Washington, D.C. — While the government shutdown postponed today’s release of the September unemployment data, a new analysis by the Center for American Progress demonstrates what today’s jobs report from the Department of Labor could have looked like if federal and state governments had not implemented policies of fiscal austerity.
“According to our analysis, if the Tea Party had not hijacked our nation’s economic debate, we would now be experiencing full economic recovery and strong job gains,” said Tom Perriello, President and CEO of the Center for American Progress Action Fund. “Instead, today we can’t even get the new job-market data for September because the Tea Party has shut down the government, but we do know that the cost of this extreme agenda and tactic has been American jobs and growth.”
According to the analysis, if we could turn back the clock and prevent the United States from experiencing three years of fiscal austerity, including sharp cuts to public services and investments as well as tax cuts for America’s wealthiest people, today’s jobs report would likely be telling us that:
- U.S. employers added more than 260,000 jobs in September.
- The unemployment rate for September fell below 6 percent.
- Since December 2010, the U.S. economy has added more than 8.2 million new jobs—or 2.4 million more than have actually been added.
Outcomes of this magnitude would not have required extraordinary rates of government expenditure; the estimates only suppose that government expenditures remained at constant pre-Recovery Act levels, or 36 percent of potential economic output. From January 2011 to the present, rather than contracting by $140 billion, government expenditures would have grown by $300 billion, proportional to the size of the U.S. economy. Applying standard fiscal multipliers—estimates of how much economic activity is generated by a dollar of public spending, about $2 for each dollar of spending—shows that the U.S. economy would be growing at an average of 3.3 percent a year, rather than 1.9 percent since 2010.
Admittedly, these output and employment counterfactuals are rough approximations of the scale of economic loss produced by fiscal austerity, but they give an idea of how costly that policy has been. This yawning gap in economic growth between our present and imagined anti-austerity worlds would make a striking impact on the U.S. jobs situation as well. Rather than adding 5.7 million jobs from January 2011 to the present, an America without the politics of austerity would have added an estimated 8.2 million new jobs, or another 77,000 jobs every month.
Read the analysis: In a World Without Austerity by Adam Hersh
Listen to the press call detailing the analysis.
To speak with an expert on this issue or for more information, contact Chelsea Kiene at email@example.com or 202.478.5328.