Who’s to Blame for the Bad Jobs Report?

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In a recent post on Wonkblog, Washington Post columnist Neil Irwin placed the blame for the disappointing August jobs report and the sluggish economic recovery squarely on the back of the government sector.

“From July 2008 to January 2013,” he writes, “the sector shed more than 737,000 jobs.”

And to make it worse, the most recent unemployment report revised June and July job growth down by an estimated 74,000 jobs – more than half of which, Irwin points out, was due to government job losses.

“Add it all up,” he writes, “and the picture for government employment is murkier.”

While this is a good assessment, when the lens is focused specifically on local government, the story becomes a little less clear cut.

Since the onset of the economic downturn, local governments have been forced to make tough choices in an effort to provide needed services and bolster their local economies while responding to large and often persistent budget shortfalls.

In 2010, NLC released a report projecting that significant local government job losses would be incurred with lasting impacts for local economies.

“Local governments across the country are now facing the combined impact of decreased tax revenues, a falloff in state and federal aid and increased demand for social services,” the report says. “Over the next two years, local tax bases will likely suffer from depressed property values, hard-hit household incomes and declining consumer spending.”

Furthermore, the report projected that state budget shortfalls would pose a significant threat to funding for local government programs, creating a climate of fiscal distress in which local governments are forced to eliminate both jobs and services. Unfortunately, this has indeed been the case.

As suggested by Irwin, it appears that these trends will not completely course correct in the near future. But an important question is: does it have to be this way?

Despite repeated calls from NLC, the National Association of Counties and the US Conference of Mayors for quick action to stabilize local economies, federal action up to this point has been modest at best – while more aggressive opportunities to boost local economies have not been taken.

Federal investment that helps save local jobs and preserves local services has been and continues to be important for economic recovery in communities across the country.

As Irwin states in his blog post, the onus for job creation can’t be placed on the private sector alone. After all, the business of government is often conducted through the private sector — construction and maintenance, garbage collection, recycling and tree trimming are just a few examples.

Expect less than ideal job growth in the government sector to continue until the federal government gets its act together.