Weathering the Storm: The Impact of Cutbacks on Public Employees

[We’re pleased to welcome author Jaclyn S. Piatak of the University of North Carolina at Charlotte. Dr. Piatak recently published an article in Public Personnel Management entitled “Weathering the Storm: The Impact of Cutbacks on Public Employees,” which is currently free to read for a limited time. Below, Dr. Piatak reflects on the impact and innovations of this research:

PPM_C1 template_rev.inddWhat motivated you to pursue this research?

I was working as a program analyst at the Occupational Safety and Health Administration in the U.S. Department of Labor when the Great Recession hit. One of my projects was to conduct a survey of the state OSHA programs to see how each of the state programs were impacted by the recession. I was fascinated by how each of the state governments had to take at least one cutback measure, if not several. These ranged from Utah going to a four-day work week to furloughs to layoffs. This was my first glimpse at the recession having a real influence on government, government employees, and the public services they provide.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

Fast forwarding to the Trump-era hiring freezes, I became concerned with the government’s ability to continue to do more with less. Between loss of positions due to the economic downturn and a large proportion of federal government employees retiring (or being eligible), the thought of a government-wide hiring freeze was disconcerting to say the least.

Were there any surprising findings?

Government employment has yet to rebound from the Great Recession. Private sector employment is back to pre-recession levels, but not the public sector. When looking across levels of government, the state government (excluding education) is particularly slow to recover.

This raises questions for timely staff recovery, organizational diversity, and the government’s capacity to cope with future crises.

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The Cost of Overcoming Profit Loss

While there have been many capitalistic strides to overcome the profit losses between the 1950s and the 1970s, there’s been a downward effect in households. Dr. Fred Moseley at Mount Holyoke College examines and explains this phenomenon in his article,”The U.S. Economic Crisis: From a Profitability Crisis to an Overindebtedness Crisis,” published in Review of Radical Political Economics.

The abstract:

This paper argues that the fundamental cause of the current economic crisis in the U.S. economy was a significant long-term decline in the rate of profit from the 1950s to the 1970s. Capitalists responded to this profitability crisis by attempting to restore their rate of profit by a variety of strategies, including: wages and benefit cuts, inflation, “speed-up” on the job, and globalization. These strategies have largely restored the rate of rrpeprofit, but have resulted in stagnant real wages for workers for decades. As a result, household indebtedness has increased to unprecedented levels and must be substantially reduced in order to make possible a sustainable recovery.

Read the full article here, and don’t forget to sign up for e-alerts to stay up-to-date on the latest from RRPE!

Falling Profits as Cause of Recession

As earnings season opens this week, corporate profits are expected to be lower than originally anticipated, according to The Wall Street Journal and other news sources. Today, we look to the Review of Radical Political Economics (RRPE) for related analysis. José A. Tapia Granados of The University of Michigan published “Statistical Evidence of Falling Profits as Cause of Recession: A Short Note” on February 3, 2012 in RRPE. To see other OnlineFirst articles, click here. From the introduction:

Profits—the basic variable in business activity—were one of the major concepts analyzed by the founders of political economy, from William Petty to Adam Smith, David Ricardo, and John Stuart Mill. However, profits are quite rarely mentioned in modern discussions in mainstream economics about macroeconomic issues in general or recessions in particular. Even in the heterodox field of progressive or radical economics the 2007-2009 crisis has been seen as related to a number of factors, but not falling profitability.

Corporate profits in the U.S. economy, however, had a peak in the third quarter of 2006, well before the upsurge of the serious disturbances in financial markets and the severe downturn of the real economy that were baptized as the Great Recession. As in other recent recessions, profits started decreasing several quarters before the downturn began to be noticeable. This note presents statistical evidence on the fall of profits preceding recessions and discusses the economic meaning of that evidence.

Read the full article here. To learn more about the Review of Radical Political Economics, please follow this link. To receive email alerts about newly published articles and issues, click here.