When unemployment numbers exceeded expectations last Friday, the Trump administration wasted no time in rolling out the metaphorical mission accomplished banner. President Trump himself declared the addition of two million jobs to be “the greatest comeback in American history.” While it is undeniably good news that two million Americans went back to work in April, anyone who reads beyond the headlines knows that those gains reflected the early reopening of some states that are now facing a second wave of coronavirus infections, and the administration’s celebration ignored the tens of millions of Americans who have lost their jobs since the coronavirus pandemic began.
And the tone-deaf premature celebration ignores another huge jobs crisis that’s unfolding in slow motion around the country: the loss of state and local government jobs to budget cuts. Over half a million state and local government employees lost their jobs in May, according to the Bureau of Labor Statistics, and one million more were laid off in April.
Still more job losses are sure to follow. State and local governments are trapped in a negative feedback loop. The coronavirus shutdown effectively killed revenue from sales taxes and other income for government services, which blew a hole in state and city budgets. Lawmakers in city halls and state houses around the country are responding to those lowered income levels by laying off or furloughing employees. Of course, those laid-off employees then have to cut back on spending, which causes the economy to contract even further, thereby decreasing revenue for state and local governments.
If cutbacks at the state and local level continue, we’ll be stuck in a destructive cycle that could extend the recession for months, even years. How do I know that? Because it’s exactly what happened in the Great Recession of 2008…