500,000 Layoffs Coming, Officials Warn

Half a million local public workers across the country could lose their jobs without legislation to support city and county services, a report issued (pdf) by groups of local officials said this week.

New survey research announced today shows that local governments are now facing a fiscal crisis that will force job losses approaching 500,000 and significant cuts in much needed public services. Representatives from the National League of Cities (NLC), United States Conference of Mayors (USCM) and the National Association of Counties (NACo) jointly released the survey results at a press conference on Capitol Hill earlier today and were joined by several members of Congress offering their support to cities and counties during these difficult economic times.

“For local governments, unemployment and foreclosures resulting from the Great Recession translate into too few revenues making it increasingly difficult to fund or satisfactorily maintain many basic services — not only parks, libraries, and public works projects but also public safety, police and fire services,” said Ron Loveridge, NLC President, Mayor of Riverside, California.

Loveridge continued, “Cities are not only the engines of their local communities, they are also the backbone of their regional economies, where investments in infrastructure and services provide a platform for private sector investment and growth. And cities are the wealth of nations. We are where economic recovery must take place… we are where jobs are increased, or more commonly lately, are lost. We must change that equation.”

The groups renewed their call for Congress to pass the Local Jobs for America Act. The bill would help local governments save as many as half a million public service jobs and fund an additional half million new local jobs for two years. First introduced last spring by Rep. George Miller (D-CA), the bill now has 163 House co-sponsors. In the Senate it is being sponsored by Senators Sherrod Brown (D-OH), Al Franken (D-MN) and Mark Begich (D-AK).

Mayors_Local_Jobs

At a press conference led by Philadelphia Mayor Michael Nutter, representing the U.S. Conference of Mayors, the groups also warned of the domino-like impact of widespread local service layoffs, saying that every public sector job lost can result in an equal number of local private business layoffs. Mayor Nutter was joined by several early co-sponsors of the Local Jobs for America Act, including (left to right) Rep. Keith Ellison (D-MN), Rep. Lynn Woolsey (D-CA), Rep. Barbara Lee (D-CA) and Rep. Jan Schakowsky (D-IL).

The Jobs for America Now coalition, which includes Working America, the AFL-CIO and more than sixty other national organizations, will be organizing support for the legislation during the August Congressional recess.

The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.

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Unemployed and Online

Working America’s Robert Fox was quoted in an excellent Washington Independent article about efforts to organize unemployed workers online (including, of course, our Unemployment Lifeline). And that article was followed by an appearance by its author, Annie Lowrey, on the Rachel Maddow Show:

Visit msnbc.com for breaking news, world news, and news about the economy

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Ending Bush’s Tax Cuts for the Rich

The 2001 and 2003 Bush tax cuts, which were passed under reconciliation by Republicans so they only needed 51 votes in the Senate, benefited wealthier Americans the most. Those tax cuts for the wealthy had little stimulative effect on the economy, turned federal budget surpluses into deficits and exacerbated the income inequality between the top 2 percent and everybody else.

All the Bush tax cuts are now set to expire next year. While there is widespread support for extending those cuts directed at helping lower-income and middle-class Americans, the debate is on over the tax cuts for those at the top of the income scale.

Now, a leading economist and former Federal Reserve Board vice chairman, Alan S. Blinder, wants to end of the Bush tax cuts for the wealthy and direct the huge budget savings toward programs including extended unemployment insurance, fiscal aid to states and job-creation programs.

Blinder, an economics professor at Princeton, penned a recent Op-Ed on the subject in the Wall Street Journal.

Apparently unbothered by the consistency hobgoblin, some of the Republican deficit hawks also want to make the 2001-2003 Bush tax cuts permanent, rather than letting them expire on schedule at the end of this year. Yet their major argument is classic Keynesian thinking: Letting tax cuts expire is tantamount to raising taxes—which is the opposite of what you want to do when the economy is weak. A few days ago, Sen. Jon Kyl (R., Ariz.) even went so far as to declare it OK to raise the deficit to finance tax cuts, but not to pay unemployment benefits.

Blinder’s preference?

Let the upper-income tax cuts expire on schedule at year end. That would save the government an estimated $75 billion over the next two years. However, it would also diminish aggregate demand a bit. So, instead of using the $75 billion to reduce the deficit, spend it on unemployment benefits, food stamps and the like for two years. That would surely put more spending into the economy than the tax hike takes out, thus creating jobs.

How much more? Getting a numerical estimate requires the use of a quantitative model of the U.S. economy. In recent testimony before the House Budget Committee, Mark Zandi of Moody’s Analytics used his model to estimate that extending unemployment insurance benefits has almost five times as much “bang for the buck” as making the Bush tax cuts permanent.

