Public sector cuts are holding back economic recovery in Washington

The latest economic forecast for Washington state, issued by Washington’s soon-to-be-former Chief Economist Arun Raha, shows we may be beginning to dig out from the recession – but public sector cuts are holding back the recovery:

The bright spots:

  • The aerospace industry added 11,500 jobs since May 2010, double the 6,000 lost during the recession.
  • Jobs are beginning to return to the software industry, which added 1,800 jobs since December 2009 – but still shy of making up for the 2,500 software jobs lost during the recession.

The downside:

  • The construction industry remains weak, and employment is flat.
  • State and local government shed 1,300 jobs in November and December, adding to the 17,000 state and local government employee jobs lost between Feb 2010 and Sept 2011.

So overall, signs in the private sector seem to be trending positive – but it’s also clear public sector cuts are holding back the state’s recovery.

public sector vs private sector job change

This point is not lost on Ezra Klein, who points out in the Washington Post that government layoffs are acting as a drag on our national economic recovery:

As Isaac Shapiro and Josh Bivens of the Economic Policy Institute have found, the rate of private-sector job growth during this recovery has actually been comparable to that after the 1990 and 2001 recessions. What makes the current recovery different is that, unlike after past recessions, the unemployment rate is getting battered by government layoffs this time around.

To rebound quickly and rebuild our state economy, Washington legislators need to stop the bleeding by making robust investments in our state infrastructure. Ending corporate tax breaks and maintaining investments of $2 billion in education, health care, and services would help do just that, and result in 9,000 to 17,000 additional private and public sector jobs.

Learn more: A Jobs and Economic Recovery Plan for Washington »

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