For those pushing austerity as the solution to America’s economic ills, here’s a reality check: According to a new study, austerity policies have cost the U.S. roughly 2.2 million jobs.
In the 46 months since the recession ended, federal, state and local governments have cut approximately half a million jobs, a study by Michael Greenstone and Adam Looney at the Brookings Institution found. After other recessions since 1970, the government typically hired about 1.7 million workers.
Reports such as this one show that it’s high time our elected officials started listening to the wisdom of economists like Nobel Prize winner Paul Krugman, who for months has been consistently warning us about the dangers of austerity. And once again, he’s been proved right.
The Huffington Post:
Given the size of the U.S. labor force, an extra 2.2 million jobs would mean the U.S. unemployment rate would be about 6.1 percent, instead of 7.5 percent. That would be below the 6.5 percent rate the Federal Reserve is targeting with its extraordinary bond-buying program known as quantitative easing. Worried about Fed-fueled financial bubbles? Thank austerity. In fact, the Fed recently called out tight fiscal policy in explaining why it’s keeping the economy’s gas pedal floored.
That 2.2 million jobs would also get the U.S. job market back to its peak level of employment, set in January 2008, in the early months of the recession. Right now, we’re about 2.6 million jobs shy of that peak, making this the slowest job-market recovery since World War II. The government has not helped at all—in fact, it has pulled in the other direction, firing people when it should be hiring.
That 2.2 million jobs would also help close another wide disconnect: Employers aren’t firing people any more, but they’re only barely hiring, leaving the economy about 4 million jobs short of where it should be, given current levels of unemployment benefits.