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Needless Layoffs: Firing 1,000 Public Workers a Day is Bad Policy

David Callahan

Here's a data point that slipped under the radar when the U.S. Labor Department released its latest job numbers earlier this month: Layoffs of public sector workers accounted for the biggest chunk of pink slips handed out overall in September.

Despite urgent national concern about the jobs crisis, state and local governments are still laying off an average of 1,000 workers every single day. And despite wide agreement that investing in education is crucial for America's future, many of these layoffs are in the education sector.

None of this makes any sense -- and it doesn't have to be this way.

While overall nonfarm payroll employment was up in September, with 103,000 new jobs created, layoffs continued to hit some sectors of the economy. Thirteen thousand jobs were lost in manufacturing and 9,000 jobs were lost in retail. These bad numbers reflect continuing lax consumer demand, a situation that policymakers can only address indirectly through fiscal stimulus.

But the biggest layoffs were in the public sector, with 34,000 workers losing their jobs in September and another 5,000 workers getting laid off by the U.S. Postal Service (now a quasi-private entity). That brings the total number of workers laid off by government since September 2008 to over a half a million. This figure is much higher if you include private contractors and people who work in businesses dependent on government spending.

Many of these layoffs are at the local level, where governments don't have much maneuvering room to deal with cuts made higher up the food chain by state and federal politicians --  leaders who have embraced misguided austerity policies.

In retrospect, many analysts agree that the 2009 stimulus should not only have been larger, but should have directed much more direct aid to state governments so that major layoffs, particularly in education, could have been avoided. For example, instead of devoting over a third of the stimulus money to tax cuts aimed at sparking more spending and thus more job creation, it would have been much more strategic to bolster the parts of the stimulus aimed at saving public sector jobs. Direct job preservation should always trumps indirect job creation (especially when it comes to tax breaks, which may be used not for spending, but to pay down debts or increase savings).

Congress is now getting another bite at the apple, with Obama's American Jobs Act calling for billions in direct assistance to states, mainly with the goal of saving jobs in education. Alas, we already know where this debate is going, with ideology almost sure to trump pragmatic steps to improve the labor market.

The gridlock in Washington means that it is all the more important that states make the right fiscal choices. And while it is no surprise that Tea Party governors like Rick Scott in Florida are making the wrong choices, and worsening their states' recessions with Hoover-like policies, one would expect better from Democratic governors like Andrew Cuomo.

But even Cuomo has embraced discredited austerity policies -- letting a tax surcharge on the wealthy expire at the end of this year with the result that thousands of public sector workers, mostly in education, will lose their jobs. These layoffs have already started in New York City.

Think of it: a Democratic governor allowing workers barely scraping by as it is on their salaries as teacher aides or whatnot to get pushed into an economic abyss in order to shovel yet more wealth to the state's top 1 percent of households.

Maybe it's time to Occupy Albany.