iOS app Android app More

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors
Beth Kobliner

GET UPDATES FROM Beth Kobliner

Budget Cuts Mean Job Cuts

Posted: 08/04/11 06:16 PM ET

Finally! The debt ceiling drama is over and we can all breathe a big sigh of... Wait a second. It's certainly not a sigh of relief that you're hearing from Wall Street. Because as we all now know, in the end, this was probably not the right time for spending cuts, but instead, we should have been focusing on getting our economy up and running.

And it seems like most Americans felt that way. Although the media was distracted by the Boehner Budget Show, most average folks had their priorities straight: Let's get people jobs. A Gallup poll found that twice as many Americans felt unemployment was a more important problem facing the country than the federal deficit.

Now that the Republicans, having been sandbagged by the Tea Party, have forced Congress and the president to cut $900 billion in U.S. spending over the next 10 years, plus devise a plan to cut $1.5 trillion more, there will be a different kind of focus on jobs -- that is, on cutting them. Official unemployment numbers for July will be out on Friday, and you can bet your beleaguered bottom dollar that the numbers won't look good.

In truth, the unemployment figures were on an upward track before the spending-cuts train left the station. Last month, the Labor Department announced that the unemployment rate in June was 9.2 percent -- the highest in 2011. And that doesn't even include people who have given up looking for a job or those who are underemployed. If you add them, the rate is closer to 16.2 percent. Ouch.

But with the new massive cuts, get ready for layoffs for government workers -- as well as at private companies and state and local services that rely on federal funding.

And to make matters worse, the budget package doesn't extend unemployment benefits to the full 99 weeks, which had been on the table before the debt-ceiling stalemate. That's a big bummer to American families who have had to cope with extended bouts of joblessness during this tough economic period. Women and minorities have already been suffering: From June 2009 to May 2011, women shed 218,000 jobs while men racked up 768,000, and June's unemployment rate was 16 percent for blacks and nearly 12 percent for Hispanics, compared to 8 percent for whites.

No one right now -- not the Tea Party, not Paul Krugman of The New York Times (who has been writing passionately and thoughtfully on this) -- knows with certainty how our unemployment problem will shake out. But for savvy job-seekers, there are certain hiring trends worth noting:

  • If you're willing to flip burgers, the jobs are there. A new report from the National Employment Law Project found that 60 percent of all jobs lost during the recession were mid-wage, meaning those which paid as much as $21 per hour, such as bookkeepers, kindergarten teachers, and food-service managers. By contrast, a higher portion of the jobs created during our recovery -- 73 percent -- have been lower-wage occupations paying less than $14 per hour, like cashiers, stocking clerks, and food-prep workers. So if you have to support your family, expect to work more hours at lower pay. Not good news.
  • If you're able to go green, you might get a leg up. Businesses like to gripe about how the EPA has some teeth, complaining that it costs them money. But besides making our air and water cleaner, government spending toward such efforts can create jobs. Take Obama's Fuel Efficiency Standards that were released last week -- requiring cars to get 54.5 miles per gallon by 2025. It is expected to require new innovations and technologies and create some high-quality green jobs. A June 2011 report from industry research group IBISWorld found that the number of jobs particularly focused on manufacturing sustainable building materials is expected to grow 19.3 percent by 2016.

    For now, according to an MSNBC report, green jobs are everywhere. And by everywhere, I mean places like Little Rock, Arkansas, where companies such as LM Wind Power thrive (the mayor, Mark Stodola, hopes to make it "the greenest city in the South"); or Albany, New York, where GE employees focus on wind power, renewable energy, battery technology, and much more. One great example is Knoxville, Tennessee where nearly one in every 20 jobs is considered green. The biggest source of these jobs is Oak Ridge National Laboratory, which researches how to develop alternative energy sources.

    But there there's a catch: Many green initiatives rely on federal grants. If those grants are cut, the jobs will be, too. According to a spokesperson at Oak Ridge, they're funded by the U.S. Department of Energy through 2011. But because science funding is discretionary, the lab could see its funding cut in 2012, which could affect their 4,600 employees. That's not good news, either.

  • If you're what I've dubbed the "light blue" collar, there are jobs. Wired magazine called them "smart jobs," in a series of fantastic articles that they did in collaboration with NPR's Planet Money. These are middle-class jobs for which a doctorate and sometimes even a four-year degree aren't required. Examples include technicians, analysts, and programmers in labs, manufacturing, information technology, and chemical engineering.

    These positions are not in trendy places like New York and Silicon Valley, but smaller locales that are growing, like Reading, Pennsylvania (electrical equipment); Provo, Utah (programming); and Fort Collins, Colorado (automotive clean energy).

    A young woman in my office from Reading confirms Wired's assessment: Her hometown is all about batteries, these days. In 2009, as part of the Recovery Act, the U.S. Department of Energy awarded East Penn Manufacturing a $32.5 million grant to produce a new type of battery for hybrid electric cars, which has added 150 new manufacturing jobs, so far. Prior to the Recovery Act, which contributed $2.4 billion to battery technology research, only 2 percent of vehicle batteries were made in the U.S. -- now it's 20 percent! If we halt that type of spending, it's not difficult to predict what will happen. Not only will there be job cuts, but small towns -- and our nation as a whole -- will lose future growth opportunities. Bottom line here: A smart job is only smart if it's funded.

  • If teaching or healthcare is your calling, there might be jobs. A projected increase in student enrollment at all grade levels will create demand for jobs in education, reports the Bureau of Labor Statistics (BLS). In fact, the number of teaching positions in public and private schools is expected to grow by 12 percent, adding 1.7 million new jobs through 2018. And yet here, too, spending cuts have been devastating, particularly to young teachers without seniority.

    Healthcare has a similar story: As Baby Boomers age and life expectancy increases, more people will need medical care. For this reason, the BLS predicts that one in four of all new jobs in our country (about four million positions) will be in the healthcare and social assistance industries by 2018. They will include physician's assistants and dental hygienists (both low-cost alternatives to seeing a doctor or dentist). Occupational therapists and physical therapists will also find more opportunities, but patients could see reduced state reimbursements for seeing them, if states are forced to make cuts.


And lest you think the answer is to go to grad school, get this: The budget bill eliminates subsidized grad student loans! Which means that anyone wanting to get more education to get a better job will have to go that much deeper into debt to do so. Right now, the average graduate student is carrying $40,000 in student loans. So while the U.S. has not defaulted on the full faith and credit of its promise, let's hope our leaders' promise to get the economy moving with more jobs will come to fruition for more people soon.


Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller "Get a Financial Life: Personal Finance in Your Twenties and Thirties," and a member of the President's Advisory Council on Financial Capability. Visit her at bethkobliner.com, follow her on Twitter, and fan her on Facebook.