One year after the passage of the economic stimulus, we assess how many jobs have been created and how much money has gotten into the economy.
The economy is looking up, but governments will be feeling the recession’s effects throughout 2010.
Economic growth of 3.5 percent in the third quarter of 2009 may mark the end of the Great Recession, but state and local governments will likely feel ongoing negative effects throughout 2010 and beyond. Unemployment rates near double digits will continue through the next year, and governments will continue to endure the collateral effects of weak tax revenues, lower property values, slower consumer spending and other negative economic factors. But for the infusion of federal stimulus money, it would be a lot worse.
Through the end of 2009, investments by the American Recovery and Reinvestment Act (ARRA) in public transportation have created almost twice as many jobs per dollar as investments in highways, according to an analysis of federal data by Washington-based Smart Growth America (SGA) and other groups. The most recent data from states shows that every billion dollars spent on public transportation produced 19,299 job-months, compared to 10,493 job-months for every billion spent on highway infrastructure, according to the analysis.
From the Wall Street Journal Blog:
For those wondering why luxury spending is back even as unemployment hovers close to 10%, consider this: unemployment among the affluent is only 3%.
According to a study from Northeastern University’s Center for Labor Studies, unemployment for those in the top income decile-individuals earning more than $150,000 a year-was 3% in the fourth quarter of 2009. That compares with unemployment of 31% for the bottom 10% of income, and unemployment of 9% for the middle decile.
The differing rates of underemployment-including those working part-time for economic reasons-are also notable. Underemployment for the top 10% was 1.6%, while the bottom was 21%.
In other words, the top 10% is experiencing what economists would consider full employment.
State Fiscal Gimmicks: A Budgetary Balancing Act
Katherine Barrett and Richard Greene
Phony budget accounting defers the day of reckoning — but raises costs.
Reform Amid Fiscal Ruin
In some states, progressive leadership and grass-roots activism have turned crisis into opportunity for long-deferred tax reform.
A Tour of Six States
Jake Blumgart, Pema Levy, Gabriel Arana and Mikhail Zinshteyn
Snapshots of the fiscal crisis across the nation.
Public Capacity and Public Trust
Dianne Stewart and Michael Lipsky
Can we reverse the vicious circle of frustrated citizens denying state government adequate resources — and then resenting the lack of state services?
Loosening Fiscal Straitjackets
Iris Lav and Jon Shure
Proponents say that caps on taxing and spending enhance democracy. In reality, they destroy accountable government — but that can be changed.
Digging Out, Planning Ahead
Nicholas Johnson and Michael Leachman
The federal government needs to do more to help states survive this downturn — and plan for permanent anti-recession fiscal relief.
California in Crisis
Donald Cohen and Peter Dreier
With a dysfunctional state government unable to act, the universities, schools, and roads that were once the model for the nation are crumbling — if not collapsing.
Buckeye Budget Blues
Ohio has all the reform elements in place — except political will.
Source: Lawrence Mishel, Ross Eisenbrey, John Irons, Josh Bivens, and Ethan Pollack, Economic Policy Institute, December 2009
The United States is experiencing its worst jobs crisis since the Great Depression. Nearly 16 million Americans–our family, friends, and neighbors–are out of work. This national crisis demands a bold plan to put people back to work. The Economic Policy Institute proposes the American Jobs Plan, a plan that would create at least 4.6 million jobs in one year.
– Press Release
From the summary:
Hiring freezes, pay freezes, layoffs, and furloughs top the list of ways that local and state governments are cutting costs, according to a Center for Excellence online survey of government managers.
States and local governments also have made significant changes in their benefit offerings.
– Changes in health and retirement plans
Half of the respondents, human resources professionals, report that their governments have made changes to their health care plans:
* Increased employee contributions (69 percent)
* Added number of years required to vest (25 percent)
* Added wellness programs, 24-hour nurse lines, or on-site clinics (25 percent)
* Reduced benefits (23 percent)
* Tiered benefits (15 percent)
* Decreased employer contributions (10 percent)
Among the 21 percent whose governments have changed their retirement plans, 73 percent say the changes have not affected current workers and 60 percent say the changes have not affected new hires.
– Critical positions go unfilled
There are signs that governments need a more strategic approach to their talent challenges. Survey respondents said they are struggling to fill certain critical positions, including jobs in engineering, skilled trades, information technology, health care, finance, law enforcement, and top management.
– Furloughs don’t always equal savings
Even furloughs have not produced the savings that had been anticipated in some places. While 61 percent of respondents say that they achieved the savings that had been budgeted, 39 percent said they did not.
– Fiscal constraints and talent challenges
The economic downturn has affected retirement plans, giving governments a little breathing room. Almost half (46 percent) of the survey’s respondents report that retirement-eligible employees are postponing their retirements.
Source: Perspectives on Work, Vol.13 no. 2, Winter 2010
In our “Green Jobs” series, we include questions Perspectives on Work posed to Hilda Solis, U.S. Secretary of Labor and, of course, her answers. We also include articles on how stakeholders, including trade unionists and community activists, are stepping in to promote green jobs. Rounding out the series is the perspective of a green employer.
– Secretary of Labor Discusses Green Jobs
– The Promise of the New Green Economy by Barbara Byrd
– The Real Work behind Green Job Creation by Michael Peck
– Emerald Cities in the Age of Obama: A New Social Compact between Labor and Community by Jeff Grabelsky and Phil Thompson
From a Robert Wood Johnson Foundation summary:
The recession has significantly increased demands on the health care safety net as millions of people have lost jobs and health insurance, but in some cases the impact on safety net providers has been less severe than expected. That’s according to a new Center for Studying Health System Change (HSC) study of five communities–Cleveland; Greenville, S.C.; northern New Jersey; Phoenix; and Seattle.
The Robert Wood Johnson Foundation-funded study looks at how federal stimulus funding, among other factors, has helped safety net providers weather the economic storm, partially offsetting reductions in state, local and private funding. But while safety net providers have stayed financially viable so far, the authors suggest that the safety net in these communities may have not yet felt the full weight of the recession. Unemployment and uninsured rates will likely remain high for some time, and demands on safety net providers could persist as stimulus funding ends.
Source: Progressive States Network, January 2010
Part I: Finding the Money and Investing in Human Capital and Physical Infrastructure
As this Dispatch will highlight, the first step is to fund jobs that support long-term economic competitiveness, notably by investing in people and physical infrastructure. While the economic climate for profit-making business opportunities is more limited, investments in education, health care, transit and energy efficiency can create immediate jobs while strengthening building blocks for long-term growth.
Part II: Supporting Innovation, Industrial Clusters and Green Job Creation
The next step, as this Dispatch will describe, is helping the private sector leverage opportunities for job creation and technological innovation. Too often, some state leaders treat economic development as merely a bidding war between states to give away the most tax breaks or economic subsidies to big corporate bidders. Not only do most studies show such tax-giveaway approaches to be ineffective — fundamentals like labor productivity and physical infrastructure are more critical in site selection for most global businesses — but they end up devoting most state resources to a few large businesses while ignoring investments in start-ups and smaller homegrown firms that are the heart of long-term local prosperity.