Creating jobs and boosting our economy

Report | January 14, 2010 | By Marilyn Watkins

Executive Summary

In 2009, Washington’s legislature slashed billions from the state budget, adding to the misery of recession by cutting services, jobs, and incomes of public servants.  Virtually every area of state government was affected, including K-12 education, higher education, health care, the social safety net, and public safety.

Directly and indirectly, those state budget cuts are costing Washington an estimated 44,000 jobs.

With the economy only tentatively recovering from the deep hole of this long recession, the state now faces an additional budget gap of $2.6 billion. If the legislature were to cut that entire amount from state services, our state would lose another 33,600 private and public sector jobs. Even a $1 billion reduction in state spending would trigger losses of 13,000 more jobs.

In contrast, maintaining state services through a combination of $1.6 billion in new state taxes, plus $1 billion in enhanced federal aid and transfers from other funds would result in a net savings of 18,600 to 29,000 jobs for the working people of Washington.

Instead of compounding job losses, Washington’s legislature can act to protect and create jobs during the 2010 session. Priorities to create jobs and build a strong foundation for future prosperity and opportunity include:

  • Maintaining and restoring public services through targeted revenue increases. The best choice for both short term stimulus and long term stability would be to target tax increases and expand the tax base.
  • Creative bonding to retrofit schools and other public buildings for energy efficiency. This will immediately create jobs in construction which has lost 40,000 jobs in the past year, while reducing energy consumption and saving taxpayer money in future years. Public spending on infrastructure has a particularly strong multiplier effect. This will stimulate related jobs and allow the state to take advantage of lower prices for materials.
  • Maintaining strong social insurance systems. Washington’s unemployment insurance (UI) and workers’ compensation programs are among the strongest and most efficient in the country. While other states are  struggling with systems that pay poverty-level benefits and UI trust funds  that are going broke, Washington’s programs are healthy and providing  precisely the counter-cyclical economic stimulus and protection for  working families and businesses that they were designed for. Our UI  system could be further modernized to ensure that more workers are  eligible when unemployed through no fault of their own, but restructuring  of either system would be counterproductive.

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