Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

New York Times Room for Debate

 

Government Layoffs Don't Hurt; They May Help

February 06, 2013

By Diana Furchtgott-Roth

Some have suggested that cuts in state and local government jobs have negative effects on the economy. But that’s contradicted by the latest data on public and private sector employment and gross domestic product, by state.

The reason is clear. In general, higher state and local government employment results in a greater tax burden to finance public sector salaries and health and pension benefits. These higher taxes result in a decline in private sector employment and state G.D.P.

Between 2010 and 2011, 34 states, almost 70 percent, including California and New York, showed a decline in state and local employment but growth in state G.D.P. In six states, including New Jersey, state G.D.P. declined after cuts in government employment. State G.D.P. increased after government employment increased in nine states, and in one state, Wyoming, state and local government employment increased while state G.D.P. declined.

Private employment is a much stronger indicator of a state’s economic growth. Between 2010 and 2011, private employment and state G.D.P. both rose in 42 states, 84 percent of the country. In one state, Arkansas, state G.D.P. increased while private employment decreased. And in seven states (including New Jersey), state G.D.P. declined while private employment increased.

There are other variables affecting a state’s economic climate, and government layoffs are not the major one. But those layoffs do not drag down a state’s economic activity.

Results vary by year, but, particularly in an expanding economy, it’s quite likely that a state that cuts its budget by shrinking its public sector will see economic gains.

Original Source: http://www.nytimes.com/roomfordebate/2013/02/06/are-government-layoffs-the-problem/government-layoffs-dont-hurt-they-may-help

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

5 Reasons Janet Yellen Shouldn’t Focus On Income Inequality
Diana Furchtgott-Roth, 10-20-14

Why The Comptroller Race Matters
Nicole Gelinas, 10-20-14

Obama Should Have Picked “Ebola Czar” With Public-Health Experience
Paul Howard, 10-18-14

Success Of Parent Trigger Is Unclear­—Just As Foes Want
Ben Boychuk, 10-18-14

On Obamacare's Second Birthday, Whither The HSA?
Paul Howard, 10-16-14

You Can Repeal Obamacare And Keep Kentucky's Insurance Exchange
Avik Roy, 10-15-14

Are Private Exchanges The Future Of Health Insurance?
Yevgeniy Feyman, 10-15-14

This Nobel Prize-Worthy Economist Figured Out How To Destroy Terrorism
Diana Furchtgott-Roth, 10-15-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494