Michigan loses government jobs, hampering economic recovery

[Det_ard]

Did you read the article? There is no focus on the public sector. The public sector is being cut to oblivion, and it's offsetting slow job growth in the private sector and prolonging the recession. If anything, policymakers seem completely confused as to why unemployment is so persistent, because they don't think government jobs count as real jobs.

That's nonsensical. Say Michigan wants to add one government job. How do they pay for the salary, benefits, pension and retiree medical? They tax the people and businesses of Michigan, right? So while one person now has a job and therefore an income that can be spent in the economy, others have commensurately less money to spend in the economy because their taxes are incrementally higher. First order effects are essentially zero-sum. There's no magic money pot to pay Michigan government workers with that doesn't negatively impact other Michigan workers.

And the argument from the right will be, often with justification IMO, that a dollar spent on a private industry worker is a more efficiently spent dollar than a dollar spent on a government worker, so second-order effects to increased government employment is negative.

[Danny]

That's why we need Virg Bernero, not some nerd from some defunct computer company to be governor of Michigan. We Michiganders had made a terrible mistake.

[antongast]

That's nonsensical. Say Michigan wants to add one government job. How do they pay for the salary, benefits, pension and retiree medical? They tax the people and businesses of Michigan, right? So while one person now has a job and therefore an income that can be spent in the economy, others have commensurately less money to spend in the economy because their taxes are incrementally higher. First order effects are essentially zero-sum. There's no magic money pot to pay Michigan government workers with that doesn't negatively impact other Michigan workers.

And the argument from the right will be, often with justification IMO, that a dollar spent on a private industry worker is a more efficiently spent dollar than a dollar spent on a government worker, so second-order effects to increased government employment is negative.

Except that lower taxes on businesses and rich people don't actually increase employment unless there's demand for additional goods and services. Regular folks need to have money to buy goods and services with, or businesses will just convert the extra money into higher profits and larger executive compensation packages. One easy way to ensure that regular folks won't be able to afford additional goods and services is to lay a bunch of them off.

[Novine]

"And the argument from the right will be, often with justification IMO, that a dollar spent on a private industry worker is a more efficiently spent dollar than a dollar spent on a government worker, so second-order effects to increased government employment is negative."

There's something like 700,000 less people employed by the government today as compared to 2009. How are all those dollars being spent in the private sector working out?

[Wesley Mouch]

Did you read the article? There is no focus on the public sector. The public sector is being cut to oblivion, and it's offsetting slow job growth in the private sector and prolonging the recession. If anything, policymakers seem completely confused as to why unemployment is so persistent, because they don't think government jobs count as real jobs.

Yeah, and they're just wrong.

If you want to try and justify civic jobs, its a fine article.

As to the government jobs not being real -- well, they're not. What I think you're missing here is the idea of productivity. While much government work is critical, useful, and necessary -- it is an overhead cost to our economy. Real jobs are private sector jobs who do something, make something [[Ford), or help others make something [[UAW, Johnson Controls, Detroit Edison) that the world needs to make it a better place, or dig something out of the ground of value [[coal, uranium). That's what brings investment in the US.

If government jobs were real jobs, then all you'd have to do is hire everyone for government work. That's why they don't want to count government jobs. Because they are not real jobs, in terms of anything but wealth redistribution.

Now of course there are useful and necessary functions of government. And with all the cuts, government efficiency is no doubt going up.

[coracle]

"If government jobs were real jobs, then all you'd have to do is hire everyone for government work. That's why they don't want to count government jobs. Because they are not real jobs, in terms of anything but wealth redistribution"

Very explicit statement. Public Sector jobs are essential but should be kept to a bare minimum because they are paid for with the taxes of Private Sector produced wealth. For every dollar we put into the Public Sector that's one dollar less in the Private Sector for investment/profit/taxes. Europe is a good example of the Public Sector completely out of kilter, and we're not far behind brought about by the out of control spending of the last 10 years.

[maxx]

So why is it that government jobs are being so highly regarded as the solution. Up in arms about losses of government workers. Should be more outrage about loss of private sector jobs. If a 'job is a job' [[which is absurd, but regardless), then why the focus on public sector?

On the national level we are paying twice and three times as much for private armies and homeland security private sector companies.

[maxx]

And the argument from the right will be, often with justification IMO, that a dollar spent on a private industry worker is a more efficiently spent dollar than a dollar spent on a government worker, so second-order effects to increased government employment is negative.

That hasn't proven true when it comes to healthcare. For profits have at least three times the admin. costs of Medicare.

[coracle]

"There's something like 700,000 less people employed by the government today as compared to 2009. How are all those dollars being spent in the private sector working out?"

The government has reduced their taxes yet so they haven't seen any benefit. No doubt the savings are being frittered away on entitlements for votes. At the same time the Private Sector has to pay their unemployment benefits.

[antongast]

And with all the cuts, government efficiency is no doubt going up.

From where I sit, the main effect seems to be that my services keep getting worse.

[antongast]

If government jobs were real jobs, then all you'd have to do is hire everyone for government work.

This argument can apply to anything. "If restaurant jobs were real jobs, all we'd have to do is hire everyone to work in restaurants." Functioning economies have more than one kind of job. By this logic, subsistence agriculture and nomadic hunting and gathering are the only "real jobs," because those are the only jobs that can exist independently of any other means of making a living.

[Wesley Mouch]

This argument can apply to anything. "If restaurant jobs were real jobs, all we'd have to do is hire everyone to work in restaurants." Functioning economies have more than one kind of job. By this logic, subsistence agriculture and nomadic hunting and gathering are the only "real jobs," because those are the only jobs that can exist independently of any other means of making a living.

