Austerity cost U.S. up to 2.2 million jobs in weakest recovery since WWII

Almost everything you need to know about the self-destructive economic policy coming out of Congress was contained in two simple statements this week. While the Federal Reserve warned that “fiscal policy is restraining economic growth,” the Republican National Committee released an ad crowing that “the sequester is here to stay.” Judging by the April jobs numbers published today, the Republican Party can declare “mission accomplished.” After all, the public sector shed another 11,000 workers last month, pushing the total just since March 2010 to 625,000. Worse still, a new analysis suggests, compared to past recoveries austerity policies at the federal, state and local government level have cost the U.S. up to 2.2 million jobs.

That’s the conclusion from the Hamilton Project. It’s not just the collapse of the housing market and the implosion of the financial sector which resulted in the slowest American recovery since World War II. Much of the damage has been self-inflicted by policymakers in Washington and the 50 states. Noting that the private sector has added 6.8 million jobs since March 2010 and 2.2 million in just the last year, the public sector “has been a drag on the economy.”

We find that the last several years’ policy choices are starkly different from those following previous recessions. Specifically, there are 2.2 million fewer jobs today, relative to what would have occurred with the policy response typical of the five preceding recessions.

The Hamilton Project is far from alone in lamenting the “anti-stimulus” of cutbacks across all levels of government. In April 2012, the Economic Policy Institute similarly concluded:

The current recovery is the only one that has seen public-sector losses over its first 31 months…

If public-sector employment had grown since June 2009 by the average amount it grew in the three previous recoveries (2.8 percent) instead of shrinking by 2.5 percent, there would be 1.2 million more public-sector jobs in the U.S. economy today. In addition, these extra public-sector jobs would have helped preserve about 500,000 private-sector jobs.

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Daily Kos

Austerity cost U.S. up to 2.2 million jobs in weakest recovery since WWII