What Employment Rates Might Look Like if the Government Hadn't Cut Jobs

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Here's a little lesson on austerity measures. The unemployment rate -- the economic indicator President Obama's most maligned for -- might be a lot lower had the president been allowed to keep government payrolls up like he wanted to.

The Wall Street Journal's Justin Lahart asked a good question the other day: All other things being equal, what would the unemployment rate look like if the government employed the same number of people it did in December 2008, a month before Obama's inauguration? Remember, following the 2008 financial crisis, government, especially state and local governments, began slashing government payrolls to keep budgets in check. His conclusion: the rate would be 7.1 percent, instead of the current 8.1 percent. We've reproduced Lahart's findings above.

Of course, a full percentage point is gigantic in unemployment land. At the current employment rate, for example, 1 percent is about 1.5 million workers. But the 586,000 government jobs shed since Obama took office can't just be tacked onto the economy without corollary effects. "If there were more government jobs now, for example, it’s likely that not as many people would have left the labor force, and so the actual unemployment rate would be north of 7.1%," writes Lahart. TPM's Brian Beutler offers a classic Keynesian follow up, noting that had all those former government employees been employed, they'd be injecting more money into the economy when they spent their salaries. (Republicans, of course, would retort that we can't indebt ourselves to recovery.)

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So, it's impossible to know what the exact net effect would be, though the little Keynes in us tell us, like so many pundits have by this point, that the stimulus wasn't large enough to properly kickstart the recovery. We'll just end by noting one thing. Give Obama some credit for trying. Despite successfully squeezing in one jobs bills in 2010 with a friendly Congress, his latest jobs bill -- aimed keeping teachers, police officers, and firefighters at work -- met its painful death at the hands of legislators in 2011.

This article is from the archive of our partner The Wire.