June 2011 -- The Great Recession has created fiscal crises for state and local governments. In response, leaders of both parties are advancing agendas to downsize state and local governments by cutting taxes, slashing wages and benefits for public workers, or even selling off state-owned facilities. Robert Pollin and Jeffrey Thompson argue that these austerity policies are not the only possible responses to the crises, and propose alternative approaches that can close the budget gaps in the short term, promote a sustainable recovery, and, over the long term, help insulate state and local government budgets from the effects of recessions.

>> Download "Fighting Austerity and Reclaiming a Future for State and Local Governments"
>> Download the related New Labor Forum article by Pollin and Thompson, "State and Municipal Alternatives to Austerity"

March 2011 -- In keeping with the trend of balancing state budgets on the backs of public workers, New Haven is considering outsourcing its public school custodial services to a private firm. Outsourcing would cut the cost of services in half, saving the city $8.1 million, or 19% percent of its deficit. In “Pushing Working Families into Poverty,” Jeannette Wicks-Lim finds that the cost of that savings would be severe: the family of a custodian who continues to work in the New Haven Public Schools would simply no longer be able to make ends meet.

>> Download "Pushing Working Families into Poverty: Assessing the New Haven Plan to Privatize the Public Schools’ Custodial Services"

February 2011 -- In this article for The Nation, Robert Pollin and Jeffrey Thompson remind us that the recession was caused by Wall Street hyper-speculation, not the pay of school teachers or firefighters, and that public workers are a driver of our economy, not a burden on it. As lawmakers attempt to allow states to declare bankruptcy, effectively canceling obligations to public employees and their pension funds, Pollin and Thompson present more appropriate routes to state fiscal health.

>> Download “The Betrayal of Public Workers”

September 2010 -- In Prioritizing Approaches to Economic Development in New England, Jeffrey Thompson provides ample evidence that infrastructure (roads, bridges, dams, energy transmission systems, drinking water, and the like) and education are effective approaches for creating jobs and generating economic growth. By necessity, infrastructure repairs employ local workers and use local materials. These activities would also meet an increasingly urgent need: evidence reviewed by Thompson shows that 40% of bridges in the region are structurally deficient; 80% of the region’s dams present significant hazard; most of our roads are in poor or mediocre condition; and our drinking water infrastructure is in need of $12 billion worth of repairs and renovations.

Thompson describes how, instead of making these investments, state policymakers are too often turning to corporate tax breaks to lure businesses to their state and public subsidies for employers who promise to hire workers in the state. These policies have been tried for decades, but Thompson presents the clear evidence that these tax subsidies don’t work to create jobs or revitalize state economies.

>> Download "Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives"

September 2010 -- The refrain that government workers are overpaid, and their benefits expansive, returns with each state and local budget season. In this study, "The Wage Penalty for State and Local Government Employees in New England," PERI’s Jeffrey Thompson and John Schmitt of the Center for Economic Policy Research demonstrate that in New England the reality is the opposite. While the average state or local government worker does earn higher wages than in the private sector, this is because they are, on average, older and substantially better educated. In reality, there is a wage penalty for public workers in New England of close to 3%.

>> Download "The Wage Penalty for State and Local Government Employees in New England"

April 2010 -- The Governors of Massachusetts, Connecticut, Rhode Island and several other states have proposed employer tax credits as measures to fight high unemployment in their states. Jeff Thompson and Heidi Garrett-Peltier present evidence that such policies, in fact, do little to increase aggregate demand, and instead only modestly reduce the after-tax cost of labor in an economy with high unemployment, falling wages, and weak demand They suggest a more effective approach to creating jobs in the states: increasing spending in labor-intensive sectors and programs that are matched by federal funds, such as Medicaid. These expenditures would be particularly effective if they were financed through temporary high-income tax increases.

>> Download “Generating Jobs through State Employer Tax Credits: Is there a Better Way?”