Morning Must Reads: Imaginary and Real Threats to Employment Growth

Senator Mike Folmer of Lebanon County has an op-ed in The Patriot-News this morning arguing that unemployment insurance in Pennsylvania is costing the commonwealth jobs.

In fact, if it were not for the unemployment insurance system helping to maintain working families' buying power, joblessness in Pennsylvania would be significantly worse.

In the Senator's Lebanon County, for example, the unemployment rate climbed from 3.8% in December 2007 to just over 7% by the end of 2009. Over that period, transfers (which include unemployment insurance payments) climbed from 17% to 20% of personal income in Lebanon County. In the absence of unemployment insurance income, thousands of Lebanon County residents would have had to reduce their spending further, which would have rippled across the community as another round of layoffs.

The 6.7% unemployment rate in Lebanon County means that the people who lose their jobs each month through no fault of their own face a long queue of people already applying for jobs. With competition for jobs fierce, it takes on average much longer to find a job, and that makes unemployment insurance a vital source of income in these tough times.

What's really endangering jobs in Pennsylvania? As we explained last week, between September 2009 and September 2010, the commonwealth ranked fourth among the states in the number of jobs created and seventh by job growth percentage. But between April and September 2011, Pennsylvania’s job growth ranking slipped to the bottom 10 states.

What happened?

As federal Recovery Act dollars dried up and the national economy slowed over the spring and summer, the state Legislature gave the state another kick while it was down by sharply slashing spending on education and other essential services. As a result, the public sector in Pennsylvania began shedding jobs, adding yet more people to the unemployment lines.

In sum, the real threat to job growth in the Commonwealth is spending cuts — austerity economics — at the national and state level. The last thing in the world we need on top of current cuts is more cuts in unemployment benefits.

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