Sometime during the Spring, Ohio schools announced cutbacks to their teaching, support, and administrative staffs. This was the beginning of government's massive cutbacks that will continue for the next several quarters or so.
Government is a business cluster, just like manufacturing, health, finance, etc. Employers face staffing decisions just like the private sector. Granted it moves slower, and in many cases much slower, but at some time it also must deal with the low economic times we live in.
Many people have been laid off this year. Towns and counties started long ago to lay off workers. Now that the state budget has been passed, more state workers will be getting their "pink slips". And I believe it will happen at the federal level too. The news media is making a fuss about this for several reasons: they like making and influencing news themselves; they may not have realized layoffs were already in motion, which is highly doubtful, so they put out their articles now so readers will think they are ahead of the game; they don't understand the speed of government or again they do and rush to get something in print before government ramps up their layoffs.
For example one report said that NASA rarely changes staff. But they certainly stop using vendors, thus people loose jobs all the time. Because they are contractors and not federal employees, they don't count as per government layoffs. NASA announced this week contractors will be given notices, which will amount to 3200 layoffs.
Ohio is not unique in this. Government layoffs are happening at all levels throughout the country. I believe we will eventually see higher amounts of federal layoffs as well. This could drag out for months.
So my question is this: will this lead to a double dip depression? Yes, my regular readers know I believe we were/are not in a Great recession but a depression. I ask again--will it be a double dip? We now have all these formerly employed people not able to pay mortgages, bills, have little discretionary money, etc. etc. What impact will this have on our local, state, and national economy? Will they be able to find jobs?
Do they have transferable skills to go into another business cluster?
Other topics to consider for another day:
1. In Ohio, many government workers who can, are retiring because benefits will decrease because of the economic downturn. They hope they will be grandfathered in at the levels of retirement when they quit work. Will they support the economy as much as they did when they were working?
2. In many instances hiring has stopped altogether when someone leaves, but the amount of work hasn't stopped. Just like private industry, the employees have been doing double duty for quite some time and it is bound to get worse.
3. Layoffs of government workers will affect again our unemployment funds. Ohio, as well as other states, used up their funds long ago and are borrowing money from the federal government to pay unemployment benefits. Will this add to the possibility of a double dip depression? Federal debt situation?
Here are the news articles referred to above:
http://www.usatoday.com/news/washington/2011-07-18-fderal-job-security_n.htm
http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm
http://www.dispatch.com/live/content/business/stories/2011/07/23/jobless-hike-first-in-two-years.html?sid=101
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