State and local hiring has not recovered

Two prominent media outlets, USA Today and, have recently run stories that trumpet increased state and local government hiring. But both outlets make crucial errors in their calculations.

Let’s start with USA Today‘s story from June 27. Its analysis used the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey to claim that 800,000-plus new jobs had been created in muniland. But this number is a “turnover” number and not surprising since the sector employs over 19 million people.

Today ran a story that riffed on what USA Today reported and made this further claim:

More public workers were hired in the first four months of 2012 than any other year period since 2008. The 828,000 new hires are filling positions that were left open to save money during the recession. The hiring boost indicates that state budget problems have relaxed and that public-sector job growth could be imminent. It takes at least six months for a hiring boost to create a larger workforce, according to the newspaper.

In fact when you total up state and local government hires for the first four months of 2012, there were 1,084,000 new employees filling positions. But these are not new positions that have increased the overall level of state and local employment. These are hires replacing employees who left current positions. Total state and local employment is actually down year-over-year, from 19.3 million in May 2011 to 19.2 million in May 2012.

Why America won’t pay for more stimulus

This morning’s jobs report revealed that 79,000 net new jobs were created in the country in May, nearly 50 percent below the consensus forecast of 150,000. Almost immediately following the release, there were loud and insistent calls for another round of monetary and fiscal stimulus. “Job growth stumbles again, raising pressure on Fed,” the Reuters headline ran. My fellow Reuters blogger Felix Salmon called for immediate federal stimulus funded by more debt issuance. Felix’s rationale, like many others’, is that with U.S. borrowing costs so low, stimulating current economic activity is a higher priority than worrying about paying down the debt in the future. Or to put it differently, a little more debt is preferable to enduring the economic pain of the economy rightsizing itself.

However, economic weakness is concentrated in just a few regions, and the solutions that many are pushing for – additional fiscal stimulus from Congress or further monetary easing from the Fed – are too diffuse to make much of a difference or require a national constituency that is unlikely to materialize. Unemployment fell in 37 states in April, but in California, Rhode Island and Nevada, there are still massive employment problems. The National Conference of State Legislatures reports (emphasis mine):

Unemployment rates were down in 37 states, the District of Columbia, and Puerto Rico in April 2012. Only five states saw unemployment rise and eight states had no change for the month, according to figures released by the Bureau of Labor Statistics on May 18, 2012.

Thumbs down on infrastructure bank

Thumbs down on President Obama’s infrastructure bank

The Bond Buyer is reporting that U.S. transporation groups have given the thumbs down to President Obama’s proposed infrastructure bank. The core repayment mechanism for loans guaranteed by the proposed bank would be user fees and tolls. This contrasts to the current methods, which involve state and local governments borrowing in the municipal market to fund projects or the federal government collecting gasoline taxes to fund highway infrastructure. Given the growing opposition globally to the privatization of public assets, the core purpose of the infrastructure bank is bound to create more unease among public players and citizens. From the Bond Buyer:

American Trucking Associations president Bill Graves was skeptical.

“We’ve long advocated that roads and bridges should be paid for primarily by their users, through the most direct taxes possible: fuel taxes,” he said. “Allowing private capital to take their cut as part of an infrastructure bank, or by taxing other sectors to pay for roads and bridges, takes us further away from this core principle.”

Direct grants to state and local govts most popular part of Obama’s jobs bill

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