What Gov’t Job Cuts Have Done To The Unemployment Rate

If those state and local workers had kept their jobs, they would’ve been making and spending money the whole time, which would have further boosted the economy and provided jobs for other people in the private sector. Economists call this the multiplier effect, and it would’ve pulled the unemployment rate down further. On the flip side, if that demand had never been subtracted from the economy, fewer people would’ve grown discouraged by the economic outlook and would’ve remained in the workforce — instead of dropping out entirely as they did in reality, in large numbers. That would have pushed the unemployment rate back up.

But broadly, the unemployment rate would be significantly lower than it is in the absence of the past three years’ public-sector job losses, which in turn were the direct consequence of the austerity Republicans at the state and federal level demanded.

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