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Cutting Spending In this Disastrous Recession Is Just Another Way of Assaulting Working America

Millions are still feeling the pain of a labor market that hasn’t yet recovered and calls for "austerity" threaten to slow or reverse any growth in employment.

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While the economy – whatever that abstraction means – may "manage" through it, the same cannot be said for the almost 15 million Americans who are unemployed, a figure that rises to 25 million when we add in the underemployed and those who have given up looking for work. For them, more than three years after the start of the recession, the pain continues unabated. Anemic job growth in the 20 months since the recovery began has deepened their plight. The economy shed more than 8.7 million payroll jobs between the onset of the recession in December 2007 and February 2010 when the slide in jobs finally ended. In the 11 months from February 2010 to January 2011, the economy added just over 1 million jobs.

Phillips also looks at the macroeconomic effects of cutbacks at the state and local levels, and concludes they are minor – likely to shave just half a percent of the rate of real GDP growth in 2011. But macroeconomic effects encompass employment as well as output. Here the picture is far darker. Moreover, the effects of these cuts fall disproportionately on women.

The two bright spots in the employment picture--sectors where job growth held up through the recession-- are education/health services and government. As overall employment fell from December 2007 to February 2010, education and health services added 844,000 jobs. And as overall employment recovered, this sector added another 369,000 jobs – more than a third of all jobs added in the last 11 months. Men, who made up 23 percent of employment in this sector in December 2007, accounted for 25 percent of the jobs added during the period when the labor market was contracting and 33 percent of jobs added since February 2010. Job growth in this sector, which has provided an essential support to the labor market, is threatened by proposed cuts in Pell grants to students for tuition assistance and by state cutbacks in Medicaid spending.

Employment in the government sector also held up during the recession. The gender composition is more mixed in this sector, with women holding 57 percent of jobs and men 43 percent. Government employment expanded from the beginning of the recession through the second quarter of 2010, adding 607,000 jobs over that period, with men accounting for just over half the increase. In the third quarter of 2010, the beginning of the new FY2011 budget year in most states, government employment dropped sharply. Nearly half a million government jobs were lost in that quarter alone, with women absorbing 60 percent of the job losses. A total of three-quarters of a million government jobs were eliminated between May 2010 and January 2011. Job loss in this sector slowed in the fourth quarter of 2010, but women accounted for 96 percent of the jobs lost in that quarter, a situation that continued in January 2011.

In contrast to earlier postwar recessions, the federal government continues to deny states additional resources to see them through a period of continued weak tax receipts. As a result, budget battles are heating up in states governed by Democrats as well as Republicans. Governors who slash jobs and vital services – including K-12 education, health care for children, and supportive services for the elderly and disabled – are being hailed as heroes. We can expect sharp job losses again in this sector in the third quarter of this year as FY2012 budgets take effect in the states.

These developments do not bode well for the labor market and workers’ job prospects. Cutbacks in government employment and slower growth in education and health services places greater responsibility for job growth on private sector employers. They performed weakly last year, and are expected to do only marginally better this year. Job growth for women in the private sector outside of education and health services has lagged behind even the slow recovery experienced by men. More than a quarter of all payroll jobs lost between December 2007 and February 2010 were lost in manufacturing – 30 percent of these by women. In the recovery since then, only 7 percent of manufacturing jobs have been regained. All of the job gains, however, have gone to men while women in this sector have continued to lose jobs.

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