August 7, 2022

Economix: Discouraged Workers, Especially at City Hall

Two facts stand out from the dreadful jobs report this morning:

1. People are dropping out of the labor force.

2. This job recession is particularly bad for public sector workers. It is almost the worst on record.



Notions on high and low finance.

In the spring of 2010, there was reason for optimism. Jobs were being added and the labor force participation rate was rising. That meant that some people without jobs had new hope and were looking again. Such a trend does not help the unemployment rate, which doesn’t count you as jobless unless you are looking for a job, but it was a good sign nonetheless.

In April 2010, the participation rate — the proportion of adults with jobs or looking for jobs — rose to 65.1 percent. It had been much higher before the downturn, but that was a lot better than the low of 64.7 percent recorded the previous December.

This month the rate fell another tick, to 64.1 percent. The last time a rate that low was recorded was in March 1984.

The number of state and local government employees fell by 25,000 workers, and is now down 577,000, or 2.9 percent, from the peak reached in August 2008 — the month before Lehman Brothers collapsed.

Only once before — or at least since they started collecting the numbers in the 1950s — did state and local jobs fall that far. In July 1982 the number was down 3.1 percent.

These figures are seasonally adjusted, and you have to suspect that the numbers will get even worse this fall, when a lot of teachers don’t go back to work.

The low point in state and local government jobs in 1982 came four months before the recession officially ended. This recession ended two years ago, but the relentless declines continue.

This time is different in large part because state and local governments are squeezed as never before. Property tax collections have been devastated by collapsing property prices. Washington delayed the worst of the pain with the stimulus plan, but now seems completely unwilling to help. Instead, a lot of politicians seem to think that cutting employment is a positive good.

I have hoped that the recovery was strong enough to survive Washington’s evident determination to tighten fiscal policy despite abundant evidence this was a bad time for such a tactic. Today’s numbers argue that hope was mistaken.

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