For Immediate Release
State Government Spending Cuts Could Lead to Higher Unemployment
WASHINGTON - As state governments face budget gaps of tens of billions of dollars in FY 2009 and FY 2010, the Center for Economic and Policy Research
(CEPR) today released an issue brief that calculates the potential
detrimental effects of state budget cuts on unemployment in the states.
The issue brief, "The Effect of Budget Belt-Tightening on Employment,"
demonstrates that in a worst case scenario - in which state
governments address their budget shortfalls with only spending cuts -
budget belt-tightening would lead to losses of over 350,000 jobs in FY
2009 and almost 900,000 jobs in FY 2010. The brief includes job loss
estimates for every state that has reported a budget gap.
cuts have the effect of restricting demand and increasing unemployment.
During a recession, when the economy is already shrinking, these
'pro-cyclical' measures can make things worse," said Matthew Sherman,
Research Assistant at the Center for Economic and Policy Research and
author of the brief.
state and local governments are forbidden by law or tradition to run
budget deficits, they are limited in the methods they can use to remedy
their budget gaps. As Congress considers a national economic recovery
package, this issue brief highlights the fact that aid to state and
local governments could help avoid spending cuts and ensuing job losses.
This is the world we live in. This is the world we cover.
Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Simply Won't Exist.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.