… is that the 202,000 lost jobs in the public sector indicate the urgency with which more aid to state and local governments is needed. But, as others have pointed out, the expiration of temporary census jobs represents just over 70 percent of that total. The bill that passed the Senate yesterday would send $26 billion in aid to state and local governments. State and local government job losses totaled 48,000. There were slightly fewer state job losses in July than there were in May or June, although the cutbacks at the local level were more significant than they have been in recent months.
Some perspective is in order: Since July of 2007, when the effects of the subprime-mortgage meltdown started to reverberate through the financial sector, state governments have added 6,000 jobs. Local governments have shed 1,000 jobs. And the private sector has lost 7,760,000 jobs. By any measure, government workers have remained mostly insulated from the effects of the financial crisis.
The argument from the Left appears to be that government workers should remain insulated until private-sector hiring picks up again. It does not seem to occur to those making this argument that maybe one reason private-sector hiring isn’t picking up again is because the government is vacuuming up capital to preserve government jobs, taking on large amounts of debt in the process that will have to be repaid through higher taxes in the future. Higher taxes in the future means lower returns on investments made today, which means that the private sector will create fewer jobs than it would have otherwise. If this idea has occurred to those arguing for more aid to state and local governments, it apparently hasn’t persuaded them or shaken their “quasi-religious conviction” that Keynesian fiscal stimulus can boost private-sector job-creation, all evidence to the contrary notwithstanding.