Thursday, March 11, 2010
Layoffs 2.0: the States Turn
The last 18 months or so have been hell on the jobs market. We all know that. However, due to the 'Stimulus', a few sectors have really not felt the effects. They are of course your Federal jobs and a good deal of State employees (teachers, cops, etc). Why and what's next?
Remember that term 'saved' job, yeah I laughed at it too when I first heard the phrase. As time passed, it has become evident that the term is really fairly accurate. Jobs that were most certainly on the chopping block and HAD TO be eliminated in order for individual States to possibly balance their budgets, were 'saved'. But perhaps a much more accurate term would have been 'stayed' jobs, as in 'stay of execution'.
If you work for a State, be prepared, because Layoffs 2.0 are about to start, and this time, it's your jobs and benefits. Why? Because the money the Fed. printed and handed to the states is running out. We borrowed about 1 trillion dollars to 'save' jobs that had to be cut. Why do they have to be cut? The States are broke, States can't print money (actually they can issue local currency, but no one does) ... now 18 months later extraordinarily tough choices are being made by those who set budgets. They have NO choice but to cut jobs and programs that they don't want to cut.
What does this mean for the whole of the U.S.? A recovery that should have begun months ago, an employment recovery is grossly flat-lined or worse yet, about to 'double-dip', because the policies set forth only sedated the patient, and did nothing to treat the patient. Now a wave of layoffs are about to hit our States. Important jobs and crucial programs will be eliminated and it will be hard. I know it's not easy to accept, but these jobs and programs should have been cut 18 months ago (or prior), not subsidized and given a 'stay of execution' running our Federal Debt to over $12.5 Trillion, and now we face the consequences of these poor economic decisions.
What should have been a sharp 'V' recovery (a steep decline, followed by unabashed growth), has of course turned into an elongated 'U' recovery, delaying the inevitable layoffs, fattening our debt, and making the pain last quite a bit longer than just taking the proper medicine from day one. Now economists far smarter than I are very concerned about a 'W' shaped recovery, aka the double-dip recession and those who believe our Government intervention has done far more damage than good, see a 'L' shaped "recovery" in our future. This is what is commonly used to describe Japan's 'Lost Decade' and many feel we are at the beginning stages of ours, repeating much of the same mistakes Japan made, all glossed over and based on how policy makes us 'feel', rather than what it actually accomplishes.
I don't want teachers to lose jobs, I don't want to see State pensions compromised ... but States are broke and raising taxes locally to 'cover the shortfall' will only take more money out of the average household and business and drive productive citizens to other States where they can provide a better life for their family.
States need to take their medicine, unfortunately it's about 18 months too late. As the private sector shows legitimate signs of real recovery, States are just entering their moments of true pain. They should have been with 'us' from the beginning. It might have made the 'down' a bit harder, but we'd be on our way to a very robust recovery, and unfortunately we are not.