Based on his estimates, the budgetary trade I just recommended would add almost $100 billion to aggregate demand over the next two years—without adding a dime to the deficit. That translates to about 500,000 more jobs each year.

Blinder reiterated those assessments Wednesday, and indeed went even further, saying he thought at the time that the Bush tax cuts for upper income Americans were like “piling on” — worsening the effects of income inequality. On a conference call with reporters, Blinder said of the tax cuts for the rich “it would have been better if they hadn’t been enacted.”
Letting the top income tax cuts expire, he said, would allow us to use the additional funds for things that would stimulate the economy more directly, such as unemployment insurance, food stamps and jobs programs, while also lowering deficits long-term.

“Not all budgetary dollars are created equal,” Blinder said. “Some have a bigger bang for the buck.” He estimates the stimulative effects on GDP of a dollar used for unemployment benefits or food stamps to be $1.60 to $1.70, while all the Bush tax cuts would account for about half that much — and far less for just the tax cuts for the wealthy.

Blinder and Mark Zandi of Moody Analytics also released a detailed study this week which estimated that without the combination of monetary and fiscal stimulus measures taken since late 2008, job losses would have exceeded 16 million, more than twice the 8 million lost in the recession.

Still, Blinder said the economy is currently weak enough to require additional fiscal and monetary stimulus. That’s the context for him urging the end of the Bush tax cuts for individuals making more than $200,000 and couples making more than $250,000 a year — and directing the first two years of new revenues to programs like unemployment insurance, food stamps and state aid.

I asked Professor Blinder if he thought the private sector needs a public jobs stimulus. “Absolutely,” he replied, saying he favors creating a temporary “WPA-type public jobs program,” one which he said would also “kick start the private sector hiring process.”

Yesterday’s conference call was organized by the Center on Budget and Policy Priorities which has also urged an end to the Bush tax cuts for the wealthy, estimating that would free up nearly $90 billion in the first two years.

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The View from Main Street

Municipal employee layoffs continue around the nation.

In Rochester, NY 116 teachers are getting laid off, at a time when they’d be thinking about going back to work:

Among the layoffs were 9 music teachers, 9 physical education teachers and 9 art teachers. Teachers union president Adam Urbanski said those subjects are not mandated in the primary grades to be taught by certified teachers.

“It’s really a huge, huge blow to education in city schools if music teachers, phys ed teachers, art teachers are eliminated or reduced in the elementary grades,” said Urbanski.

In Yonkers, NY the curious decision has been made to lay off more teachers rather than cut the fall sports program:

After eliminating more than 10 percent of its staff, the district will cut deeper to save high school sports in the fall.

A $43 million shortfall that forced the district to shed staff and programs threatened an elimination of the district’s interscholastic sports, but public objections caused officials to reverse course, at least until the winter sports season.

Yonkers Schools Superintendent Bernard Pierorazio said the reversal would require other sacrifices.

“We will continue with at least the fall sports program. Not to dash the dreams of our young people, so they can compete and continue the camaraderie on and off the athletic field, but it will come at a price,” Pierorazio said.

In the Lenape School District of New Jersey, some jobs were saved:

Despite issuing pink slips to more than 400 employees after its proposed budget was defeated in April, the Lenape Regional High School District laid off only about one-fourth that amount.

The change came after the state education commissioner decided at the end of June on a $138 million 2010-11 budget for the district.

The budget — about $3 million less than last year’s spending plan — includes no teacher layoffs, although it does cut 24 positions through attrition.

In Lynwood, WA the city faces a $21 million budget gap in 2011. The biggest part of the budget is public safety.

In short, there’s a projected gap of about $9 million between the amount of money the police department needs and what’s expected to be available in 2011-12. That number represents about 25 percent of the police department’s share of the two-year budget.

Those projections are sending shockwaves through City Hall.

As many as 23 police department jobs may be cut, including the sole animal control officer, patrol officers, office support staff and more, said Mark Brinkman, president of the Lynnwood Police Guild, which represents the lion’s share of the department’s employees. Cuts of that magnitude “would decimate the department,” Brinkman said.

In the city’s budget has been steadily decreasing for the last 4 years. The finance director expects another $1.5 million budget cut. Voters will be asked to approve an increase in the income tax rate, or a number of city employees will have to be laid off:

Sengstock projects that 43 of the city’s 169 employees would need to be laid off to balance the books at the end of 2011. That includes half the police force, half the fire department and half the service department.

