Score one for economic reality: Public jobs matter

Public-sector spending feeds private industry, and creates new jobs in the private sector. To pretend otherwise is foolish.

Mike Owen
Mike Owen

Today’s New York Times editorial, “The Myth of Job Creation,” takes both President Obama and challenger Mitt Romney to task for their comments in the second debate about the importance of public-sector (government) jobs.

As the Times noted:

Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill. They are also critical for private-sector job growth in … fundamental ways.

At the Iowa Policy Project, we have made this case repeatedly in Iowa over the last few years, both in response to cutbacks in Iowa budgets and to misinformed political assaults on federal stimulus spending, which did a good job bridging revenue gaps in Iowa to prevent worse cutbacks in public-sector spending. See our latest “Iowa JobWatch.”

In Iowa, 1 in 6 jobs is a government job, at the local, state or national level. How is it possible that roughly a quarter-million jobs in our state do not have an important impact on our economy? The answer of course is that they do. The lion’s share of those jobs are in local government, so they are scattered across the state. They are filled by our neighbors, buying goods and services from local businesses and keeping kids in our schools. As the Times notes, regarding comments by both presidential candidates suggesting that “government does not create jobs”:

Except that it does, millions of them — including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s old job) and congressmen (like Paul Ryan).

As with shortsighted approaches in budgeting that attempt to resolve all deficit issues with spending cuts, instead of taking a balanced approach to both the spending and revenue sides of the budget ledger, our leaders make a mistake when they think all new jobs have to be in the private sector or they don’t matter. Public-sector spending feeds private industry, and creates new jobs in the private sector. To pretend otherwise is foolish.

It’s always good when a dose of fiscal and economic reality hits the public debate. But it is unfortunate that it doesn’t happen more often.

Posted by Mike Owen, Assistant Director

Iowa JobWatch: Jobless Rate Dips — Payroll Jobs Improve

The state still remains almost 41,000 jobs behind where it was at the start of the last recession in December 2007. Still, things are looking better.

David Osterberg
David Osterberg

Unemployment Rate 5.4 Percent in January; Job Growth Still Slow in State

IOWA CITY, Iowa (March 13, 2012) — Analysts at the nonpartisan Iowa Policy Project noted the unemployment rate dipped to 5.4 percent in January, down from 5.6 percent in December, as payroll jobs also improved by 3,700. IPP, which tracks employment trends in Iowa, released this statement from Executive Director David Osterberg:

Employment over the last year in Iowa is showing good signs, though growth remains very slow. Payroll data showed a net gain of over 9,000 jobs during the year, with about 40 percent of those jobs added in January.

Especially good news was the fact that the state gained nearly 12,000 manufacturing jobs from January 2011 to January 2012. These jobs generally are higher paid and often have benefits. However, the state also lost 4,000 government jobs and 3,200 professional and business services jobs, also generally better paid than jobs in some sectors.

Now that the economy seems to be picking up with the unemployment rate dropping to 5.4 percent, it is time to question the quality of the jobs we are getting back. And it is time to stop shedding jobs in the public sector. That is one area that the governor and legislature have some control over.

The state still remains almost 41,000 jobs behind where it was at the start of the last recession in December 2007. Still, things are looking better.

Key Numbers

— Nonfarm jobs were up in January by 3,700, to 1,484,300, from the revised December estimate.
— Nonfarm jobs are 43,900 behind the May 2008 peak of 1,528,200, and 40,900 behind the level at the start of the last recession in December 2007.                           
— The unemployment rate was 5.4 percent in January, down from 5.6 percent in December and down from 6.1 percent a year earlier.
— The labor force, those working or looking for work, was virtually unchanged (up 100), but slightly down (1,900) over the year.
— Initial unemployment claims were down — by 37 percent, to 19,846 — for the month, and down 6.3 percent over the year.                                    

Key Trends

— Iowa averaged a monthly increase of only 800 jobs, in the last 12 months.
— Nonfarm jobs are above year-ago level for the 16th month in row.
— Manufacturing is the top-gaining job sector over the past 12 months, up 11,800, followed by construction at 3,100 and trade, transportation and utilities at 2,900. Manufacturing led gains for the month at 3,500, with leisure and hospitality up 3,200 and “other” services up 1,600.
— Government jobs declined by 4,000 over the year, and professional and business services fell by 3,200. For the month, education and health services led declines at 2,500, and professional and business services dropped 1,200.


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