Debt Limit Deal will Mean More Job Losses for Mississippi

August 22nd, 2011

The large federal spending cuts prescribed in the recent debt limit deal from Congress will mean more cuts for state budgets as well–resulting in more jobs lost in state and local economies.

While specific cuts have not yet been decided on, some general areas are outlined for cuts, including “non-security discretionary” spending. According to the Center on Budget and Policy Priorities, “Fully one-third of this category of federal spending flows through state governments in the form of funding for education, health care, human services, law enforcement, infrastructure, and other services that states and localities administer.”

If the super-committee, the group tasked with finding the cuts prescribed, decides to include Medicaid in the spending cuts, Mississippi will be hit especially hard. Mississippi receives the largest federal Medicaid match rate—meaning it relies on federal funding for a larger percentage of Medicaid funding than any other state.

These cuts will mean more jobs lost on the state and local level. Public sector jobs in Mississippi have already decreased by almost 8,000 in the last year and are now at 2007 levels. At the same time, needs for public sector services, like education, health care, and infrastructure, have become even more vital for our economic recovery. The chart below shows public sector job levels in Mississippi over the last few years.

Click to enlarge

Public Sector Jobs in Mississippi, January 2007-Present

Not only do public sector job losses affect the quality of and access to vital public services, they also lower demand for goods and services in the private sector. Ultimately, this drop in demand for goods and services could result in job losses in the private sector. Without new revenue on the federal and state level, these job losses will continue to strain our fledging economic recovery.

Source:

Economic Policy Institute