Of course cities and towns aren’t the only ones feeling the budget pinch. A new, rather ominous trend is hospital layoffs.

In Plymouth, MA:

Jordan Hospital has notified 15 veteran employees that their medical transcription jobs will be eliminated next month.

Jeff Hall, spokesman for Local 1199 Service Employees International Union, said the medical recordkeeping jobs are being outsourced to a New Jersey-based company that provides medical transcription services.

The 15 employees were notified of the layoffs last week and will lose their jobs Aug. 14.

oops

News of the layoffs comes just days after South Shore Hospital in Weymouth announced a security breach that resulted in the loss of medical records for up to 800,000 patients and staff. South Shore Hospital has refused to identify the data management company involved in the loss of its records.

Hall said Jordan Hospital cited South Shore’s success in outsourcing medical recordkeeping in proposing the cutbacks last week.

In Hartford, CT:

St. Francis Hospital and Medical Center will lay off about 200 employees in late August, as a shortfall in reimbursements for Medicare and Medicaid and a “modest decline” in patients exacerbates an already tight financial picture, the hospital’s chief executive said.

and

St. Francis, with 572 beds, had a deficit of $31.7 million, or 5.6 percent of its total revenue, in the year ending June 30, 2008, according to a state report. That year, the cost of care that the hospital provided without receiving payment grew from $12.5 million to $15 million. But in fiscal year 2009, St. Francis was in the black, with a 1.8 percent margin, the state Office of Health Care Access reported.

In 2009, as investments recovered and as hospitals slowed the pace of spending, in part by reducing staff through attrition and layoffs, more of the state’s 30 acute-care hospitals were in the black. Sixteen had higher surpluses or profits than St. Francis in fiscal year 2009, and 13 had worse financial performance. A report for the most recent fiscal year is not yet available.

It sounds like they’re downsizing in order to continue to turn a profit.

One extremely important point:

Health care union representatives said that St. Francis has no unionized employees.

In Ashland, KY:

A union official indicated that 85 people were terminated and 150 others reduced to part time status. The cutbacks took effect immediately.

From the statement made by the hospital:

The economic recession has hit our region hard and is lasting longer than anyone expected. KDMC has weathered the economic downturn for two years by minimizing capital expenditures, changing benefits, renegotiating contracts and changing flow processes whenever possible to improve efficiency. However, the harsh reality is that patients are delaying their own healthcare and often those who are receiving the needed care cannot pay forit. Unreimbursed care and bad debt are at an all-time high for our organization — approaching the $100 million mark this year, which is a 33 percent increase over just a year ago. This is a $25 million dollar difference in one year. Cost reductions alone cannot compensate for this change in our community and in our country.

That’s a stark illustration of the actual economic realities being faced around the country. We hear a lot about recovery on Wall St. No one lives on Wall St. The folks who live on Main St. have a very different view.

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More Stories of the New Homeless

A while back I wrote about The New Homeless, and took a look at why it is we hear so little about them. In 2009, tent city stories were all the rage. In 2010, the most visible tent cities have been broken up and residents dispersed by the town fathers. As the numbers of homeless families increase, the media coverage decreases. A little digging finds a few stories:

In the Las Vegas Sun:

Before the recession, Michelle and her then-boyfriend, John Brower, led a relatively happy life. He worked at a grocery store, she as a waitress and then at the crafts store. She hoped to go back to college.

Like thousands of other residents, the Browers, now married, had lived paycheck to paycheck. They teetered on the brink of homelessness for the better part of a decade. If one of the longtime Las Vegans lost a job, eviction wasn’t far behind.

They wound up living in a tent in a homeless encampment in the desert. Michelle was pregnant.

But getting out of the desert is harder than ever amid the recession, the Browers say. You need to create and print resumes, you need a phone, and you need clean clothes for interviews. Getting all of that lined up takes a lot longer when you have to ride a bus for two hours across town just to shower and the only phone you have is at a friend’s house.

and

In 2009, an estimated 13,350 homeless people were in Clark County, according to county records. That’s 17 percent over 2007 numbers.

Of those, about 6,640 were living on the streets or in the desert.

The National Alliance to End Homelessness says that’s a drop in the bucket. The group says there are 39,760 Nevadans, mostly in Southern Nevada, couch surfing or in families that are “doubling up” in single-family homes to share expenses. It claims Las Vegas has the fourth highest homelessness rate in the country, behind Detroit, New York City and Los Angeles.

Maybe I’m being naive, but shouldn’t nearly 40,000 homeless folks in the southern part of one state be a big news story?

