Michael Spitzer-Rubenstein

In recent days, New York Governor Andrew Cuomo announced his intent to layoff almost 3,500 public employees. While the layoffs may not go through if Cuomo convinces the Public Employees Federation to accept pay cuts and higher healthcare costs, the threat is part of a broader trend of government layoffs. Across the country, federal, state and local governments are laying off thousands of workers in their pursuit of reducing budgetary deficits. As a result, more than half a million Americans have lost their jobs in government since 2008, adding to the already swelling unemployment figures.

This loss of public sector jobs comes at an especially critical time with 14 million Americans officially unemployed and more than 16 percent of Americans want a full-time job but can’t get one. Private sector jobs remain scarce with employers hiring just 1.8 million people since September 2010, according to seasonally adjusted data from the Bureau of Labor Statistics. But close to 300,000 public sector jobs disappeared over the last year, or one sixth the number of new private sector jobs.

Political leaders insist that they simply can’t afford to pay workers. While pundits and politicians in Washington argue about the right level of deficit spending, state and local governments generally cannot run deficits. They don’t have the option of just raising the debt ceiling, and so must choose between cutting jobs and raising revenue. Governor Cuomo has rejected raising more revenue, arguing: “The working families of New York cannot afford tax increases.”

It’s important that we stop and consider what the impact of cutting public sector jobs in a time of painfully high unemployment will be. Even the IMF, an organization notorious for imposing austerity measures on struggling economies, now says that cuts are the wrong move in this period of perilous economic recovery. According to their report, deficit reduction results in higher unemployment and lower incomes for the subsequent two years. Indeed, the harm is not just for the subsequent two years; long-term unemployment remains above average for five years. The spending cuts also diminish wages far more than they affect investment profits. As a result, the IMF recommended that the US, specifically, should work more to create jobs, rather than reducing employment in the name of deficit reduction.

Unfortunately, the opposite seems more likely to actually happen, and the consequences are dire. Layoffs create a vicious cycle, depriving people of jobs and as a result further slowing economic growth. When one person loses their job, they have to cut back on other things, such as going out to eat at restaurants. That means restaurants have less money and must lay off workers, who in turn have less money to spend creating jobs. At the same time, the lack of business means lower tax revenue for government, which must either lay workers off or simply put off hiring people. Layoffs make a bad economy worse.

And unlike Greece, it is not like states are completely out of money. They still have choices. New York State is choosing to give money away to large corporations, rather than to keep workers. The testing company Pearson Education will receive at least $13.5 million and potentially as much as $50 million to move 628 jobs to Lower Manhattan. t the high-end, Pearson might receive about $80,000 per job, for jobs that are estimated to pay $72,000 a year. By contrast, Cuomo hoped to save $80 million this year and $160 million for the subsequent four years by laying off government employees. For just a little bit more money, Cuomo could create thousands more jobs. But instead, it seems like he and other politicians are going in the opposite direction, reducing jobs at the most inopportune time.