Not at all. Of course there's room and need for all sorts of services.

Difference between a restaurant and the government is that when a restaurant starts cooking bad food, they go out of business. When the government does bad permit process or hiring, we give them more money because they're understaffed.

[antongast]

When the government does bad permit process or hiring, we give them more money because they're understaffed.

This does not actually happen. You are making this up.

[Novine]

"The government has reduced their taxes yet so they haven't seen any benefit. No doubt the savings are being frittered away on entitlements for votes."

If you were trying to say that government hasn't reduced their taxes, you're wrong. Taxes paid to the state and local governments through property taxes has gone down by $1.6 billion.

http://bridgemi.com/2011/11/1-6-bill...rty-tax-bills/

Thousands of fewer government sector jobs and billions in reduction in taxes and little evidence that has resulted in an economic benefit to the state. Conservative economic theory never survives its first encounter with the real world.

[Wesley Mouch]

...If you were trying to say that government hasn't reduced their taxes, you're wrong. Taxes paid to the state and local governments through property taxes has gone down by $1.6 billion.
http://bridgemi.com/2011/11/1-6-bill...rty-tax-bills/
Thousands of fewer government sector jobs and billions in reduction in taxes and little evidence that has resulted in an economic benefit to the state. Conservative economic theory never survives its first encounter with the real world.

Or maybe things do go better w/ Coke, oops, I mean 'conservative economic theory'...

As it does every January, Atlas Van Lines reviews data on the origins and destinations of interstate moves during the last 12 months. The 2011 Migration Patterns study results provide a snapshot of relocation patterns, showing an overall increase in the number of moves over last year.
Southwestern and Mid-Atlantic coastal states were popular destinations in 2011. The Midwest continues to lose residents, but Michigan became a balanced state after six consecutive years of steady outbound moves. For the sixth year in a row, Washington, D.C. had the highest percentage of inbound moves, while Ohio came out the clear leader in the highest percentage of outbound moves.

[[link: http://www.atlasvanlines.com/migration-patterns/ )

[Cincinnati_Kid]

I sure hope he's a one term Governor. He's doesn't give a rats _ss about working people, only big business and the wealthy, like all the other GOP's.

[Novine]

" The Midwest continues to lose residents, but Michigan became a balanced state after six consecutive years of steady outbound moves. "

Good - you can tell us what economic policy that was adopted by the state that took effect in 2011 that would account for individuals deciding to move back to Michigan. Let's see if you can find anything,

[Wesley Mouch]

" The Midwest continues to lose residents, but Michigan became a balanced state after six consecutive years of steady outbound moves. "

Good - you can tell us what economic policy that was adopted by the state that took effect in 2011 that would account for individuals deciding to move back to Michigan. Let's see if you can find anything,

Not a believer in 'simple solutions'. No single 'economic policy' is/was responsible.

Some federal stimulus supporting us, extended unemployment benefits, reductions in government spending increasing efficiency and keeping property tax rates from going up too much... and of course the biggest thing is auto industry bailout.

[RO_Resident]

As to the government jobs not being real -- well, they're not. What I think you're missing here is the idea of productivity. While much government work is critical, useful, and necessary -- it is an overhead cost to our economy. Real jobs are private sector jobs who do something, make something [[Ford), or help others make something [[UAW, Johnson Controls, Detroit Edison) that the world needs to make it a better place, or dig something out of the ground of value [[coal, uranium). That's what brings investment in the US.

<snip>

Now of course there are useful and necessary functions of government. And with all the cuts, government efficiency is no doubt going up.

Just a thought experiment:

Q1) Community A is running short of money. They have a waste disposal unit with 15 people performing duties. They decide to privatize waste pickup. In the end, 10 people form a new company Purple Truck LLC. Their only work is an exclusive contract/concession to collect trash in Community A. What is the net number of jobs in the community?
a) +10
b) 0
c) -5
d) other

Q2) Same scenario in Community B. However, the 10 people at Gold Truck LLC have an exclusive concession with the city, but 50% of their business is with the private sector. What is the net number of jobs in the city?
a) +10
b) 0
c) -5
d) other.

[Wesley Mouch]

Just a thought experiment:

Q1) Community A is running short of money. They have a waste disposal unit with 15 people performing duties. They decide to privatize waste pickup. In the end, 10 people form a new company Purple Truck LLC. Their only work is an exclusive contract/concession to collect trash in Community A. What is the net number of jobs in the community?
a) +10
b) 0
c) -5
d) other

c.

Q2) Same scenario in Community B. However, the 10 people at Gold Truck LLC have an exclusive concession with the city, but 50% of their business is with the private sector. What is the net number of jobs in the city?
a) +10
b) 0
c) -5
d) other.

d. => 10

Good questions. At the end of the day, we all know that there's not much difference between civic and private jobs, to the employee. They get a check [[let's not debate size thereof) and benefits [[let's not debate size thereof).

But for purposes of 'job creation' statistics, we're better served when we don't count government jobs.

Yeah, its misleading in some cases. But in the big picture, better for government not to count jobs created by government.

Good post.

[Novine]

"Some federal stimulus supporting us, extended unemployment benefits, reductions in government spending increasing efficiency and keeping property tax rates from going up too much... and of course the biggest thing is auto industry bailout."

Look at all those conservative economic measures put in place that helped Michigan turn around its economy.

[Wesley Mouch]

"Some federal stimulus supporting us, extended unemployment benefits, reductions in government spending increasing efficiency and keeping property tax rates from going up too much... and of course the biggest thing is auto industry bailout."

Look at all those conservative economic measures put in place that helped Michigan turn around its economy.

Things are often best when you have balance.