A recent NPR story looked at the phenomenon of homeless college students:

Antonio Sandoval, head of UCLA’s Community Programs Office, says he doesn’t have the exact number of students experiencing the day-to-day hardship of food and shelter because they often keep it hidden.

“It’s very affluent here, it’s Westwood, Bel Air, Beverly Hills,” Sandoval says. “Students who come to UCLA want to fit the norm here, so they’re not going to tell you they’re homeless, or they’re not going to tell you they’re hungry.

Just down the hall from Sandoval’s office is an unmarked door. Inside is a converted utility closet filled with food. There’s a refrigerator stocked with fruit cups, yogurt, juices and milk. Next to the fridge is a pantry.

“It has a lot of soups and main meals you can cook like macaroni and cheese,” explains Abdallah Jadallah, a 22-year-old engineering student.

Jadallah says he got the idea for the food closet after noticing a number of students were going hungry. The food is donated..

As Antonio Sandoval points out – this is at UCLA, which is smack dab in the middle of California affluence. Imagine the stories that aren’t being reported in the other 49 states.

HBO is currently showing a new documentary called Homeless: The Motel Kids of Orange County.

The film takes a look at the lives of families who work hard, but don’t earn enough money to be able to afford housing in one of the wealthiest areas in the nation – and what life is like for children growing up with no fixed address.

Grateful. Honored. Still Angry.

First, let me say how grateful I am to everyone who voted for me to win the award for 2010 CREDO Mobile/Netroots Nation Blog Activist of the Year. A very special thanks to Laura Clawson and Working America for waging such an effective campaign on my behalf.

I’m truly honored — as I have been since first being asked by Laura if I’d like to write and post here on Main Street about a year ago. Prior to that, I had been a relatively obscure blogger, posting as the diarist catchlightning mostly on Daily Kos, perhaps best known for a series I’d written on the jobs crisis, unemployment and the economy in the spring of 2009.

Posting here, alongside Laura and Susan, has really helped to spur me on; and for their inspiration, I’m also grateful.

But what has most motivated my work, as you might expect, has been the need to contribute to the crucial fight to overcome the desperate wrongs that have been done to the lives and livelihoods of decent, hard-working Americans — especially since the onset of the Great Recession. All this suffering is so unnecessary, and so wrong. And among those responsible for causing this disaster, there are precious few who’ve lost their jobs, and certainly not their livelihoods.

I’m still angry.

So Much for the Conventional Wisdom

We keep hearing that when the economy begins to turn around, businesses will start to hire. Well, it ain’t necessarily so:

Motorcycle sales are falling in 2010, as they have for each of the last three years. The company does not expect a turnaround anytime soon.

But despite that drought, Harley’s profits are rising — soaring, in fact. Last week, Harley reported a $71 million profit in the second quarter, more than triple what it earned a year ago.

That’s impressive! But:

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year — more than a fifth of its work force.

and:

Because of high unemployment, management is using its leverage to get more hours out of workers,” said Robert C. Pozen, a senior lecturer at Harvard Business School and the former president of Fidelity Investments. “What’s worrisome is that American business has gotten used to being a lot leaner, and it could take a while before they start hiring again.”

What’s worrisome to me is that businesses may choose to perpetuate high unemployment.

Harley has warned union employees at its Milwaukee factory that it would move production elsewhere in the United States if they did not agree to more flexible work rules and tens of millions in cost-saving measures.

This could be a frightening new US reality – companies holding workers hostage, in exchange for jobs.

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Blog Activist of the Year (Congratulations, Mitchell)

Thanks to all of you who voted for Main Street’s Mitchell Hirsch in the CREDO Mobile/Netroots Nation blogger awards, Mitchell won the “blog activist of the year” category. He’ll get a smartphone and phone service from CREDO, but at least as importantly, he got some well-deserved recognition.

When I asked Mitchell if he’d object to a little campaign on his behalf, I said up front that I thought he was a long shot—not because he wasn’t deserving but because I figured there’d be someone with more connections, more Twitter followers, more blog readers out there who’d be a shoe-in. Apparently I underestimated you all. Thanks again. Your votes contributed to one of the high points of Netroots Nation for me, and I’m not even the one who won!

The Private Sector Needs a Public Jobs Stimulus

What do I mean? Specifically, the U.S. private sector currently needs substantial, publicly-funded direct job-creation programs in order to get private employers to hire again on the scale needed to significantly reduce unemployment and promote a robust economic recovery.

It’s an argument that I don’t think has been made, at least not adequately, to help advance the debate in favor of large-scale stimulus to create jobs.

