States May Shed Another Million Jobs

03/18/2010 05:12 am ET | Updated May 25, 2011

On the eve of President Barack Obama's White House Summit on Jobs, labor leaders yesterday issued a dire warning: Unless Congress and Obama create a "bold jobs program," state and local governments could shed almost a million jobs next year, further worsening our national unemployment rate.

"The budget crisis that they face is dire," Thea Lee, chief of staff of the labor federation AFL-CIO, told a conference call with journalists.

"If we don't help state and local governments," she said, they will "cut off vital services to people who are struggling at the worst possible moment, whether it's community safety, fire fighting, or health care."

Lee also predicted that they would shed hundreds of thousands of jobs through layoffs. "We cannot afford to have state and local budget cuts undermine the recovery before it gets off the ground," she said.

The nation's unemployment rate already stands at 10.2 percent, it's highest rate in 26 years.

Unemployment is even higher for blacks (15.7 percent) and Hispanics (13.1 percent). The Labor Department says more than one in four teenagers is unemployed.

Obama's jobs summit today will gather top business leaders, union officials, politicians, and economists to provide ideas for jumpstarting the economy and putting people back to work, according to White House press secretary Robert Gibbs.

Unions and liberal lawmakers hope the president will use his jobs forum to get the ball rolling on a second stimulus package that builds on the $787 billion American Recovery and Reinvestment Act (ARRA) he signed in February.

That Recovery Act contained a $53.6 billion State Fiscal Stabilization Fund, which the government reports saved 250,000 education jobs across the country. Other provisions of ARRA helped prevent layoffs of police officers, firefighters and health care workers.

But that money has all been spent and the financial picture of most state and local governments remains grim. So unless Congress ponies up new money, many of those workers whose jobs were saved by the stimulus will have to be let go.

"They are already furloughing a lot of people and laying people off, state aid is going away, sales taxes have been hammered, and income tax in places with high unemployment will continue to decline," said Mark Muro, policy director of the Metropolitan Policy Program of the Brookings Institution.

In addition, Muro said that property tax revenue will likely continue to decline as homes and commercial buildings are re-assessed at lower values.

And, Muro said, local government makes up approximately 11 percent of all employment in urban areas.

As a result, many Democrats in Congress are pushing the White House to implement a wide ranging, federally funded jobs program implemented by local government.

Rep. Keith Ellison, D-Minn., is pushing a $40 billion jobs program, which he says would create "one million full-time jobs."

"These jobs could focus on communities that critically need them and put people back to work," he said. "People are needed to paint and repair schools, community centers, libraries, clean up abandoned and vacant properties, alleviate the blight that's been caused by the foreclosure crisis."

"We need people to help expand our emergency food programs to prevent hunger and promote stability, and of course we need staff at our Head Start and preschool programs," he said. "We have all kinds of jobs that need to be filled and all kinds of people we need to fill them. But we need to pay those people who can get the economy going again."

Financing a new stimulus would likely run into difficulties on Capitol Hill, however.

Robert Borosage, director of the Campaign for America's Future, which organized the conference call, noted the political hurdles. "Speaker [Nancy] Pelosi has pushed hard to get something out of the House before the holiday break, but the Senate is locked into this health care debate and it's hard to imagine them getting anything done before they get freed of that."

That debate will likely stretch into the new year while job losses mount.

Brookings' Muro is more optimistic. He sees a second stimulus by the end of the year -- either in the form of direct federal aid to cities to stave off job losses, or in the form of large amounts of money pumped into transportation and infrastructure projects that would spark additional employment. Another possibility, he said, is a large investment in the Community Development Block Grants program, which would provide federal dollars to local communities across America.

"The tension is going to be between a White House very concerned about fiscal issues and an increasing deficit and Democrats in Congress who are more ready to increase the deficit to respond to the jobs emergency."

Regardless, Muro said, "most forecasters expect unemployment to continue with continued job losses for a number of months -- let alone beginning to make back the millions of jobs that have already been lost."

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This article originally appeared in New America Media.