workers number 4.3 million (greater than the population of Kentucky) and make only $25,000 a year, well below the more than $45,000 national median wage.
If you're waiting for the newfound holes in austerity logic to give way to government hiring, good luck with that. The Brookings report didn't even factor in the 750,000 jobs that will be lost as a result of the recent sequestration cuts. The belt is tightening, but unfortunately it's around the nation's neck.
What a joke this report is. If we had not laid off any government workers and hired more of them then we would not have an issue. Of course our debt and taxes would be higher but who cares? People would be spending more money and our unemployment rate would be lower! Using this logic, then lets get the unemployment rate down to 2% by hiring more government workers and everything would be even better.
Of course we eventually would have to pick up that can that we continue to kick down the road.
Inflation and debt payments -- that is for the cloudy future and someone else's problem.
Of course, our politicians are focused on everything but improving the economy and growing good jobs-- Syria, immigration, abortion, guns, bancrupt green jobs, etc.
Just look who wrote this article...the CROOKings Institution...
From Wikipedia: the media most frequently describe CROOKings as "liberal-centrist"
More BlowbamaMath to muddy the waters. Incompetent DOUCHEBAG PresiDEBT.
Truly a silly way to define 'austerity'--any government's budget goes DOWN? No, didn't think so. Did any of your taxes go down? No, didn't think so. Their only definition of austerity is that goverment did NOT hire 1.7 million people it normally does when we are coming out of a recession. What a truly asinine way to define austerity! I agree iwth Mr. Franks here--there is never a downside presented for borrowing and spending so much; why not? What do you think the cost in jobs is of the federal government paying interest (much less attacking the principal!) on the $15trillion it has borrowed over the years? I would like these morons who right this nonsense to tell us THAT number.
Well that means that 2.2 million people are entitled to something - let's guess, they all live in the inner cities. mmm, mmm, mmm!
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[BRIEFING.COM] The stock market ended the Thursday session on a mixed note ahead of Friday's nonfarm payrolls report for February (Briefing.com consensus 163K). The Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.2%) posted modest gains while the Nasdaq Composite (-0.1%) lagged throughout the session.
Equities began the trading day on an upbeat note following comments from the Bank of England and the European Central Bank, both of which reaffirmed their commitment to ... More
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