Public vs. private unemployment

February 14, 2011 

Gov. Rick Scott came out with his budget recommendations this past week and it was met with the gamut of reactions, from skepticism to hurrahs.

I zeroed in on the job numbers sprinkled throughout his proposal. There’s the 700,000 that Scott says he’ll create through his policies during the next seven years and then the 8,700 jobs that will be eliminated in state government through layoffs and attrition.

Scott made job creation a centerpiece in his campaign for governor. His “jobs agenda” has been the cornerstone of his economic recovery plan for the state.

So that made me wonder how eliminating 8,700 jobs could be the right thing to do. I mean, a job is a job, right? The state’s unemployment rate is already 12 percent, so how could eliminating jobs, whether public or private, be the right thing to do?

Scott’s argument is that the jobs elimination will achieve a more responsive, slimmed-down operation. But when he was quoted that putting state workers out of work would only have a “temporary” impact on the state’s high unemployment rate, I wondered.

So I turned to several economists about the difference between public sector and private sector jobs and whether there was a method behind the seeming madness.

Private sector jobs often have a multiplying effect, says economist Stan Geberer with Fishkind & Associates of Orlando. Depending on the industry and the wage, eliminating a private sector job such as those in construction or manufacturing often has a ripple effect that is felt through other parts of the labor market.

Most public sector jobs don’t have that impact, he said.

“A planner or an administrator doesn’t generate whole other industries,” Geberer said.

Also, higher-paying jobs are usually found in the private sector and that also contributes to a bigger impact when eliminated.

Sean Snaith, economist and director of University of Central Florida’s Institute for Economic Competitiveness, agrees.

He also points out that public sector jobs are paid by tax dollars, so eliminating those translates into less revenue the government needs to collect.

But both economists agree that eliminating public jobs is still adding to the state’s unemployment numbers and it remains to be seen how “temporary” an impact it will have by new jobs created in the private sector.

The personal impact is the same. State workers facing unemployment are faced with the same quest for a job and applying for unemployment benefits as their private sector buddies. And they have the same constraints on spending and contributing to the economic recovery.

Snaith says Scott’s timing for his jobs push has been impeccable.

The state has lost 850,000 jobs in the Great Recession, he says, and now that the economy is turning around, the natural flow of the economy spurred by people’s perceptions and confidence level, national policies and other factors will mean creation of more jobs without Scott or any of his policies.

Snaith predicts we’ll hit 700,000 jobs before seven years is up.

“Politicians often receive credit or blame for forces that are beyond what we can control,” he said.

Geberer, who says the job loss between 2007 and 2010 was more like 700,000, agrees that hiring is already on the upswing without Scott’s policies.

“If we did nothing, we would get 400,000 to 500,000 jobs because of the normal growth in Florida and internal demand,” he said.

And, in the end, it will be hard to quantify whether Scott’s 700,000 job creation plan can be judged a winner or a failure. You’ll be able to track the number of jobs added, but determining whether they came as a result of policy changes he implemented is a little dicey, the economists said.

“It’s not something you could say with 100 percent certainty, but you can get reasonably close, maybe 50 to 70 percent,” Geberer said.

Jennifer Rich, Herald business editor, can be reached at 941-745-7087.

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