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Bloomberg’s Job Killing Budget Cuts

Thursday, December 9th, 2010

amytraub4It’s the city’s ninth round of budget cuts in three fiscal years, and the most brutal. Mayor Bloomberg calls for 6,201 layoffs of public workers in the 2011 and 2012 fiscal years. Instead of responding at our firehouses, serving our frail elderly, and helping job-seekers perfect their resumes on the library computer, former New York City employees will instead crowd the unemployment lines – where, given the fact that there is just one job opening for every five Americans looking for work, they are likely to remain for some time. But this understates the impact on New York’s economy.

When we lay off public workers, we not only lose the services they provided to New Yorkers but also their spending power as city residents. As a result, laying off 6,200 New York City workers means destroying an additional 1,860 private sector jobs. The last thing New York needs is another 8,000+ jobless.

Think about it: the administrative worker in the city finance department who used to support her family on $45,000 a year now qualifies for a maximum $405 a week in unemployment benefits. She’ll buy cheaper groceries, cancel the cable, pull the kid out of ballet lessons, and put off the next shoe purchase, for starters. Suddenly the neighborhood grocery store, shoe shop and ballet studio have lost revenue: multiply that and they’ll quickly be ready for more layoffs of their own. Small businesses already on the edge may close up shop completely. In the meantime, New York taxpayers pick up the tab for her unemployment benefits as our former city worker searches in vain for a new job. It’s a bad deal all around.

Worse still, destroying 8,000 jobs in New York City is completely unnecessary. Economists find that progressive tax increases on higher income households do far less economic harm than spending cuts and layoffs. As the Fiscal Policy Institute has pointed out, New York City could raise $1 billion by raising personal income taxes on residents making more than $250,000 a year while still reducing taxes for lower-income households. Studies at the national and state level find that wealthy taxpayers do not flee tax increases in significant numbers. Yet Mayor Bloomberg has categorically ruled out such an increase, arguing that killing jobs and decimating city services is preferable.

DC37, a public employees’ union with a big stake in avoiding city job cuts, has identified still more sources of new revenue. The city could more seriously enforce its existing tax laws on billboards and cell phone antennas, for example, and could crack down on inappropriate property tax exemptions, making certain that when non-profits sell land to for-profit companies, property taxes are once again levied on those previously exempt parcels. Yet there’s no sign that these common sense proposals are on the table either.

This article was originally posted on DMI Blog.

About the Author: Amy Traub is the Director of Research at the Drum Major Institute. A native of the Cleveland area, Amy is a Phi Beta Kappa graduate of the University of Chicago. Before coming to the Drum Major Institute, Amy headed the research department of a major New York City labor union, where her efforts contributed to the resolution of strikes and successful union organizing campaigns by hundreds of working New Yorkers.

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