Part of the problem is the almost religious belief that the private sector, and only the private sector, can be the engine of job creation. As James Kwak wrote recently, in a somewhat different context:

… the belief that the private sector is the answer to all our problems remains deeply rooted. One might even call it an ideology.

And the problem is exacerbated by policy makers who ostensibly grasp the need to do more to boost a weak and faltering economy, but undercut that message with utterances to the effect that ‘we’ve done enough’ and ‘government can only do so much’, as Treasury Secretary Tim Geithner did recently. Now, Mr. Geithner is a smart man, who we’d hope doesn’t believe in magic. And he’s right, of course, that private investment is needed. But the fact is, it’s not happening.

Private businesses don’t hire more workers unless they need to or perceive they need to. And what is it that creates that need? Principally, an increase in demand for goods and services — and labor. There are certainly other important factors as well, including the flow of credit and incentives driven by competition. But none of those elements are working in favor of rates of private sector job growth that are anywhere near what’s needed to bring down unemployment in any meaningful measure.

Under anything approaching normal economic conditions, we could reasonably expect the private sector to generate a sustained growth rate without substantial new public stimulus. But we don’t have anything approaching normal economic conditions. Nearly 15 million workers are officially unemployed; record levels of long-term unemployment; severely depressed demand; huge excesses of productive capacity; reduced competition for goods, services and labor. And, as even conservative economist John Makin of the American Enterprise Institute wrote recently, a banking system that’s dysfunctional in the face of a rising threat of deflation.

In fact, banks have virtually ceased to function as financial intermediaries since 2008, preferring to use the zero cost of money provided by the Fed to finance purchases of Treasury securities instead of supplying loans to households and small businesses. After a financial crisis, banks become much more risk averse, as is manifest in their willingness to lend only to the government instead of to households and businesses.

We’ve been stuck in this kind of economic debacle before, of course, during the Great Depression. And so we know the kinds of things that can be done to rapidly bring down unemployment and generate growth that then leads the private sector into a recovery, that in turn allows fiscal deficits to be reduced.

After lambasting Geithner for what he calls the Treasury Secretary’s “Hoover impersonation”, Harold Evans supplies a worthy analysis and then reminds us:

In the ’30s, Keynes recognized the risks so paralyzing Public Works Administration Chief Harold Ickes, who rightly worried that a quick public works program invited waste, inefficiency, and corruption. (Of the $3.3 billion authorized, Ickes had invested only $110 million in the first year.) With a hard winter coming in 1933-34, Keynes urged Ickes to balance those risks: “He must get across the crevasses before it is dark.”

Given some of Ickes’ money by an impatient FDR, Harry Hopkins pledged that his Civil Works Administration would put 2 million people to work within 10 days and 2 million more by end of two weeks afterward.

Impossible! He had no blueprints, no staff. So he did it. He hired private contractors who built more than 450 airfields, built or improved half a million miles of city streets and feeder roads, scores of miles of sewers, hundreds of parks and swimming pools. Hopkins subsequently took charge of the Works Progress Administration, a rival to Ickes agency, with a then-massive budget of $5 billion.

His energy and vision left an enduring legacy—650 miles of roads, 78,000 bridges including the mammoth bridges spanning the San Francisco Bay, the Florida Keys, and New York’s East and Harlem Rivers, a host of levees, floodways and dams to harness the Mississippi, the Hoover Dam, the massive Grand Coulee and Bonneville Dams, the electrified Penn railroad, some 40,000 new schools and 2,500 new hospitals. There is not a city in the United States that does not have a landmark of those years.

Altogether Hopkins created more than 8 million jobs; the equivalent today would be more than 20 million jobs.

Large-scale public investments that directly create jobs — and lots of them — are what is needed now to generate the increased demand for goods, services and labor that will stimulate private sector growth, investment and employment.

The private sector needs a public jobs stimulus.

I’ll be coming back to this point from different angles in upcoming posts. But for now we need to ask: without it, what will happen? Paul Krugman warns of permanently high unemployment. His post, which is brief and worth reading in its entirety, concludes:

The point is that while policy makers may think they’re being prudent and appropriately cautious in their responses to unemployment, there’s a good chance that they’re prudenting and cautiousing us into a long-term jobs catastrophe.

The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year

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140 Characters Can Say a Lot

Ezra Klein tweets:

Tell me again about the public sector employees and their outrageous pensions.

The link in his tweet? That goes here:

How do you retire at 53 years old with an annual pension of nearly $1 million? Become the head of a giant global oil company, and then allow it to spill millions of gallons of oil into the ocean, which forces your early resignation. BP Chief Tony Hayward, expected to step down this fall, is set to receive a huge pension as a part of his golden parachute.