Morning Must Reads: Public-sector Job Losses

Good Wednesday morning. Here is your economic news roundup. 

The article focuses on the loss of 600 public sector jobs in the Harrisburg-Carlisle metropolitan area in August, contributing to a rise in the unemployment rate to 7.8%. Since one-month changes in employment are not reliable indicators of employment trends, especially at the metro level, a question exists about whether there is a longer-term trend of public-sector job losses driving down the area's economy. We took a look and the answer is yes, trends in public sector employment are now hurting this region's economy. Below are the details.

To identify longer-term trends in metro areas, economists compute an average of employment over a period of months and then see how this average changes over time. An average over 12 months is reliable and also has the benefit of removing seasonability from the data. The chart below shows a 12-month average of public-sector employment in the Harrisburg-Carlisle region over the past five-and-a-half years. The bottom line: since 2009 the region has shed just over 1,300 jobs in the public sector. We have yet to see the full impact of state budget cuts on local public employment, so more losses are to come.

Interesting contrast between Williamsport and Reading.

Like Fed Chairman Ben S. Bernanke, [Federal Reserve Bank of Dallas President Richard] Fisher called on Congress and the White House to do more to stimulate economic growth.

Fisher is correct that action by the Federal Reserve alone is not enough. We need an aggressive expansion of government spending to jump start employment growth. Philadelphia Federal Reserve President Charles Plosser has yet to explain his vote against further action by the Federal Reserve. 

'People are coping with less income,' said Josh Bivens, an economist at the Economic Policy Institute. Mr. Bivens noted that recent reductions in spending have accompanied reductions in incomes as wages and the hours worked have fallen. The average income for a household has gone from $63,563 in 2008 to $62,857 in 2009 and then down to $62,481 in 2010. A larger share of average household incomes has gone to health care, spending on which rose by 5 percent from 2008 to 2009 and another 1 percent to 2010. Health care spending now takes up $3,157 of household income, with the largest share of that, $1,831, being spent for insurance.

A study released on Tuesday by the Kaiser Family Foundation, a research group, showed that the average annual premium for family coverage through an employer reached $15,073 in 2011 — 9 percent higher than in the previous year. You can read the study here.

Democrats in the Pennsylvania Senate rolled out a revised plan to create jobs on Monday, reacting to a rise in the state's unemployment rate from 7.8 percent to 8.2 percent between July and August. Senate Democrats said their 'PA Works Now' plan would devote money to water and sewer projects, establish a new on-the-job worker training program and tap into $80 million from a proposed tax on Marcellus Shale natural gas extraction.

Good to see somebody in Harrisburg focused on jobs.

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