There is no labor problem in the public sector in the US. Public sector jobs increased between December 2007 to last February. A time when the private sector shed 8.8 million jobs. Governments now employ 22 million workers while the private sector is five times as large.
But, in states like New Jersey, pubic jobs are being eliminated. As other states take up the budget issues, more and more may go. If private sector job growth doesn’t pick up the slack, the overall unemployment numbers may begin going up again. Recent unemployment’s claims are at their lowest since mid-2008.
If public employees follow what happened in Wisconsin and refuse to make concessions, the alternative, like it was in Wisconsin is to eliminate jobs.
The path out of the recession is job creation. If public jobs reductions exceed private job creation, the economy will not recover.
It will happen in many cities and states as revenues can’t keep pace with escalators in public employee contracts. Eventually, jobs will go.
This is a hard one to call. Productivity is at an all time high. From small businesses to huge corporations, managers have found ways to do more with less. Those profits generated by that productivity will be hard to relinquish.
My bet, the public sector which has added jobs when they should have been reducing them is in the trick bag. Like all problems that get kicked down the road, the chickens do come home to roost. All of those jobs added plus inefficiency and duplication in government employment are rich areas for productivity gains now. Faced with the need to do that at the municipal and state levels, it will get done.
Those job losses will come just as Obama is gearing up his run for reelection. He doesn’t see it coming.
