Tuesday, June 12, 2012 | 2 a.m.
- New Romney ad hits Obama on the “fine” economy (06-10-2012)
- Obama seeks to clarify remarks on private sector (06-08-2012)
- Nevada unemployment falls to lowest level in 3 years (05-18-2012)
- Brookings report: Job growth in Las Vegas ‘flat’ after two good quarters (12-14-2011)
- More Sun political news
- More Sun business/economy news
Republicans had a festive weekend excoriating President Barack Obama for saying “the private sector is doing fine” Friday during a press conference about the state of the economy.
“Mr. President, I beg to differ,” Nevada Republican Rep. Mark Amodei said. “Tell the nearly 160,000 Nevadans who are looking for work ‘the private sector is doing fine.’”
Obama’s “sunny outlook doesn’t help nearly more than 158,000 unemployed Nevadans,” Republican Sen. Dean Heller retorted.
To say any part of the economy is “doing fine” just after May reports showed the slowest job growth in a year is politically perilous to start.
Democrats have already experienced just how treacherous it is to make such conclusions about the private sector. Last fall, when Sen. Harry Reid said the private sector was “doing just fine,” Republicans piled on his comments in much the same way.
But politics aside, both Reid and Obama have a point — at least comparatively speaking.
“Because of balanced budget constraints, state and local governments have been shedding jobs for the last three years, and this has cancelled out some of the job growth in the private sector,” said Elliot Parker, an economics professor at UNR. “There are job losses at the state and local level, (but) the private sector is improving.”
According to Department of Labor statistics, employers reported almost 2 million more non-farm, private sector jobs this May compared with one year ago. But the public sector reported 161,000 fewer jobs than one year earlier.
Even in the last month, in which reported job gains were disappointingly low, the private sector added 82,000 jobs while government sectors lost 13,000.
The public sector trend is often overlooked because of the dramatic job losses in the private sector — which employs more people — during the worst of the economic downturn.
In Nevada, the recession hit the private sector particularly hard, with key sectors — especially construction — taking the brunt of the fallout. In the public sector, the federal stimulus helped staunch the jobs hemorrhage by funding salaries for teachers, firefighters, police and public works personnel.
As a result, the Nevada private sector shrank by 13 percent while the public sector shrank by 9 percent.
Republicans consider that record to be a failed one. They often cite the average six-figure stimulus price tag per public job saved, and they claim the cost-per-job created in the private sector — largely through tax incentives — would have been much lower.
But in a recession such as this one, the trade-off of private-vs.-public sector health isn’t cut and dry.
“Can anyone say we have too many teachers? ... Can anyone say we have too many police officers? Too many infrastructure jobs?” Reid said Saturday, defending Obama and citing the potential for even more layoffs in Clark County schools this year. “I don’t think so.”
Some economists argue that a healthy public sector is more important during a recession.
“When the economy is doing pretty well, let’s say above average, then an expansion of the public sector winds up taking resources away from the private sector,” Parker said. “When the economy is below average, especially in a situation like this where you have very low interest rates, the public sector and the private sector tend to be complements: The better the public sector does, the better the private sector does.”
In an election year, however, political reality can trump economic nuance.
In Obama’s case, the better the economy is doing, the better the president will do on Election Day. If the economy is suffering, so will Obama’s numbers.
When it comes to lagging public sector numbers, Obama can point a finger at Congress and chide them for not passing a jobs plan and slow-walking a transportation bill, as he did Friday.
But when it comes to the gains and losses in the private sector, he’s at the mercy of the monthly Bureau of Labor Statistics reports. And as those reports have recently gotten worse, the Republicans have been heaping the blame on his administration.
That gives the president an extra incentive to say things are “fine” in the private sector when they might just be getting marginally better.
“I wouldn’t say the private sector’s ‘fine’ because you still have inadequate demand,” Parker said. “But had we not been having state and local governments cutting back, the private sector would be even better off.”