Fifty Little Hoovers – Not

Much has been made of the fact that state and local governments were blunting the impact of federal stimulus by raising taxes and cutting employment. Paul Krugman refers to them as “fifty little Hoovers.” Well, a report in the New York Times at least partially refutes this meme.

From the Times:

While the private sector has shed 6.9 million jobs since the beginning of the recession, state and local governments have expanded their payrolls and added 110,000 jobs, according to a report issued Thursday by the Nelson A. Rockefeller Institute of Government.

The report, based on an analysis of federal jobs data, found that state and local governments steadily added jobs for eight months after the recession began in December 2007, with their employment peaking last August. State and local governments have since lost 55,000 jobs, but from the beginning of the recession through last month they gained a net of 110,000 jobs, the report found, in part because of the federal stimulus program.

Government jobs are always more stable than private sector jobs during downturns, but their ability to weather the current deep recession startled Donald J. Boyd, the senior fellow at the institute who wrote the report.

“I am a little surprised at the fact that state and local government has remained as stable as it has in the nation as a whole, given the depth of the current recession,” Mr. Boyd said in an interview.

The article points out that there is considerable geographic disparity with regard to government employment. Arizona for example has cut deeply while Idaho’s government payroll has increased. Additionally, it is likely that more cuts in governments’ payrolls will ensue barring a quick turn around in the economy.

Nevertheless, it’s another great example of the shooting from the hip that has gone on as pundits and politicians advance all manner of plans and prescriptions for getting out of this recession. Maybe the best road is just to keep it short and simple. Get money into peoples’ hands and stand back and let the economy work through its problems as it has countless times before.

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