By Mark S. Mellman - 07/12/11 10:41 PM EDT
Two recent documents expose the impact and the intent of Republicans’ insistence on slashing federal, state and local government jobs. The impact, as revealed in last week’s dismal jobs report, is substantial and felt by us all. The intent, as communicated by a March report from Joint Economic Committee Republicans, heralded by Speaker John Boehner (R-Ohio), is to diminish the economic prospects of every working American.
The answer lies in another sector: government. The morbid math works because 39,000 government workers lost their jobs last month, along with more than 660,000 others during the last year. Teachers, police officers, firefighters, safety inspectors, child abuse investigators and scores of other job categories have been hit hard.
No one would argue the private sector is humming based on these numbers. But they do suggest budget cutting is helping drag down the economy. State, local and federal government employees have families to feed, children to educate, housing to pay for, consumer products to purchase and healthcare to procure.
The fact that these former government employees no longer have dollars to spend not only creates private tragedies, but also ripples through the economy as businesses from grocery stores to car dealers to homebuilders take in less money and hire fewer workers themselves.
A recent Brookings Institution study found growth of government employment was more closely associated with economic recovery than any other factor. “Among the nation’s 100 largest metro areas, [of] the 20 that have recovered most strongly from the recession … all but six gained government jobs … At the other extreme, [among] the 20 large metro areas that have had the most difficulty recovering from the recession … all but three lost government jobs since total employment began to recover.”
These are not just the views of wild-eyed Democratic liberals. No less a conservative voice than The Economist opined that too much budget cutting in the U.S. will cost jobs and put an end to recovery.
The intent of Republican efforts to slash government payrolls is even more frightening than the results. As articulated in a report from Joint Economic Committee Republicans, widely praised by GOP leadership, “A smaller government workforce increases the available supply of educated, skilled workers for private firms, thus lowering labor costs.”
The GOP theory: Reduce wages for every worker by cutting government employment to swell the ranks of the skilled jobless and, if labor costs fall low enough, businesses will hire. The premise is mistaken, but even if correct, the consequences are devastating. Amazing as it might seem, the Republican plan to end the recession is to lower everyone’s wages.
Of course, the reason businesses are not hiring has nothing to do with a shortage of affordable labor. Hello. Unemployment is high. Rather, businesses aren’t creating more jobs because they fear no one will have money to buy their products.
Government spending must come down. But as The Economist notes, timing is critical. Throwing too many government workers out of jobs too quickly will only lower demand for the goods and services businesses produce.
However, the GOP economic plot is more nefarious than that. Perhaps some of the “neo-classical economists” cited by Joint Economic Committee Republicans endorse their stated goal — to lower wages for all working Americans. Most Americans would object. Strongly.
Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982. Current clients include the Majority Leader of the Senate and the Democratic Whip in the House.