Friday’s job report was a post-convention headache for President Obama. But it’s also a hangover from early in his term: He could’ve avoided this problem had he thought harder about stimulus three years ago.
Private companies added only 103,000 jobs in August; they’d need to create more than three times that for a full year to replace the 4.2 million-plus jobs that America is still missing from the recession.
And this isn’t a one-month slowdown. Growth has stagnated this year.
Meanwhile, public-sector employment lost ground. Last month, state and local government shed 10,000 workers. Since mid-2008, 716,000 state and local workers have lost their jobs (or not been replaced when they quit).
The 2009 stimulus was supposed to prevent these losses. It sent $200 billion to state and local governments over two years, mostly for education and health care. The point was for governors and mayors to avoid layoffs as tax revenues plunged — to tide them over until the economy fixed itself.
But this strategy was wrongheaded.
During the supposedly good years, state and local governments grew too fast. Even today, state and local government employment is 7.3 percent higher than in 2000.
Yes, that’s below population growth — but more than half of state and local jobs are in education, which is (mostly) for young people, and the number of people ages 5 to 19 is up only 2.9 percent since 2000.
This math makes one of Obama’s convention-speech pledges — to “recruit 100,000 math and science teachers within 10 years” — a head-scratcher. It’s not clear that we need new teachers.
Plus, governments can’t employ new people, or keep the old, if they don’t have tax money from private workers to pay them. Since 2000, the number of private-sector workers is up only 1 percent.
If we want more public workers, we’ve got to grow the private economy to pay for ’em.
But even if state and local governments had more private-sector tax dollars, they’d have to spend them not on keeping workers, but on paying benefits to existing workers. Here in New York City, the taxpayers’ bill for public-worker pensions and other benefits has nearly tripled, to $16.5 billion a year. New York is extreme, but the rest of the country has the same problem.
The 2009 stimulus could’ve addressed this issue. Instead of sending states money for worker pay, Washington could have earmarked more money for building and rebuilding things like roads, bridges and urban transit. (The stimulus only devoted a paltry $40 billion to such projects.)
That would’ve forced governments to cut benefits if they wanted to keep teachers and other workers on the payroll (and forced public unions to go along, once they knew the feds weren’t coming to the rescue).
Since the recovery was always going to be slow, it wouldn’t have mattered if some road and bridge projects weren’t “shovel-ready.” Governments could take their time and do them (sort of) right.
Instead, the approach Obama chose harms future infrastructure investment, which is still a big campaign plank.
Last Wednesday, one of the Democrats’ new stars, Massachusetts Senate candidate Elizabeth Warren, got a prime-time slot to speak on this topic. “Obama believes in a country where we invest in . . . roads and bridges,” she said. She spoke of a construction worker who “went nine months without finding work.”
But voters can sense a gap between sentiment and reality. In 2009, Obama promised to shore up our Depression-era infrastructure — but then dedicated only about 5 percent of stimulus toward that goal. The result shows now on the ground.
As for Warren’s construction worker: He was likely out of work because the stimulus let state and local governments avoid the tough choices with their own money.
The problem for voters is that Mitt Romney and Paul Ryan don’t have much to say about this stuff either.
Voters have a choice: Pick the folk whose actions don’t match their words, or pick the people who keep quiet on something that matters a lot.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s
City Journal.