News Column

Feds Shed Jobs, Putting Brakes on Economy

October 29, 2013

Isaac Cohen --

hispanics in unemployment office
Cutting federal jobs is putting a drag on the U.S. economy and boosting the unemployment rate, Labor Dept. figures show.

The Labor Department's delayed report on job creation in September was disappointing.

Even before the government shutdown and the debt ceiling confrontation, only 148,000 new jobs were created in September and the unemployment rate decreased from 7.3 to 7.2 percent. Next month, when the effects of the government shutdown will be taken into account, these figures will be even worse.

The private sector created most of the new jobs in September, in sectors such as wholesale trade and transportation. Even construction was up.

State and local governments are hiring again as well. The drag is coming from the federal government, which has been shedding jobs consistently.

Compared to last year, employment in the federal government in September was down 3.1 percent.

According to the New York Times, the number of civilians employed by the federal government last month was the lowest since August 1966, when Lyndon Johnson was president.

The federal government today employs 2 percent of the civilian labor force, while in 1966 -- with a smaller population -- the figure was 4.3 percent.

These figures on government employment confirm the conclusion the central bank has drawn that fiscal policy -- that is, what the government receives and spends -- is restraining economic growth.

A recent study by the research firm Macroeconomic Advisers concluded that fiscal uncertainty has raised the unemployment rate in 2013 by 0.6 percent, equivalent to 900,000 lost jobs.


Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.

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