Public Employee Press

Union study shows cost of $80,000
Layoffs drain tax dollars, hurt economy

"Layoffs actually wind up costing more in the long run."
— Bill Bliss, Bliss & Associates, New Jersey consulting firm

Mayor Michael R. Bloomberg plans to lay off over 550 public service workers in the next 16 months. He says firing the workers will save money. But an analysis by the DC 37 Research and Negotiations Dept. says he's wrong.

Last fall, the Dept. of Education cited budget problems as it fired nearly 650 low-paid school workers. But did DOE really save money by casting workers with $19,000 salaries onto the unemployment lines?

The union study says "No!"

In fact, each firing will cost the public about $80,000 - four times what DOE was paying them.

"Once you consider public assistance, Medicaid, unemployment benefits, lost taxes and what the workers used to contribute to the economy, the simple truth is there really aren't any savings," DC 37 Executive Director Lillian Roberts said. "The cost to our society far exceeds what they were paying the workers. What's worse, we've lost the important services they were providing for our children."

Cost to the economy: $47,500

According to the union study, the typical laid-off School Aide costs the local, state and federal governments a total of $32,216 in unemployment insurance, food stamps, lost taxes and publicly financed health care through Medicaid and public hospitals.

"In addition to these direct costs to the taxpayers, layoffs harm our economy," said DC 37 Research and Negotiations Director Evelyn Seinfeld.

Economists say working people generate economic activity worth 2½ times their salaries. Each laid-off School Aide, therefore, costs the economy $47,500.

"In effect, every job in our economy pays for another 2.5 jobs," explains Assistant Research and Negotiations Director Raymond Santander, who did the study. "By shopping in a supermarket or bodega or using a dry cleaner, you help create jobs and in turn, the workers and businesses use your money to pay for goods and services and hiring. Layoffs break the chain."

Particularly tragic is that the 642 laid-off school workers are mainly minority women whose public-sector jobs provided a pathway to the middle class.

All told, the Bloomberg administration has eliminated 20,478 city jobs in 10 years, and local governments nationwide have destroyed nearly 500,000 jobs since 2008.

Economic recovery at risk

Labor economist Heidi Shierholz of the Washington-based Economic Policy Institute calls these losses "an enormous drain on the recovery."

With President Barack Obama's policies finally showing their desired effects, the U.S. Bureau of Labor Statistics reported that the economy added 243,000 jobs in December, cutting unemployment from 8.5 percent to 8.3 percent. But virtually all of the 243,000 new jobs were in the private sector. As mayors and governors ignored the simple economic truths shown in DC 37's research, the public service workforce fell by another 14,000.

— Gregory N Heires